This article would deal with sideways moving market and how investors can trade these market directions and make money off it.

• Range Trading: Range Trading is one of the most suitable ways of trading a sideways market. You are expected to map out major resistance and support level that price is expected to move within, this would make up what is known as a trend wall or a trend channel.

A good knowledge of where price is moving towards (sideways direction), can help you take a BUY decision when price hits the support level and a SELL when price hits the resistance. Well as a matter of fact, it is necessary for you not to forecast the market based on the support &resistance levels alone as the use of oscillators should be vital in your exit and entry.

As a matter of fact, I employ the use of stochastic and sometimes I use the RSI in a situation like this. You can SELL when the RSI and stochastic are in the overbought regions and BUY when they are align in the oversold region.

• Scalping: Scalping is a method of trading that entails the investor taking a position and exiting within a short timeframe. When scalping it is important that you make use of resistance and support levels (Fibonacci or Pivot Point) in a bid to better utilize your open and close.

To be comfortable with this type or trading style, you’ll be required to spot out the range of price actions before triggering a buy or sell position. Spotting out entry point is very vital as it helps investors plot out the various pivot points or Fibo levels once they have successfully established the range.

It is wise to take a position when the pivot level or Fibonacci level coincides with the support and resistance channel and exit the position when it touches the level.

Let’s say we have a BUY order at the S1 level, it is okay for you close your position when it touches the next pivot level. If you got into a trade at the 0.382 level you can exit your position when it reaches 0.236 levels.
The above mentioned methods are a viable way for investors to trade sideways markets and make gains off it if duly applied.

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On the indicator any level between 0.7 and 0.3 is termed to be neutral level depicting a continuous phase. When we have a bullish trend and the indicator surges as well, we tend to believe that the bullish trend would continue on its way upward. If we get a bullish trend, along with a falling indicator value, then we have a divergence around the corner. What this explains is that the bullish signal is losing momentum and we could witness a swift reversal. On the other hand, when we witness a bearish trend, and we see the indicator value surging upward, we can assume that the downtrend is weak. There’s a convergence of the oscillator and the price movement, meaning that we would be seeing a reversal. When we find the indicator and the price in an uptrend, what this means is that the prevalent price pattern would keep up.

Trading with the Demarker Indicator

This indicator is an oscillator and as such can be sued on almost all common styles that are applicable to oscillators. The regions of overbought and oversold are 0.7 and 0.3 respectively. When we find the indicator beyond the 0.7 (overbought) marks, then we should be expecting price to fall pretty soon. On the opposite, we get ready for a bullish signal when we find the indicator beyond the 0.3 (oversold) regions.

Most of you who are conversant with the Relative Strength Index (RSI) would be fully aware of the fact that it is constructed similar to that of the demarket indicator. The one difference is the fact that the Demarker employs the Simple Moving Average of the prices, while the RSI uses an Exponential Moving Average most of the time.

Image above shows the Demarker indicator on a 1-Hour EUR/USD chart. It shows the overbought levels and the corresponding selloff. We also had the Demarker indicator on the oversold region and the corresponding buyoffs we saw that followed. This is an indicator that is suitable for ranging market, and if it must be used on a trending market, it should be a backup to a trend indicator, and we should look out for divergence/convergence interpretations alongside.

Conclusion

The Demarker indicator is a firm, simple and dependable indicator that can be substituted for the Relative Strength Index when an investor decides in that vein. It does not show any outstanding difference from the latter and as such we should not have a system that combines both.

A lagging indicator is a technical tool that trails the price action of an underlying instrument, and it is used by investors to generate trade signals or confirm the strength of a define trend. It should be noted that since this is a lagging indicator, it lags the price of an instrument and as such you would notice that a significant move will have to take place before they lagging indicators react. Imagine you are using a lagging indicator to determine market trend. You should know that by the time you get the alert the trend is exhausted and thus you’ll be unable to ride it from the beginning.

On the other hand a leading indicator provides signals before the new trend or reversal takes place. You are thinking at this point that you’ll be getting rich with leading indicators, since you just have to get into a trade before it starts. But the drawback here is that the leading indicator does not catch the trend correctly every single time. You’ll get a lot of fake outs when using leading indicators, as they sometimes give bogus alerts that could “mislead” you.

This article would focus on lagging indicators, examples of lagging or momentum indicators include;

o Moving Average Convergence Divergence (MACD) &
o Moving Average (SMA & EMA).

