Part 6/11:
Lessons on Trading During Sideways Trends
One of the key takeaways from the recent market activity involves understanding and managing expectations during sideways channels. When stock prices fluctuate within a defined range—say, between $410 and $460—many traders experience emotional reactions, especially during rapid moves up or down.
The Psychology of Channel Trading
- Upward Moves: When Tesla's stock moves from $430 to $460 in a short period, traders often panic or become overly optimistic. The instinct might be to buy more, fearing missed opportunities, or to worry about the stock "going to the moon." This is the wrong response during a sideways trend; instead, one should remain rational and recognize the pattern.