What is flat or sideways? Trading Strategies

Trend lovers, how do you view the opportunity? flat trading? About 70% of the time the Forex market is in a flat state. Taking into account the fact that most participants in currency trading direct all their efforts to finding a trend, this means that they use only 30% of the potential of price movement. To change the situation and make work on the Forex market more effective, you can add flat strategies to the trend systems in your portfolio, one of which is called Rubber Band.

Characteristics of a strategy for flat trading.

The Rubber Band trading strategy is characterized by the following features:

• - : any;
• - time frame: H4 + H1 + M15;
• - trading time: all;
• - recommended brokers: Alpari, RoboForex, Forex4you and AMarkets.

Flat strategy concept.

To achieve good results when trading, you need to learn how to correctly determine the point of entry into and exit from the market. It is best to open a deal from the border of the side corridor, and close it when the price passes approximately half the distance of the corridor. Since there is a possibility that the sideways trend will turn into a trend movement, you need to have time to take profit, even if it is not the maximum possible!

To make it easier to determine the presence of a flat in the market and the point of rebound from the corridor in Forex trading, various indicators and other technical analysis figures are used. The Rubber Band flat strategy is based on several Forex instruments simultaneously. Among them are Bollinger bands, the RSI indicator, reversal patterns and round levels.

By interacting, these tools help determine the moment of price rebound from the border of the sideways movement, and allow you to find the flat stretch points, that is, when the price goes outside the corridor, and then returns and crosses it in the opposite direction. In this case, the trader gets an opportunity outside the flat, and additional technical analysis tools will confirm this signal.

Definition of flat in the market.

In the Rubber Band strategy, you can use two options for determining a flat:

• 1. In the first case, it is assumed that the trader has sufficient experience to visually determine the sideways price movement and build. A channel is constructed using two or more price highs located on the same horizontal line, and two or more lows also located on a horizontal line. The Horizontal Line tool is located on the toolbar in the MT4 terminal;
• 2. The second case assumes using moving averages with periods of 20 and 50. It is more convenient and is considered simpler, since the trader only needs to monitor the signals of the moving averages. The presence of a flat in the market will be indicated by the intertwining of moving averages or their parallel movement.

Rice. 1. Determining a flat on a price chart using moving averages.

Using both options simultaneously improves the quality of the analysis. You should look for a flat on the chart with the H4 time frame. It should also be taken into account that prior to trading in a flat, the strategy is not carried out, since the news may cause the development of a trend and the loss of the opportunity to enter using this strategy.

Installing indicators to determine flats.

We recommend analyzing the market and trading using the Rubber Band strategy in. The terminal allows you to open several chart windows simultaneously in the main window, which is necessary according to the strategy. And you need to open 3 windows with different time periods: H4, H1, M15:

Two moving averages with a period of 20 and 50 and different colors are installed on the H4 chart. The Bollinger Bands indicator with its standard settings, as well as is installed in the H1 chart window. For it, the period remains the default, and the overbought and oversold levels are set to 35 and 65. And finally, a chart with the M15 time frame. An indicator of round levels is installed here, or the trader can determine them independently, without using an indicator.

You can download templates for all three time frames and the round levels indicator from the link:

Download rubber-band.rar (downloads: 36)

Rules for entering a deal, setting SL and TP.

To complete a buy transaction using the Rubber Band flat strategy, the following conditions must be met:

On chart H4 flat recorded: price movement in a horizontal direction, moving averages intertwined, or also moving horizontally with a minimum distance from each other:

Rice. 3. Definition of flat on the market.

On chart H1, the price breaks the lower line of the Bollinger Bands indicator, and the RSI is in the oversold zone, that is, below its level of 35:

Rice. 4. We receive a buy signal on H1.

On the M15 chart we are looking for a signal for a trend reversal. It can be represented by a pattern like , or . The price should also rebound upward from the round level:

Rice. 5. Entry to buy using the Rubber Band strategy.

If all these conditions are met, then you can consider entering the market to buy.

Sell ​​transactions are opened under similar but reverse conditions:

On the H4 chart you need to determine the flat:

Rice. 6. Determination of flat on the price chart for selling trade.

