Ranging or trending market.

The question that haunts us all. Is the pair going to range or to trend tomorrow? Which strategy will i use? Which time frame will be the best one to use.

What was the pair doing yesterday? Is their any important data that will be released. When writing a CTL strategy their are many indicators that can tell us if the market is ranging or trending. The only problem is that they are all lagging!! Nothing worse than running behind the facts. Nobody knows for sure what will happen. The only thing we can do is to try make a decision based on the current situation of the market.

Imagine being wrong ! How can we protect our self? Every time we go in to the market we have to try to be realistic. We can be wrong. What will the loss be? What profit are we going for? An experienced trader knows that you profit target should be a lot bigger than the potential loss. Aiming for huge profits doesn't make sense either cause you will have so many small losses and so few big winners. Changes are that you blow up you account before you get that big winner. Greed kills that's a fact.

Another thing to consider.. are we going to trade big or small? Everybody wants to make huge gains on his account. And in FOREX it is actually possible to have big gains. But what are the risk that we will be taking. Most inexperienced traders are risking to much of their balance. You should decide what % of you balance you are willing to put at stake before taking any position.

Simple CTL strategies are written for a ranging or trending market. More advanced strategies are written for both. When you use a simple strategy for a ranging or trending market the strategy must keep the loss small when its wrong and the trader should stop the strategy and say : OK this is not the time to use this strategy.

In fact a good trader has an arsenal of strategies that he can use. He should decide which one will suit the current market conditions the best.

Would it not be nice to write a strategy that consist of 2 parts. One part for a ranging market and one for a trading market. And then the most important a part that decides which strategy will probably be the best one to use.