CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing all your money. Read our full Risk Warning.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

4 Unique Strategies to Keep Trading During Flat Markets

Although flat markets tend to symbolize stability, it is not exactly great for trading, which depends on price fluctuations. However, there are still ways to capitalize on a flat graph. Find out more below.

Marcel Deer - Writer for Fortrade
By Marcel Deer
Joel Taylor - Editor for Fortrade
Edited by Joel Taylor

Updated March 28, 2024.

Online trader holding iPad with market graph showing a general flat trend

Flat markets are characterized by a lack of volatility, which makes trading challenging. It means the market doesn’t trend up or down for any significant period. While it may appear boring on the surface, there may still be possibilities to make a potential profit.

Choosing the right strategy could help you make smart decisions and potentially lead the way to gains even during a flat market:

1. Boundary Trading

Trends can go sideways in a flat market, but not always. Although in a smaller range, there will still be ups and downs. Trends can be defined by the recurrence of these movements.

Draw trend lines on an instrument chart to keep track of its highs and lows. You'll quickly see that the price usually fluctuates within a channel, going up or down (above and below the trend line). Use this data to determine the patterns the market might follow. Always remember that trading CFDs involves the risk of loss as well as potential for profit. So, make sure you fully understand the risks involved before you begin.

Each time these boundaries are exceeded, the support and resistance levels get stronger, giving you a better idea of the range of the market.

Alibaba Group Holding Ltd stock price graph

Take this graph as an example, showing the stock price of Alibaba Group Holding Ltd from the beginning of January 2023 to the beginning of February 2023. The trend line is relatively flat, though there are numerous points where the stock price falls below or rises above it in the space of a single month. Using this data, you will have a better idea of when to open a buy or sell trade on Alibaba stocks in the future.

2. No Touch Trading

With no-touch trading, you essentially wager against the instrument's potential to rise in value during a specified period. With the right knowledge of the market's constraints, it may be a potentially helpful strategy.

You can place a no-touch trade if you see a currency pair that has been stagnant for some time without showing any signs of breaking out. If the price does not reach the price value after the expiration period has passed, that's good for you. This means you might make money if the market keeps consolidating within the boundaries you have set, but not if the value of the currency increases to or above that level.

» Need more help? See our trading eBooks and video tutorials

3. Scalping

With this method, you can earn potential profits off of slight price swings in the market. The goal is to leverage a large number of shorter trades, which last for only a few seconds or minutes, as opposed to buying and holding positions for days or weeks.

It is based on the idea that larger price movements are less common and harder to predict, making smaller ones easier to earn a potential profit from. It calls for a precise trading strategy that defines the best moment to enter and exit positions and how much capital will be invested in each.

4. Iron Butterfly

This strategy is employed when a trader anticipates that the price of an instrument will stay within a specific range. It involves simultaneously selling both a call option and a put option at the same strike price. Additionally, the trader buys a call option at a higher strike price and a put option at a lower strike price.

The basic principles are the same for CFD trading, where a trader can open a long position and a short position on the same instrument simultaneously—the long position at a lower price and the short position at a higher price, creating a neutral position that might generate a potential profit if the price of the instrument remains in the expected range.

2 Additional Tips for Flat-Market Trading

  • Stay patient The key to success in trading is not about how many trades you make but the quality of each one. You need patience to set up every trade because many factors can affect it. Don’t be too swayed by your emotions.
  • Don't overtrade If you overtrade, you will likely find yourself in the red. The more you expose your money to the market, the better your chances of losing it. Also, the more you trade, the more execution costs you pay, mainly the spread. Thankfully, there are various steps you can take to avoid overtrading.

» Need the extra practice? Learn about Fortrade's no-risk demo accounts

Choose the Strategy That Works Best for You

If you've ever had the possibility to trade in a flat market, you probably know that it can be pretty dull. And if you haven't, it may be difficult to imagine how trading during periods of low volatility could provide any excitement or even reach a decent potential profit.

But the truth is that solid techniques and smart investing can keep you on your toes even during these slow periods. It's just a matter of finding the right strategy for you and your approach to trading.

» Learn how to leverage the Zig Zag indicator strategy for your forex trading