On H1, the price has broken through the border of the Bollinger Bands indicator from bottom to top, and the RSI indicator is in the overbought zone, that is, above its level of 65:

Rice. 7. Search for a sell signal on the H1 chart using the Rubber Band strategy.

On M15 we find a reversal pattern, with the price bouncing down from the round level:

Rice. 8. Entering a sell trade.

As for the stop loss level, for sell transactions we set it several points below the extremum of the signal candle or the neighboring one, if its maximum is higher. For sell transactions, just above the low of the signal or adjacent candle, if it is lower. is set on the middle line of the Bollinger Bands indicator, that is, it is approximately the middle of the channel. As the Bollinger Bands move, the take profit does not move!

• - when searching for trading signals, you need to pay attention to previous extremes. If a signal candle breaks a recent low or high, then this may signal the beginning of a trend movement and it is better to ignore such a signal;
• - before opening an order, it is better to wait for the price to break through the round level and reverse it. The option when the price bounces off the level without breaking through it can also be used, but such a signal is not so reliable;
• - it is possible to search for signals to open trades on the M5 time frame, in this case the entry into the market will be carried out earlier.

Conclusion.

Rubber Band is a strategy that deserves the attention of traders, as it combines the simplicity of the tools used and, at the same time, confirmation of signals. Despite such a number of indicators in its composition, the strategy is quite simple and even beginners can understand it. Due to the fact that it is multi-currency, the number of signals is quite large. If it were used only on one pair, then 1-2 transactions would have to be concluded per month, which is not very promising.

The system is designed for flat trading, but can also be combined with trend strategies, which will allow you to constantly be in the market and earn money.

Sideways or flat (translated from English means horizontal) for binary options trading is a fairly common concept in the area under consideration. Value never moves in a precise direction; it either falls or rises. All market dynamics periodically stop, resulting in consolidation and continuation of the trend, or its reversal.

And if in the case of a trend there are no questions, then how to conduct trading activities if the cost varies within a small range? And should you enter the market during the formation of a sideways trend? In this section we will tell you what is happening and how to use sideways trading in the options market.

What is observed during a sideways trend?

When a sideways movement is formed, the price is not at the same level; at this time, no patterns are noticed, as is the case with a trend movement. There is simply no special movement, the price does not tend to fall or rise, plus there is almost no liquidity. It seems that the market is accumulating energy and gathering strength to begin further movement.

At such moments, it is not difficult to guess that every horizontal movement always comes to an end, and at the same time succumbs to the aspiring market force. And with the increase in the duration of the sideways trend, the strength of the price movement increases.

For most people, trading in a mountain trend is accompanied by countless questions. Let's look at each of them in detail.

How a beginner can identify and use a sideways trend

First of all, the sideways parameter is the resonance of the price in a small range (the tendency of the price up and down).

Trend lines outlined by extremes, in the case of a sideways trend, are in the horizontal direction and do not go up or down.

The mountainous location of the “Moving Average” points shown on the chart is an excellent way to establish a sideways trend.

It should be noted that not at all periods of time the movement of value will be in a horizontal direction. Looking at charts with a long time frame, you can understand that the trend continues.

Why is it necessary to install a side train? This is required to make the right decision.

Should you trade in a side channel or skip it?

There are many controversial issues whether to enter the market during a flat movement or not.

Most people have experienced in practice how horizontal movement is not fast, but it surely eats up profits. Along with the money, the expensive nerve cells of trading participants also disappear, who, after such trading, decide not to enter the market during the period of narrow price resonance.

Having decided to refrain from trading, you analyze the market condition and wait, hoping for a breakdown of the line border - resistance/support. A logical question arises: how long will it take to wait? There is a risk of not noticing the movement and falling into a so-called false breakout.

Along with this, there are good and reliable trading strategies, some rules for trading, the use of which allows you to make good profits.

Whether you like this approach or not, after researching the essence of channel strategies, you will determine whether this type of trading is clear, accessible and acceptable for you.

Sideways trend - basic principles of trading activities

You shouldn't take big risks. This is the fundamental rule that matters most in this strategy. If you think that the largest position is ten percent of the deposit, then do not increase this level under any circumstances.
Unconditional use of STOP LOSS. As soon as the price goes beyond the channel movement, its rapid movement is observed! Because of this, it is not recommended to limit the expected losses with a stop order, as there is a risk of losing a considerable share of capital.
Do not use unreliable strategies. If you are not confident in using a particular strategy, do not try it. Conduct trading strictly following established and reliable rules. In this case, improvisation can play a negative role for you.

