A flat is a period of time when the price stays within the same range and almost doesn't grow or decrease.
The flat on Forex is a very dangerous period of time because horizontal or sideways trend and the price fluctuations from 10 to 60 points can negatively affect trading. That's why the flat is not a good period for trading especially for the owner of a small 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 the maximum of 60 points 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 further high decreasing or growing will take place.
It is believed that the prolonged flat is a signal of a strong trend in future. Although there are also exceptions to this rule.
Despite the duration of "slack", the main thing is to predict the right direction of the next trend.
Is it possible to earn on the flat?
In order to do this it is necessary to change the tactics. You should move to another timeframe and gradually collect your profit. In this case it will be better to use channel strategy. Some traders call such trading as scalping.
- 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 very 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 give any guaranty of clear determination.
- Stochastic Oscillator and Williams %R (Percent Rage) are very popular 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.
In order to determine the end of the price range you can also use CCI, Envelopes, MACD, Price Channel and etc.