Peculiarities of Trading in the Flat Market.

The market may be either flat or in some trend. The trading tactics described before suits a trend market. Whereas in the flat market it does not work. That is why peculiarities of trading in the flat market should be also considered.

Flat market is a market with quotes fluctuating within a narrow trading channel (200-300 pips).

In this case it is recommended to enter the market in the direction of the global trend only (specified on the daily/weekly charts) from the support/resistance levels, using bullish divergence / bearish convergence as signals on the H1 charts. Stop Loss order for a short position is placed below the support level, whereas for a long position it is placed above the resistance level.

If 1 min – 5 min charts are used to enter the market the planned profit may make about 10-20 pips. Such a trading tactics is called scalping. Statistics shows that scalpers lose more than get in the long run.

Here are the reasons of it:

• there is a great possibility to take emotional (wrong) decisions;
• applying small time-frames triggers lots of useless signals in the data analyzed (see «Choosing the periods of the charts analyzed»);
• it is impossible to follow the rules of Money Management;
• it is quite difficult to specify the true breakout of support / resistance level.