Flat trading strategy

There are many types of “flat”: wide, narrow, etc. It is recommended to trade with sufficient width, which is at least 50 points.

Analyzing the movement of value, it can be noted that it moves within the boundaries of the levels. And having identified the trend lines at the extremes, you can see how a certain range is formed, present in both directional and mountain movements, where the value does not go out for some time.

It is logical that the price will further move away from the channel lines before a breakdown occurs. This doesn’t happen often, which can’t be said about a price rebound from a psychic level.

In other words, by buying near the bottom line and selling near the top line, you can make a good profit.

Trading strategy - waiting for a breakout

However, as was said earlier, all channels are sometimes broken through by price movement, it goes beyond its boundaries and acquires a directed and powerful movement. Expect a breakdown as it will appear anyway.

To “catch” a trend, so-called “gate” of pending orders, plus twenty points to take into account noise.

Before the breakout, the price catches the established order, according to which a position will be opened in the required direction vector. You can make a good profit from this.

A flat in options is also called a “sideways trend”, in which no significant movement of the chart is observed. There is no clearly defined direction, it is not clear how to open trades, whether to go up or down, and so on. Most traders prefer to refuse to trade under such conditions. They move to other assets or another time frame, where movement is still possible.

What is “flat” in options?

In the options dictionary, a flat is a sideways movement of the chart that does not clearly determine the direction of the trend. It is characterized by oscillatory, small movements of the graph up and down with weak amplitude. It is rightly considered one of the most unfortunate situations for trading. In options there are wide and narrow flats:

• Wide. Although fluctuations occur approximately in the same range, it is large enough (usually 20-40 points) so that you can trade more or less comfortably.
• Narrow. Fluctuations occur within a range of literally several points, making trading virtually impossible.

Is it worth trading?

No. For beginners - definitely. An experienced specialist can afford to take a risk and work a little on a wide flat, but this does not always give the desired result. Well, a specialist doesn’t need our advice, so let’s talk about beginners.

For them, the best trading option is when the chart shows a clear movement up or down, with slight fluctuations in the opposite direction. If we observe a sideways trend, it is recommended to stop trading, or another time frame. As a rule, if there is no clearly defined movement in the 15-minute range, then the hourly chart shows a much more interesting result. The opposite is also true.

• Work only with proven ones.
• Do not use transactions worth more than 5-10% of the deposit.
• If there are three failures in a row, stop trading.

Trading example

Let's look at an example of flat options trading based on the Bollinger indicator. We work on the site of the innovative IT company “Olympus Trade”, you can register on whose website using the form to the right of the text.

Since with such a system of chart movement, with a high degree of probability it will return to the average for a long time, we need to wait for small jerks up or down. As soon as the candle goes beyond the upper limit, we open a bearish contract. If it crosses the lower border, we open a trade for an increase. Let's look at an example:

In all cases, the chart immediately after crossing the upper or lower border turned in the opposite direction. The interesting thing is that you can still open trades in the interval, focusing on another indicator - the parabolic. Here he is:

It's even easier to handle. If the points are below the candles, we are working for an increase. If it's on top, go down. But in any case, Bollinger is considered the main one in this case, and it is recommended to look at the general movement of the trend. In this example, we would not recommend opening trades for a fall, focusing on the Parabolic, since, as you can see, the signals from it are not always correct.

This happens due to a weak but fairly confident upward trend movement, which cannot be ignored. As a result, bullish contracts are more likely to produce a profit than a loss.

Profitability of options trading in flat

Let's assume that we are trading an asset with a return of 80%. Each transaction is “worth” $100. Above we have already shown 5 Bollinger entry points. The time period in this case is 5 hours. That is, 1 trade per hour. Let’s say that we open 1 more trade per hour using Parabolic (although in reality it’s more, but let’s not be greedy). In total, in an eight-hour working day we get 16 contracts. Of these, about 5 may be unprofitable; after all, this is a flat.

Now let’s calculate: 5 trades bring a loss of $500. The remaining 11 contracts give a profit of 11*80=$880. Net income=880-500=$380. A very good indicator for trading in just 1 day (and then only during working hours that you could spend, for example, in the office).

