What is flat?
The simplest definition of “flat” is a period of time when the price
stays within the same range and almost doesn't grow or decrease.
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Flat on Forex is a very dangerous period of time because horizontal or
sideways trend and the price fluctuations from 10 to 60 points can
negatively affect trading. That's why flat is not a good period for
trading especially for the owner of a small capital because even the
possible profit not always can pay for the spread.
Flat on Forex is also a “tip” for experienced traders
It is not difficult to see the flat on the graph because the price
movement is limited to the maximum of 60 points within this period.
Flat on Forex is also a “tip” for experienced traders. When the price
stops at a certain level it means that further high decreasing or
growing will take place.
It is believed that a prolonged flat is a signal of a strong trend in future. Although there are also exceptions to this rule.
Despite the duration of “slack” the main thing is to predict the right direction of the next trend.
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Flat on EUR/USD |
Is it possible to earn on flat?
In order to do this it is necessary to change the tactics. You should
move to another timeframe and gradually collect your profit. In this
case it will be better to use channel strategy. Some traders call such
trading as scalping.
Let's look through the following kinds of technical indicators which help to determine flat on Forex:
- Pulse Flat indicator clearly shows flat with its interface. It
consists of 2 lines (yellow means there is no flat, green means that
there is a flat) and a histogram which helps to determine a sharp price
movement on the graph.
- iVAR looks like a polyline which moves near the level of 0.5. This
indicator is very easy to use: the trend is under the indicated level,
the flat is above the same level and there is uncertainty at the level
of 0.5 within which it is not recommended to trade.
There is one condition for a correct work of iVAR: an additional
indicator should be used with it because iVar itself can not give any
guaranty of clear determination.
- Stochastic Oscillator and Williams %R (Percent Rage) are very
popular indicators, which have almost the same formula indicated on the
graph. They differ only with their range (Stochastic has the range from 0
to 100, Williams – from -100 to 0).
These oscillators are included into the set of standard instruments of
the MetaTrader trading terminal, which you can turn on in the
“Navigator” window in the “Indicators” tab.
In order to determine the end of the price range you can also use CCI, Envelopes, MACD, Price Channel and etc.