Sideways market trends are in favor for most of traders. A sideways market is a stock market phase where the price rises and bounces back within the upper and lower limits. It causes a horizontal band with prices fluctuating constantly. It occurs due to low volatility and equal demand and supply in the market. As a result, there is a neutral risk. Common belief is that only volatile market can bring high profits.
Indeed, it is easier to see the trends and read signals when the price moves up and down. In addition, traders utilize all kinds of indicators, oscillators and advisors, available at broker platform Pocket Option. You are in for a surprise! Let us discuss a strategy based on the chart reading without indicators. It sounds like a fairytale but continue reading and learn more.
Framework of the Flow Strategy
Many people who have been working on financial markets for a long time are familiar with such a concept as candlestick analysis or Price Action. Its essence lies in the fact that for a long time observing the market behavior, traders have identified some regularities in the construction of the candlestick chart.
As a result, as soon as one of these patterns appears on the chart, it gives a reason to open a deal in the corresponding direction. The “Flow” strategy is based on this principle.
It is worth noting that trading on Price Action patterns, which are called “sets” in trading circles, gives the user several advantages.
Firstly, if you work on the lower timeframes, and otherwise there is no point in trading on binary options, you will be able to make a lot of trades during a trading session. Figures are formed on the chart quite often.
Second. To earn on the strategy “Flow” you will not need a deep knowledge of financial markets and the principle of indicators. You will only need a little attention and a chart of Japanese candlesticks.
Thirdly, this system is suitable for most assets, including cryptocurrencies, which are quite difficult to trade using traditional strategies.
Intro to the Basics of Flow Strategy
The strategy got its name because the purchase of the contract takes place on an impulse price movement. In other words when all market is in a single flow.
How to determine the signal? It is enough to see several candles in one direction. This is the principle on which this strategy is built.
Traders with considerable experience have noticed that the price, which has not made a correction after three unidirectional candles, will often move in the same direction for at least two more periods. Consequently, it is logical to assume that:
You should execute CALL after four ascending candles.
You should execute PUT after four descending candles.
The expiration time should be minimum, for example the time of formation of one candle.
Candlestick patterns are used to predict the future direction of price movement. You can use the candlestick analysis to identify trading opportunities. A candlestick is a way of displaying information about an asset’s price movement. Candlestick charts are one of the most popular components of technical analysis, enabling traders to interpret price information quickly and from just a few price bars.
Candlestick analysis can be an effective tool if you know the meaning of patterns. It is recommended to open deals in the direction of ascending candles and to close deals in the direction of descending.
However, no matter how effective a particular methodology is, one should never forget about the rules of money management.
