What is flat?

A flat is a period when the price stays within the same range with no single defined trend. It's a critical period because horizontal or sideways trends and the price fluctuations from 10 to 60 pips can negatively affect trading. Flats are bad for trading, especially if you don't have significant capital, because even the possible profit not always can pay for the spread.

The 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 a maximum of 60 pips within this period.

The flat on Forex is also a tip for experienced traders. When the price stops at a certain level, it means that the next trend will be a lot stronger. However, you still need to predict the right direction of the next trend.

Flat on EUR/USD
Flat on EUR/USD

Is it possible to earn on the flat?

You don't need to change your tactics to make money on a flat - move to a shorter timeframe and start trading there. Some traders call it channeling or scalping.

Let's look through the following kinds of technical indicators which help to determine the flat on Forex:
  • Pulse Flat indicator clearly shows the 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 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 recommended not 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 guarantee precise determination.

  • Stochastic Oscillator and Williams %R (Percent Rage) are prevalent 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.

To determine the end of the price range, you can also use CCI, Envelopes, MACD, Price Channel, etc.

by JustMarkets, 2017.07.28

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