Non-trending Market Trading Strategies
Traders need to remain cautious as they can lose their capital if they miss out a trend or if they are on the wrong side of the trend. Data however suggests that market shows trends around 35% of the time and for the rest 65% of the time it is trend-less. Traders need to be aware of how to utilize market conditions and make the best use out of it.
Some traits traders need to be aware are:
Identify and utilize the trendless market to their advantage
Identify non-trends in markets to avoid loss and retain their capital
Change markets to trade and return to the current trading market when a specific trend emerges
Trade in options or scalping for profit consolidation and while waiting for the next trend to emerge
When the market does not exhibit a clear trend online share trading becomes tricky and unsafe. A non-trend indicates that it is range-bound and stocks are moving between resistance and support.
The moving averages are also important and the market is below the ‘all time high’.
The few options traders are:
Do not trade:This helps to avoid mistakes and prevent heavy losses. Traders can make use of this time to research, uncover new idea or optimize the trading methodology and not force a trade which would result in loss.
Flip the trade:Under this strategy,when the range breaks the trader flips and trade with the breakdown.Traders look forward to a new trend to shape up and hence it is recommended that the position taken be small and a tight stop-loss is maintained.
Mean reversion Trades: This strategy is suitable for traders who wish to trade in a choppy market. This approach proposes buying stocks when they are oversold and when they have support and are bouncing. Traders can sell when it is overbought or when it shows resistance. The downside of this approach is if the range changes then there is problem and therefore maintaining a stop loss is critical.