There is a big difference between when the market moves in a range and the market is trending. And of course, when traders trade in different market conditions, they need different trading principles, and also different profits.

Here are a few of the differences between bull markets and fluctuating markets that traders need to remember:

  • In a market with an uptrend, traders can buy at a high price and sell at a higher price to make a profit, while in a range market traders usually buy when the price is near the support level or sell near resistance.
  • In an uptrend, there is usually a gap up as a signal of a new uptrend and then the market will make the next high higher than the previous one, and the next one higher than the previous one. While the market moves in a range, gaps are often ambiguous and are easily filled by price action.
  • During an uptrend, traders can increase profits by holding positions in the direction of the trend as the market continues to make higher highs after each pullback. Whereas the market fluctuates in a range often traders will not increase profits when holding trading orders for a long time but it is even riskier.
  • During an uptrend, cash flows into the asset cause prices to rise higher as people gradually accumulate long positions. While the market fluctuates in a range, positions are usually traded back and forth within that range.

It is very useful if you know these characteristics to know what trading conditions the market is in. Once you have identified the market in which you will focus on trading, you will exploit your trading strengths, and it also gives you better trading opportunities.

If you choose to trade in a trending market: you would trade a breakout or pullback to follow the main trend, move your stop loss to the short-term moving average when the market is trending and you will know that, in Market conditions trend you have the opportunity to maximize your profits.

If you choose to trade in a range market: You will learn that you need to buy at support and sell at resistance, you should not hold the position long term but take profit when the market hits. to the remaining range.

These are very basic and simple knowledge that helps traders distinguish these two market types and quickly realize which market conditions are your strengths.