- Sideways markets demand disciplined short-term trading strategies to optimize smaller price movements.
- Traders are diversifying into alternative assets, leveraging DCA to manage entry risks.
- Effective risk management becomes critical as lower liquidity heightens potential volatility.
It comes as no surprise that one of the most remarkable fluctuations can occur during some specific calendar time, namely the preliminary Christmas period. Minimizing volatility in trading activities happens and price swings are likely to be compressed into trading ranges, which implies different risks and opportunities for equities.
Adjusting to Lower Time Frames
A decline in the trading volume normally results in keeping of volatility wherein price fluctuations turn slow and less erratic. Some traders revert to lower frequency time frames where such patterns can still be observed because they are not as consequential as high frequency or long term ones but may be more frequent. As for the lower time frame strategies, these require even increased focus along with the rapid decision-making.
Short term strategies involve for instance placing tighter stop loss orders in the business with a view of controlling risks. Sideways markets are featured by tight price ranges for which stringent entry and exit points must be set in order to unlock the greatest profits while exposing oneself to minimum risks.
Diversifying with Alternative Assets
In trading, sideways movement in key trading pairs tends to bring focus on other investments such as altcoins in the cryptocurrency market. Holders may opt for such less liquid options hoping to achieve a better risk reward prospect by traders. However, they also pose unique problems that are associated with relatively immature and less standardised markets; these are more volatile and illiquid than other markets.
Those looking for opportunities in other markets use the dollar- cost averaging (DCA) techniques. Due to this, DCA reduces the risks of acquiring positions at ineffective costs at particular intervals which is extremely important when the market fluctuation is uncertain.
The fact is that with less intense activities in the markets, the risks cannot be completely ruled out. Actually, lower liquidity tends to increase the risk of sharp price fluctuations, insofar as it may exaggerate them.
The post Holiday Markets: Why Traders Are Eyeing Shorter Time Frames This Season appeared first on Crypto News Land.
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