How flat market can be traded
If after reading the post whether you should trade a flat market you have decided to try it, we recommend you to go through tips on how the flat market is traded.
Trading the flat market has one significant advantage - even when everyone else has to stop trading, you can continue earning no matter what. Risks are much higher if not done right, but we will share with you a couple of techniques to help you master that market condition.
First of all you should analyse the movement behavior of the flat market and decided whether it is worth trading. How you do that: open a graph of the asset you are interested in. Now look for support and resistance levels. If those are well defined and you can see it with the naked eye, that market can be traded.
That is an example of how worth trading flat market looks like.
The distance between support and resistance levels should be considerable so you have the time to open deals in both (Call and Put) directions.
If, on the other hand on the graph a clear pattern cannot be seen, it is better to switch to another asset and come back to the first one later.
If you see the graph similar to following, we recommend you to avoid trading it
After you have evaluated the market and decided you can trade and get the profit from it, the next step is to define when to enter the trade and what expiration time to set. The good news is that both short term and long term deals can be traded on the flat market. Let’s start with how to trade short term option type during the flat market. How you do that: you use Scalping strategy. The main idea is to profit on short (30-60 seconds) deals. Since the market has a certain pattern of movement, you can easily predict where quotes will be moving at least for a short period of time which is more than enough for Scalping strategy.
So if you see that quotes have “touched” and started going in the opposite direction - you can open a short deal for 30 seconds. That will allow you to take off the profit from the small movement of the price.
For the long term trading the basic idea is quite the same, it is just the analysis which is done a little bit differently. How you do that: you open a graph and define support and resistance levels. Then you look for false-breaks to use it as a signal to open a deal.
After you have detected a false breakout you wait for the beginning of a new candle, confirm that it started moving in an opposite direction and open a trade. To select an expiry time correctly, you should count how much candles it takes to get from the higher (resistance) to the lower (support) level. In our example it takes on average 7 candles. If you have set a timeframe of your candles to 5 minutes, it means that you can open a trade for 30 minutes.
Those are basics of the flat market trading. Let us know if you want to deepen your understanding of the flat market trading so we can prepare an in-depth article about the trading of the flat market.
Practice it, master it and use all market conditions to profit!