Choose a direction in the sideways price range to trade

You should rely on the major trend to determine which direction to trade when the price enters the trading range. If the sideways price area you are monitoring is on the M15 chart, then move up to larger timeframes such as H1, even H4 to identify a major trend. Likewise, if you trade H1 then you can identify a big trend on H4 or D1.

GBPJPY frame H4:

If the uptrend is bullish on the D1 chart, but currently the price is going sideways on the H1 chart, then you should watch to buy below the range of the sideways price range. And the reverse is true if the big trend is down, then you should sell at the upper edge of the range on the lower timeframe.

But keep in mind that the market never goes sideways forever. There will come a time when the price breaks out of this sideways price zone.

These buy and sell opportunities can work well if the trend continues to move. However, sometimes after a period of sideways prices can be a sign of a trend change. An uptrend can convert to a downtrend after a long period of sideways movement. And vice versa.

Entry point, stop loss and take profit

Entry point: Many times the price may not reach the top or bottom of the sideways price zone and has returned. So if we want a precise entry point it is impossible.

GBPJPY frame H1:

A general rule of thumb that can be applied when trading sideways is to buy when the price is close to the bottom of the trading range (perhaps 15% from the range) or sell when the price is close to the bottom of the trading range. range area (can be about 15% away from range area). Note that the price is more active inside a price area than it is at the top or bottom of the range.

Stop Loss: Always setting a stop loss is the first requirement when trading in the trading range. The right place for you to place your stop loss is above the top of the sideways price range and about 15% from the top (relative to the range) for the buy order. Sell orders, on the other hand, are placed 15% from the bottom (relative to the range). In general, you can take about 30% of the range risk.

Take Profit: Still the 15% rule. For sell orders, you place take profits 15% from the lower range, and for buy orders, you place take profits 15% from the upper range. In general, you take profits of around 70% of the range.

With this strategy, it gives you a pretty good ratio of 70:30, which equates to an RR ratio of 2.33: 1. That is if you risk 100 pips, you could make a profit of 233 pips.

Furthermore, with this method of trading, your RR ratio should be at least 1: 2. While this is not the dominant RR ratio and is as good as trend trading, range trading still has some limitations. But it also has its own advantages. If a trader has a strategy, knows how to manage capital, and guarantees a good RR ratio, in the long run, tradẻ is still capable of making good profits.