Have you ever made a total profit of 200pips in a trading week and then lose all this profits just in a trading day? This can really be frustrating as this is what a ranging day in the market can cost if you fail to spot these days. Actually ranging days are inevitable but it can be controlled, managed and if possible avoided when they arise in the market. The markets are in a ranging mode 70% of the time and in a trending mode 30% of the time. I remember in my early years of trading, I asked a friend of mine when is the best time to trade in the week and he told me not to worry about it. Instead he told me to focus on making profits at month ends, none withstanding participating in ranging days or trending days.
There is a myth which says that Mondays and Fridays are not good days for spotting trends in the market due to low volume of participants. It was stated that Tuesdays, Wednesdays and Thursdays are the best days the market are in the mood to trend due to the fact that these days are more prone to economic news releases. I started focusing spotting entries these days but sometimes i still come to the markets and find out that Mondays and Friday’s trends as well when they are in the mood to. So I made up my mind to take trades when I have a reason to do so any day of the week.
Most ranging currency pair occurs due to the fact the both currencies are strong or weak in correlation with other currencies. I usually recommend staying away from such currency pairs that have this behavior when this kind of scenario is seen. The secret to making profits in Forex trading is pairing a strong and a weak currency together and trade them. This is not a total guarantee that you will escape loss trades but it will filter out bad trades for you.
Another way of filtering ranging days is not to open deals when there’s a conflict on the trend on multi-time frames. I usually recommend 1hour, 4hours and Daily all synchronized towards the same direction before opening deals in a particular currency pair. Pairing a strong and a weak currency together with 1hour, 4hours and Daily confirming this via technical analysis is a high guarantee of making profits in the market. However this doesn’t count out loss trades, no trading system is a “Holy grail”. Any trader seeking for a “Holy grail” system in Currency trading should just find something else to do with his/her time.
In conclusion, ranging markets are markets that take profits away from 80% of technical traders while trending days are days we get remunerated. Only a few traders have developed trading systems that can be applied on ranging days. Seriously if I had one, I won’t hesitate to make use of it but they say the ‘trend is your friend’, so i made up my mind to develop and use only trend trading systems.