If you think it has been difficult to trade the movements in the Nifty and individual stocks recently, you are right. The volatility in the markets has dramatically increased. In our courses at Online Trading Academy, we teach our students to first identify the trend of the security they want to trade and then find the supply and demand zones in order to enter the trend.
But what can you do when the trend isn’t so identifiable? The markets really have three possible trends:
- They can be trending higher with higher lows and higher highs.
- They can be trending down with lower highs and lower lows
- They can trend sideways with similar highs and lows
The last trend is one that most people forget about. The seemingly trendless market that moves in a haphazardly fashion is usually seen when the markets are shifting between a bullish to bearish mode or vice versa. Unfortunately, it can also arise when the trend is pausing and may continue.
So how do we know which it is doing? One clue is to view the security from a larger timeframe. When prices are moving sideways in a smaller timeframe and are also at a larger timeframe supply or demand, then the reversal is more likely.
But if the sideways stalling occurs in an area that is not a supply or demand on the larger timeframe, then it should be treated as a pause before the trend continues.
Most sideways trends allow you to buy the demand and sell the supply in the smaller timeframe. Eventually one of those trades leads to the breakout. If you identify whether it is a pause or reversal, you will increase your chances of catching the breakout and a larger winning trade.
So learn how to identify these trends properly and more importantly, how to find and trade the supply and demand zones. We teach these in detail in our Professional Trader courses. Come visit the center nearest you and enroll today.