How to read the market and trading strategies based on market conditions [Forex Oni]
Readers, do you trade after judging whether the current currency market is a ranging market or a trending market? Some of you may look at the chart, feel it might go down and sell, or buy because an indicator gave a buy signal, or trade based on feeling or intuition.
For example, in a market where a strong downtrend is occurring, haven’t you entered a buy on a counter-trend move only to see prices continue to fall?
The cause of these unsuccessful trades is that the market conditions were not judged accurately. In the world of forex, it is said that 80% of the time the market is ranging and 20% of the time it is trending, but setting aside the truth of this ratio, discerning market conditions is the eternal theme for FX traders and their ultimate goal.
In this article, I will discuss the method I use daily to assess market conditions and the trading strategies based on those conditions.
Table of Contents
1. What is a ranging market
2. Detecting a trend is difficult
3. What is Dow Theory
4. Trading strategies for trending markets
5. What not to do
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※This article is a revised version of an article from FX攻略.com May 2014 issue
