In our last lesson, we spoke about the importance of capping your losses as an intraday trader.
In this week’s lesson, we will be addressing one of the trickier trading environments which cause many a trader to lose money or give back their market gains and that is the rangebound or rotational market.
Most traders love trending markets. These are the easiest markets to trade in the sense that there is usually sufficient range for most participants to catch some profits.
On the other hand a lot of traders especially newer traders have a hard time dealing with rangebound or sideways markets.
If your style is to trade momentum – that is you’re trying to buy/sell breakouts, ride winners, or buy or sell pullbacks to see new highs or lows then this is a losing style in a rotational market.
The market makes sharp reversals that will chop you up whether you go long or short and the ranges aren’t sufficient to cover your losses.
And here’s the problem – most studies show that markets typically only trend between 70-75% of the time.
So what do you do?
Watch the video to begin to put the pieces together.