Introduction
Hello trading view! Today I will be doing an educational post about trading consolidation effectively. There are two methods that I've found that are not only simple, but also self explanatory, and can provide decent returns for everyone who uses them.
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Method 1
Long/Short the breakout. Set your target for the nearest resistance and stop-loss below the consolidation resistance. If you have any reason to believe the security will go higher, set your target at the second or third nearest resistance level (or wherever you see fit).
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Method 2
Long a retest of the support, short a retest of the resistance. Set your target for the resistance if longing, support if shorting. Stop-loss below the support if longing, above the resistance if shorting. This strategy can be used in conjunction with method 1 to make up for any losses caused by you getting stopped out.
*if you get stopped out there has been a breakout, which is when you enter using the first strategy. This can cut any losses you incurred when using the second method and then some.
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Final thoughts
When combining the two methods above you can always make money off of consolidation (or at least most of the time). Good luck and great trading everyone! I will be posting again soon.
*this is not financial advice.
Hello trading view! Today I will be doing an educational post about trading consolidation effectively. There are two methods that I've found that are not only simple, but also self explanatory, and can provide decent returns for everyone who uses them.
==============================================================================================================================
Method 1
Long/Short the breakout. Set your target for the nearest resistance and stop-loss below the consolidation resistance. If you have any reason to believe the security will go higher, set your target at the second or third nearest resistance level (or wherever you see fit).
==============================================================================================================================
Method 2
Long a retest of the support, short a retest of the resistance. Set your target for the resistance if longing, support if shorting. Stop-loss below the support if longing, above the resistance if shorting. This strategy can be used in conjunction with method 1 to make up for any losses caused by you getting stopped out.
*if you get stopped out there has been a breakout, which is when you enter using the first strategy. This can cut any losses you incurred when using the second method and then some.
==============================================================================================================================
Final thoughts
When combining the two methods above you can always make money off of consolidation (or at least most of the time). Good luck and great trading everyone! I will be posting again soon.
*this is not financial advice.