There are different strategies depending on the market conditions (trend and range).
So before trading, it is necessary to learn about the different conditions of the market and then apply appropriate strategies.
Today, we’re going to talk about the fourth phase is the decline, during which the traders turn into investors.
Find the description of the previous phases in our tab of course where, if you go back in the thread, you will find a wealth of article learning forex trading, dozens.
The best strategy in this phase is then to sell the downward trend.
Once the price has completed its distribution phase, it enters a phase of decline (bear market) with the lowest and the highest lower and lower.
In this phase, the traders who do not take their loss turn into investor of the long-term. It is said that they married with their position.
Characteristics of the decline phase :
-It usually begins after a distribution phase
-It can last from several months to several years
-The price mark of the lowest and of the highest lower and lower
-The more time that passes, the more the price drops
-The price spends more time oriented to the downside than upside
-The short term moving average is under the long-term
-The 200-day moving average is pointing down
-The price is also below the 200-day moving average
-The volatility increases because of the fears and the panic on the markets
It looks like this :
A strategy may be to play the pullback. That is to say when the price bounces on a cut key like a moving average, a support area, a resistance that turned into support, a Fibonacci level, etc…
You can also play the breakout, that is to say sell when a cut key is pressed. Like this :
It must at all costs refuse to buy, to spend long. You should never trade against trend. This is rule number 1. Of course, it takes experience to choose your sense of trading with wisdom. A lot will depend on the time horizon on which you take a position…