Chop 2

[Tavurth]

This subject is getting overcomplicated so let's simplify it. Let's assume we have a security that is only moving in pure chop, i.e., there is absolutely no trend. The chop is flat; it isn't upsloping or downsloping because that would involve trend. There is no range because range is a series of alternating trends, and here there is no trend.

There is only pure chop, alternating continuously between two price levels.

Is this tradable?

Sure, just buy or sell anywhere and martingale grid.

 

[kut2k2]

Sure, just buy or sell anywhere and martingale grid.

What does that mean?

 

[wrbtrader]

This subject is getting overcomplicated so let's simplify it. Let's assume we have a security that is only moving in pure chop, i.e., there is absolutely no trend. The chop is flat; it isn't upsloping or downsloping because that would involve trend. There is no range because range is a series of alternating trends, and here there is no trend.

There is only pure chop, alternating continuously between two price levels.

Is this tradable?

I've never seen such a price action. Therefore, due to the fact this seems like a big issue for you...

Please post a chart example of such that includes the name of the trading instrument, date and time frame because these types of discussions without any chart examples...they quickly go someplace you really didn't want to go especially when you start to talk about trade strategy.

Your own words from below involving your opening statement implies that that you know that chop comes from somewhere (there was a type of price action before the chop showed up) when you said price goes sideways. That somewhere can only be trend or range. As I stated earlier...there's a flow to price action movement (trend, range, chop). Simply, they are always connected unless we're talking about the first price actions of an IPO and that price action decides to be chop. Thus, the chop came from no other price action (trend or range) in reference to an IPO trading for the first time.

...The goal of this thread is to determine if choppy markets can be profitably traded. Although I am not asking for anyone's detailed chop-trading plan, if someone wishes to volunteer such, it will be a much appreciated contribution.

...Clearly one or more alternative strategies must be used if profits are to be extracted when price "goes sideways"...

Once again, please post a chart example with name of trading instrument, date and time frame of what you're talking about that you refer to as "pure chop" that didn't occur within a trend or range.

 

[kut2k2]

This subject is getting overcomplicated so let's simplify it. Let's assume we have a security that is only moving in pure chop, i.e., there is absolutely no trend. The chop is flat; it isn't upsloping or downsloping because that would involve trend. There is no range because range is a series of alternating trends, and here there is no trend.

There is only pure chop, alternating continuously between two price levels.

Is this tradable?

One solution, which I believe is what RedNeck was getting at, is to turn the chop into range by going to a smaller timeframe. This will reveal intermediate prices between the limits and the price series can then be range-traded (aka trend-traded).

But what if for whatever reason a smaller timeframe is not accessible? Any other trading option(s)?

 

[kut2k2]

I've never seen such a price action. Therefore, due to the fact this seems like a big issue for you...

Please post a chart example of such that includes the name of the trading instrument, date and time frame because these types of discussions without any chart examples...they quickly go someplace you really didn't want to go especially when you start to talk about trade strategy.

Your own words from below involving your opening statement implies that that you know that chop comes from somewhere (there was a type of price action before the chop showed up) when you said price goes sideways. That somewhere can only be trend or range. As I stated earlier...there's a flow to price action movement (trend, range, chop). Simply, they are always connected unless we're talking about the first price actions of an IPO and that price action decides to be chop. Thus, the chop came from no other price action (trend or range) in reference to an IPO trading for the first time.



Once again, please post a chart example with name of trading instrument, date and time frame of what you're talking about that you refer to as "pure chop" that didn't occur within a trend or range.

"I've never seen such a price action."

Yeah, well, I've never seen a pure trend but how to trade it is obvious. It is my contention that all price action can be considered as mixtures of trend and chop, and there are mixtures that are tradable and other mixtures that are not tradable. Just as pure trends or mostly pure trends can be traded, the question of this thread is whether the same applies to chop.

It's a thought experiment, no need for actual graphs. If it helps to assume this security has been chopping since IPO then go with that. The point is that by the time you become aware of this security, it has been chopping for a long time so what it was doing before that is irrelevant.

 

[Tavurth]

What does that mean?

martingale grid is a strategy where you continuously add to a losing position, and close each trade at one point profit relative to the original entry. This results in eventual catastrophic loss due to the non-normal returns in the market. In your example however, the system would be assured of profit.

 

[loyek590]

martingale is the only known system which has no risk of ruin

worked great on eur.chf for the longest time

 

[wrbtrader]

"I've never seen such a price action."

Yeah, well, I've never seen a pure trend but how to trade it is obvious. It is my contention that all price action can be considered as mixtures of trend and chop, and there are mixtures that are tradable and other mixtures that are not tradable. Just as pure trends or mostly pure trends can be traded, the question of this thread is whether the same applies to chop.

It's a thought experiment, no need for actual graphs. If it helps to assume this security has been chopping since IPO then go with that. The point is that by the time you become aware of this security, it has been chopping for a long time so what it was doing before that is irrelevant.

It's a thought experiment.

Ahhh...its a hypothetical situation in which you're trying to determine how to trade.

Sorry, I got confused. I was under the impression these types of price actions you've been having problems trading via you're earlier statement in your first "chop" thread.

Yeah what you wrote has been my chop-trading "strategy" thus far.

Therefore, I assumed you were familiar with such and has been having problems in trading. Thus, I just though you could easily post a chart example of one of your problem trading in "pure chop" that's not related to any trend or range.

Anyways, I'm not good in types of price actions that don't exist as you described as a "pure chop" that doesn't involve any trend or range. The only exception of pure chop as such that I've actually seen is an IPO. That's something I'm not willing to participate in a discussion about.

Yeah, your thread has now become complicated as you noted earlier now that I know what this discussion is really about.

Good luck...I'm outta here because I don't want to complicate it further with a trade method of chop that occurs often in typical trends and range.

 

[Tavurth]

martingale is the only known system which has no risk of ruin

worked great on eur.chf for the longest time

Sure, as long as you own infinitely deep pockets, and live forever, you'll always make a profit.
Martingale strategies are useful only if you know where the trend will go, but if you're already a good trader, then you should certainly have some idea.

It would become RR, just like every other trade. The problem with the system becomes when the user believes that it can never lose, as so many retail traders do.

 

[kut2k2]

It's a thought experiment.

Ahhh...its a hypothetical situation in which you're trying to determine how to trade.

Sorry, I got confused. I was under the impression these types of price actions you've been having problems trading via you're earlier statement in your first "chop" thread.

Yeah what you wrote has been my chop-trading "strategy" thus far.

Therefore, I assumed you were familiar with such and has been having problems in trading. Thus, I just though you could easily post a chart example of one of your problem trading in "pure chop" that's not related to any trend or range.

Anyways, I'm not good in types of price actions that don't exist as you described as a "pure chop" that doesn't involve any trend or range. The only exception of pure chop as such that I've actually seen is an IPO. That's something I'm not willing to participate in a discussion about.

Yeah, your thread has now become complicated as you noted earlier now that I know what this discussion is really about.

Good luck...I'm outta here because I don't want to complicate it further with a trade method of chop that occurs often in typical trends and range.

Yes I know how to avoid chop when I trend trade. That's not what this thread is about.