Trading what’s In-front of You with Market Type Transitions

Like the sea turns from calm to stormy so do markets.

As a trader, like the captain of a sailing ship, you want to notice these changes to adapt your strategy as appropriate.

Today, I wanted to share what market types typically follow the one you are currently in. Trading is very much about probabilities, and if you know which market types will likely follow next then it can give you a big edge.

For example if the market type is a bull volatile you can expect the next market type to be bear volatile and tighten your stop-loss so you don’t give back you profits when the sudden sell off begins.

Here are the primary market types and the market types that generally follow next.

• Bull normal. Followed by a bull volatile or sideways quiet
• Bull volatile. Followed by a sideways volatile or a bear volatile
• Bear normal. Followed by a bear volatile or a sideways quiet
• Bear volatile. Followed by a bull volatile of a sideways volatile
• Sideways quiet. Followed by a bull or bear normal, or a sideways volatile
• Sideways volatile. Followed by a bull or bear normal or a sideways quiet

So if you are in a bull normal market you can expect a bull volatile to happen next, or if you are in a sideways quiet you can start to stalk the break-out to a new trend.

There is a lesson on market types in the Advanced Forex Course for Smart Traders.