Conclusion

Trading during low market volatility is not recommended. You can always find a more suitable asset or time period. However, if there are no other options or you definitely want to try your own strength, you can always, the main thing is to do everything correctly.

And again, hello, dear visitors and readers. Webmastermaksim is in touch with you and we continue to consider interesting topics in the context of trading. And today we have a very interesting topic - trading in binary options. I think this topic will be useful to you and you will be able to expand your horizons in trading.

In general, there are a huge number of different trading approaches on the market, and all of them can work. Some people work according to the classics of technical analysis, while others prefer fundamental analysis. Someone is studying approaches and . In general, the most the main thing is to find your own style in all this variety of approaches, which will bring you profit.

I always tell you that overcomplicating a trading strategy only brings potential problems. A working strategy is first and foremost a logical and simple strategy. You see a signal, you evaluate it and enter. That’s all, you are like a predator who sees the prey and will not let it go, it doesn’t matter to you what happens next, your goal is in front of you, and you only need to make a competent leap towards this very goals.

Thinking too little is bad, but thinking too much is no better. If you think little, you are unable to correctly assess the situation on the market; if you think too much, doubts may overcome you, and you will not enter a potentially high-quality position. Here you need to keep a balance, that is, to correctly assess the situation before entering, but at the same time not to hesitate unnecessarily. Imagine that you are a sniper () who is waiting for his target, you have assessed all possible factors: air humidity, atmospheric pressure, distance to the target, wind direction, etc. And now, your target is in front of you, it has appeared in the crosshairs of your sight. That's it, no more need to think, just shoot to kill.

It’s the same with the market, you are waiting for a high-quality signal, you have assessed the context of the market, paid attention to the levels (Candle temperature indicator) that are nearby. And when the signal appears, that’s it, there’s no need to hesitate, you need to enter, and the market will judge you. Yes, the deal may turn out to be unprofitable, no one is immune from this. But if you always do this, you can be sure that you will be a very profitable trader in the long run. But all this is lyrics, let's get closer to the point.

More details about flat binary options trading

We all know that the vast majority of the time the markets stand still, that is, they are sideways, and only about 30% of the time the markets move in a clear direction, that is, in a trend. Many can say that it is better to avoid sideways and only trade in a trend. In part, these people will be right, but you can make money in the flat, however, if you do everything wisely and consciously.

The biggest problem is that you and I don’t know where the trend will end and the flat will begin. This knowledge is beyond our control, no one knows where the price will go, I assure you, and they also don’t know where it will go, but where do we care about these sharks of the stock exchange business? But I have good news, they are that in order to make stable money in the market, we don’t need to know this at all. Just strictly follow your system, and you will be fine!

How does a flat differ from a trend?

First of all, let’s clearly look at how a flat movement differs from a trend movement.

Here we have a trend movement depicted. Notice that the market has a clear direction up, and each new maximum goes higher than the previous one. By the way, many people say that if you suddenly see a picture that a new maximum is lower than the previous one, then this is a clear change in trend. Actually this is not true. For us, this is only a sign that the current trend has shown weakness, but it is far from a fact that it is changing.

The figure above shows a clear example. Pay attention to the maximum, which is marked with an arrow. But it is lower than the previous one, but for some reason the price went further along the trend, magic, isn’t it? In fact, this situation is, as I already said, a sign that the current trend has shown weakness. And this means several things:

• Yes, the trend can really change.
• There will be a deep correction against the trend, and then the price will again move in the priority direction.
• A flat movement will begin.

As you can see, this situation is an indicator of one of these scenarios. And based on the behavior of the market, you should understand which scenario will be more relevant in a particular case. Remember that trading is a game of probabilities and nothing is 100% certain and never will be.

Now, look at the picture above. Here we have already presented the flat movement. Notice how the market moves clearly in a sideways direction. Flat trading on binary options is a real opportunity to make money, since even a small rollback is enough for us, and if you strictly meet the time frame, the profit will be yours!

However, I want to point out one very important detail. In many books you will be given very clear examples of flatting in pictures. But you must understand that this will be more an exception than a frequent occurrence.

