Sit on hands, side lines
To sit on hands, or sit on the sidelines, refers to traders staying out of the markets due to directionless, choppy or unclear conditions. This allows traders time to analyse the market and use technical principles to enter at optimal moments rather than just entering a position at will and holding it in hopes its price rises.
How to optimise your entry
Once you’ve sat on the sidelines and identified a trend, you must decide how to open your trade. There are three main ways to optimise your entry and increase your chance of growing profits and limiting losses:
- Spotting breakouts: breakouts occur when an asset’s price action breaks from the current trend, be it bearish, bullish or sideways. Being able to spot a breakout allows you to capitalise on the new price movement
- Testing across timeframes: comparing shorter-timeframe charts with longer ones allows you new perspectives to spot price trends. Zooming out and examining a longer-timeframe chart may help you understand how long a bull or bear run has gone on, and whether the market has hit previous support and resistance levels. This information helps you better gauge the timing and strength of future movements
- Taking a broader view: In addition to checking a longer timeframe of the market you’re looking to enter, a broader view means understanding outside conditions like fundamentals that affect the market. This knowledge can help you predict short-term volatility and avoid potential risks you might otherwise have overlooked