I have the opposite problem to most traders. My mechanical system works great in chop, but fails when the markets go into a strong trend. Are there any good trend indicators or formulas? I've tried all the usual suspects but can't find one that can get me out fast enough in a strong trend.
best trend indicator
- Thread starter luxor
- Start date
Learn the characteristics of a range, then enter upside or downside breakouts. If they fail, exit the trade. If they succeed, you're in a trend. After that, it's just management.
And that's is good - you know that chopping suppose to stop.
The problem starts when trend initiates slowly, and chopping continues, just in the different time-period, but you think that trend already started and you keep paying for the trend that still did not start.
Or it is started, but sig-zaging, and you keep paying (loss after loss) since you watching trend following indicator in the wrong time period.
Solution: you have to determine in which chart period (for example 5min chart or 15 mini chart) to set up the trend following indicator.
For that you have to keep in mind that the longer chopping continues the higher period is the set up required . In fact your chopping indicator also should be adjusted after a while if chopping persists ( you should not watch it on 5min charts if you can see it on 15 min already)
Actually the problem and solution have less to do with "periods" and indicators than with deciding who you want to trade with. As for indicators, if you use them, you'll be late. Better to be able to determine the initiation of a trend without them. If you enter late, you'll be buying at the same time the pros are taking profits.
As for the periods, or bar intervals, all charts are tick charts. There are many ways of bundling those ticks into bars or candles of one sort or another, but the market couldn't care less. The market moves by ticks.
However, not everyone watches tick charts. Some trade 1m charts. Some 5m. Some 15m. And many or most of those who trade 15m couldn't care less about 1m. They view it as "noise". However, as you move up the scale, you're trading alongside different groups of people, on to the hourly people and the daily people and the weekly people. Therefore "chop" on the 1m segues into chop on the 5m, then the 15m, and so forth, until you end up trading chop on the weekly chart, as we are now.
There are only two states available to price: ranging and trending. You have to, again, determine at what point in whatever bar interval you prefer the ranging transitions to trending. This will mean a lot of time observing price and how and when and where it moves in a way that provides you with trading opportunities. Then make your entry with whatever stop your testing has shown to be best for you and sit on your hands until the trend is over, which could be 5m or all day or several weeks.
As for the periods, or bar intervals, all charts are tick charts. There are many ways of bundling those ticks into bars or candles of one sort or another, but the market couldn't care less. The market moves by ticks.
However, not everyone watches tick charts. Some trade 1m charts. Some 5m. Some 15m. And many or most of those who trade 15m couldn't care less about 1m. They view it as "noise". However, as you move up the scale, you're trading alongside different groups of people, on to the hourly people and the daily people and the weekly people. Therefore "chop" on the 1m segues into chop on the 5m, then the 15m, and so forth, until you end up trading chop on the weekly chart, as we are now.
There are only two states available to price: ranging and trending. You have to, again, determine at what point in whatever bar interval you prefer the ranging transitions to trending. This will mean a lot of time observing price and how and when and where it moves in a way that provides you with trading opportunities. Then make your entry with whatever stop your testing has shown to be best for you and sit on your hands until the trend is over, which could be 5m or all day or several weeks.