You can notice in the above Nifty Fut chart for last 17 weeks the markets are trading in a sideways trend and slowily but surely forming a " Triangle Pattern". Also the trading range goes on narrowing for each week, making it diffcult to trade on intraday basis as the most on the move is completed within 30 min of opening the markets & after that the markets are lack lustre. There is a risk of stop being hit on both sides.How to trade in sideways trending markets ?
- Either don't trade or, if the conditions are conducive, write options over stock that aren't going anywhere in order to collect the time premium. In those cases - I don't have to be right about market direction or timing - just not terribly wrong of where it is not going.
- If Market ' lacks clear direction either up or down shift attention to other markets or commodities like Gold & Silver where they are in clear uptrend.
- Even during a sideways market there are still stocks that defy the general market by trending strongly. So there are still opportunities for trend traders during sideways markets, although obviously they're less plentiful.
- A bull put spread makes it possible to make money as long as the stock stays above a certain level. A bear call spread makes it possible to make money as long as a stock stays below a certain level. This can be profitable as long as a stock stays within a given area.