This is a range, and this is also a range. But there is a big difference between these two. How do you master the Range Market in Forex and Stock Market? I have talked a lot about trading with the trend on this channel, but how do traders make profits when the price is moving sideways? Today, I’m going to show you how I made money by day trading in a sideways market. In the previous videos, you saw how I got a high win rate in the last two months. And in the last video, you saw how the trade on Monday made a profit. Since then, I have had two more green days. But these are not really two trades. In the last video, I said I had two trades running. One of those trades was a weekly trade, and the other one was a monthly. The weekly trade was in profit, so I booked a profit on it. And in the monthly trade, when the market was at 15250, I sold a lot of call options, because I was expecting the price to go down. Since the price went down, the call options I sold decreased in value, and I was in profit. So I closed 1 third of my monthly position, and booked a partial profit. Remember the strong support level I talked about in the last video? Well, after making a downward move, price found support on the 15000 mark, and started to go sideways.
Now remember, at the start of this video, I said, there are two kinds of sideways market. One looks something like this, and the other one looks like this. On the first chart, price moves between two levels that are very close to each other. It is a bit difficult to get good reward risk ratios in these kinds of sideways markets. So instead of trading inside of these levels, many traders wait for breakouts. When the price moves in a sideways direction like this, many people set their stop loss below and above the range. If you see a range like this one, there is a good chance that there will be orders above and below it. When price breaks these levels, lets say price moves higher, multiple orders will be triggered. When this happens, you can see a good move in the breakout direction. Some traders buy as soon as the breakout happens, and some wait for a confirmation because not all breakouts are worth trading immediately. I have already explained how to trade breakout, and identify false breakouts like a pro, check out the False Breakout video on the Trading Rush Channel to learn more. While you are at it, subscribe and ring the notification bell, because on the Trading Rush channel we also test and have tested many different trading strategies 100 times to find their win rates. After all, you don’t want to risk your hard earned money on a strategy that doesn’t even work.
In the last video, you saw me make money in the first kind of sideways market. This is the second kind of sideways market. And this is where things get a little complicated. You see, on the first chart, you could easily see the price was in a range. It was moving between two price levels. But if you look closely, you will notice that these two charts are actually the same. Price went up on the first chart, price also went up on the second chart. Price went down on the first chart, price also went down on the second chart, and so on. If you look closely, you will notice that if you switch to a higher timeframe, the second chart will look very similar to the first one. Many beginner traders are so focused on their entry timeframes, that they forget that price is in a range on the higher timeframe. On this chart, price is in a similar range. It is moving between two price levels. And as you already know, the top of the range will act as a strong resistance area, and the bottom of the range will act as a support area. In the last video, I said that there is a strong support below. And When I shorted the call option when the price was at the top, I booked a profit when the price came down near this support area. Since then, price has not made a big move in one direction. It is staying between these two levels.
Furthermore, after doing the option chain analysis, I found out that, there were almost equal amounts of long and short positions near the 15200 mark. In simple words, this means that price can stay in a range. And as you already know, the best place to buy and sell in a range market, is at the support and resistance respectively. In this case, the 15250 is the resistance, and 15000 is the support. When I opened the charts, the price was near the 15200 price mark. So I waited for the price to come up near the 15250 resistance. Now, we won’t immediately sell when price comes near the resistance. We are not going to blindly take trades at the resistance. Remember, if price wants to go above the resistance, it can go above the resistance. Since price is in a range, there is a higher probability that price will reverse from the resistance area.
When price comes near the resistance level, we need to see a decrease in upward momentum. Subscribers of the Trading Rush Channel already know, when it comes to finding the momentum of a move, there is nothing better than the MACD indicator. MACD Trading Strategy got the highest win rate when we tested it 100 times. If you don’t know about the MACD strategy, check out the MACD video on the Trading Rush Channel.
When price came near the resistance area on the 2 min time frame, MACD gave a crossover. But the signal was a little bit earlier than I expected. I wanted to sell close to the 15250 mark. So when MACD gave a signal, I created a limit order slightly above the MACD signal. But when the price was not making an upward move, I entered near the MACD signal. I sold a call option.
The chart on the right hand side is an options chart, and it will move very similar to the chart on the left. After taking a trade near the resistance area, I was looking to book the profit near the support area mentioned earlier, and looking to book a loss if price crosses above the resistance area. But I overestimated the profit and stop loss distances on the options charts. You will see what I mean in a moment.
After taking a short entry at a resistance, price struggled to move higher and made a move down. At first, I thought the option price would be around this level when the price comes down near the support level. But I overestimated the profit and stop loss targets by a long shot. So I manually closed the trade when the price touched the support area.
We waited for the price to come up, then we took a short position near the resistance area of the range, and when the price made a move down towards the support area, the profit was booked! This will be another green day of this month. I still have two trades running, so let’s see how long we can keep up this winning streak. One of them has a good chance of making a loss. If you want to see what strategies I used to get a high win rate, and to see win rates of trading strategies that we tested 100 times, Subscribe to the Trading Rush Channel and ring the notification bell. After all, you don’t want to risk your hard earned money on a trading strategy that doesn’t even work.