The above mentioned indicators can only be used to spot trends that have been established already. They are good at identifying trends that have been established at the expense of delayed trade entry. The positive outlook here lays on the fact that there’s less chance of being wrong with hem.

From our chart above we’ll notice “Bullish” when the fast moving average cut the slower Moving average from above.
At this point you are actually you’ll be saying to yourself how you would spot the trends at the initial stage using the leading indicators and all you’ll have to do is to ride the profit. It not as easy as it is being said as the leading indicators produce a lot of fake outs that basically ruin newbies in this business.

Trading the 2-3% Stop Loss Technique

The 2-3% Stop Loss technique is applicable to trading on all time frames; it doesn’t matter whether you are on a 1-Hour chart or a 1-Day chart. Let’s look at an example to enable us fully grasp this awesome Fibonacci trading technique;

If you have an account size of $10,000, this would translate into a $200-$300 per trader (2-3%). It clear that if a trade opening shows up, and price touches the Fibonacci retracement support level of 0.500 and you ultimately plan on entering a BUY and placing a Stop Loss at the 0.382 level. It is worth note taking the pips difference between the levels.

What essentially matters is the time frame that’s been traded. We’ll assume two conditions, one on a 1-Hour time frame and the other a 1-Day chart.

1-Hour (H1) Chart

The pips difference between the 0.500 and 0.382 levels (Stop Loss level) is assumed to be around 30. On a standard account for a EUR/USD pair, 1 pip is equal $10 and this implies:

$10*30 = $300
$300/$300 = 1 standard lot

1-Day (D1) Chart

We would assume the pips difference here to be 80 pips. For standard account where a pip is equals $10 for the EUR/USD pair. It is clear from Fig 5.1 that between the 0.500 and 0.382 Fibbonacci levels, the red horizontal lines maps out the price at those points. 0.500 was mapped to 1.45979 and 0.382 to 1.45170. If you compute the difference, you’ll get a result that’s around 80 pips.

$10*80 = $800
$300/$800 = 0.38 standard lot

I should state here that the lot size is determined by your stop loss and at the same time it should be noted that the entire loss in a position entered is $300 on both sides not minding the time frame of choice.

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3 Candle Chart Forex Indicator Info:

Indicator helps you find out if there was useful information to be displayed from the London open to the New York Close.

It is made of 3 candles per trading day:

- London Open to New York Open
- New York Open to London Close (Power hours)
- London Close to New York Close

Indicator contain a “funny” number to offset the chart itself. See image above.

Recommendations:
# Works only on 1 hour timeframe
# Timeoffset variable is the offset (in hours) between GMT and your MT4 Broker’s time
# SBnumber variable is a funny number used to offset the whole group of candlesticks. It gives sometime surprising results.
# Displays better on a line chart

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What does the Moving Average mean?

The Moving (or Rolling or Running) Average is an indicator that indicates the average value of a currency’s price over a set value. This is in fact not the Moving Average definition that is normally used but one that is suitable for the forex moving average. The MA or Moving Average can be used in any statistical science field and is not just limited to the FX moving average.

1) Simple Moving Average (SMA)

It is also known as arithmetic mean. The SMA is calculated by adding the currency closing prices for a certain number of time periods and then dividing the sum by that number of time periods.

For example, to calculate a 20 days simple moving average, you need to take the sum of the closing prices from the 20 past days and divide the result by 20.

2) Exponential Moving Average

It is also known as exponentially weighted moving average. This type of moving average is similar to a simple moving average, with the addition that more weight is given to the latest data.

3) Weighted Moving Average

The more recent closing prices are given more weight under this type of moving average. In order to do this, the moving average is calculated by multiplying each of the closing prices prevalent over a given time period by its fixed position in the data series. Thus, the price prevalent during the last day is multiplied by one. Each closer day is multiplied by an increasing consecutive number. After that the prices are summed together and divided by the sum of the multipliers.

Trading signals from moving averages

One of the most common buy or sell signals in all chart analysis is the MOVING AVERAGE CROSSOVER. These occur when two moving averages representing different trends crisscross. For example, when a short-term average crosses BELOW a long-term one, a SELL signal is generated. Conversely, when a short-term crosses ABOVE the long-term, a BUY signal is generated.

Looking to the above chart, for example, when the 10 period EMA crosses the 200 period SMA from below, this will generate a BUY signal.
Or, when the 10 period EMA crosses the 200 period SMA from above, this will generate a SELL signal.

However, you should remember that moving averages should be combined with other indicators in order to get a more accurate picture of trading levels.