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Everyone can catch great trades when the market is trending nicely and just shoot in one direction.

But markets spend a lot of time ranging and many traders often lose all their money during choppy range markets when they don’t know how to approach and trade them. In this article, I want to share principles and tips on dealing with and trading consolidations the right way.

 

Good vs. bad consolidations – You don’t have to trade them all

Most traders forget that besides buying and selling, standing on the side and being neutral is also a viable option. You don’t have to be in a trade at all times just because you call yourself a trader.

When it comes to ranges and consolidations, there are good and then there are bad consolidations. A good consolidation is orderly, the top and the bottom are well defined and the volatility is usually moderate. A bad consolidation is wild, price continuously overshoots the boundaries and you also get frequent false breakouts which...


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