Look at the picture above - this is a flat. Agree, it doesn’t look as beautiful as in the textbook, but this doesn’t change the essence, we have a flat in front of us. You just need to understand the general scheme of difference between a flat and a trend, and act in a consolidated manner with it.

Trading binary options flat

In general, flat trading on binary options has its own specifics, which you must clearly understand. With the click of a finger, you can find a huge number of trading strategies that will supposedly allow you to trade binary options on a high-quality basis. The vast majority of these systems will be indicator systems. But all this is nonsense, in fact, there is a good old time-tested strategy - trading from the flat boundaries. In this case, you find the boundaries of the flat and make trades from them on binary options. From the upper limit we sell, from the lower limit we buy.

Look at the picture above! Numbers 1 and 2 indicate the local minimum and maximum from which we take the boundary. And look at the moments that I marked with red arrows - these are all rebounds from the boundaries of our channel. And this is our potential profit, isn’t it?

At the same time, you can find such a formation at any interval. But of course, don't go for the minute time frame as you will encounter market noise. In general, the idea is simple: you look for flat boundaries and trade for a rebound from them in binary options. But at the same time, I don’t recommend taking too many touches, since with each new test of the border, the probability of a breakdown increases. Take a couple of touches of the upper and a couple of touches of the lower level of flat on binary options, this will be enough for you.

Watch a video about binary trading

Flat is a term that defines price movement within a certain channel. In essence, this is a sideways movement of the market, in which the price always tends to return to the channel when leaving it. Forex traders do not like flat trading, since it does not promise much profit, however, you can successfully make money on it.

Binary options will help us make money on the flat. After all, it is binary options that allow you to receive up to 90% of the investment amount even with the slightest price fluctuations.

First you need to open a terminal, no matter what it is, MetaTrader4, MetaTrader5, Think or Swim or Tradingview. Personally, I mainly use the latter terminal. After this, you need to determine the currency pairs that are available for trading with your broker. I recommend adding them to the so-called Watchlist, which allows you to have the fastest possible access to them.

The next step is to find the market movement inside the channel, flat. This is determined visually, I don’t see anything complicated about it. An example of a flat can be seen in the picture below.

To make it easier to determine a flat, I can also recommend using the Bollinger Band indicator. Thanks to the direction of the tapes, you can easily determine the direction of market movement. In addition, to filter signals, it is best to use an indicator such as RSI (Relative Strength Index).

So, we found a currency pair with a clear movement inside a narrow channel, installed all the indicated indicators, built an approximate channel and its continuation. And now the question arises, when to trade? It’s very simple to trade rebounds from the channel walls.
We open a bullish trade when the price reaches the lower border of the channel, while the RSI must be above 30% and below 70%; if this condition is not met, the signal can be considered false.

We open a downward trade if the price has reached the upper border of the channel, and RSI is also within 30%/70%.

As you can see from the screenshot, over a time interval of more than 12 hours, we received 7 signals to open options, 6 of which turned out to be profitable, and 1, unfortunately, was unprofitable due to the price leaving the channel.

Some traders try to catch the first breakout of the channel border. Personally, I do not recommend trading on the first breakout of the border, since the probability of the price returning to the channel is very high. In turn, the channel breakdown should be traded as follows. The first breakdown of the border is a signal for us to carefully monitor the next development of events. In the future, we wait for the price to stagnate towards the broken channel border, after which we wait for the signal candle to close, and upon its closure, we open an option in the direction of the channel breaking. Typically, the signal candle is the first candle that closes in the direction of the breakout. If you don’t wait for it, then there is a high probability of getting into a false breakout.

Expiration time

Often, many traders trading binary options have problems with expiration time. When trading using this strategy, I recommend buying options for 2-3 candles of the analyzed timeframe, for example, we found a flat on the M15 timeframe, therefore, all options will be opened for a period of 30-45 minutes. In the future, you can adjust the expiration time depending on the volatility of your chosen currency pair or other asset.

Capital Management

As with any other trading, do not forget about the basic rules of risk management. I do not recommend trading with a volume of more than 5% per trade; ideally, you should have 0.5-1% of your deposit per trade.

Where to trade?

Trading using this strategy is possible with almost any broker. Otherwise, it all depends on your preferences and desires. Below I have listed the most honest and interesting brokers for trading binary options.

I wish you success and profit, Simple Investor.