Consolidation occurs when there is a presence of sellers in the market. Price will remain sideways until sellers have exhausted, then it will eventually rally up. The exhaustion in supply can be seen in decreasing volume within the same price range.
As a trader, you need to understand that buying within this consolidation means, you will be held for some time. This is because while volume can hint at supply exhaustion, there is no way to 100% confirms such a fact. Hence, the expectation and assumption that price will immediately rally is the common cause of traders failing to catch any form of rally. Impatience and lack of holding power is a major contributing factor to retailers unable to secure profits.
Traders will also need to ensure that after they entered, they are not stopped out while the consolidation is still ongoing. The cause is usually due to improper stop loss.
Sad fact: Many traders are able to "pick" the right counter, but they are unable to execute a profitable trade.
As a trader, you need to understand that buying within this consolidation means, you will be held for some time. This is because while volume can hint at supply exhaustion, there is no way to 100% confirms such a fact. Hence, the expectation and assumption that price will immediately rally is the common cause of traders failing to catch any form of rally. Impatience and lack of holding power is a major contributing factor to retailers unable to secure profits.
Traders will also need to ensure that after they entered, they are not stopped out while the consolidation is still ongoing. The cause is usually due to improper stop loss.
Sad fact: Many traders are able to "pick" the right counter, but they are unable to execute a profitable trade.
