please tell us! I am a trend trader. I would love to know how to avoid chop. It would save me a ton. I'm not even trying to trade it. I would be happy just to avoid it. How do you ever do it?
Chop 2
- Thread starter kut2k2
- Start date
The above was the only question in your opening statement before I replied with a brief description of a trade method of trading chop after a trend became choppy.
Once again, you can trade chop profitably, I know a few that does such as stated earlier eventhough most of us have problems trading chop. Thus, you don't need to avoid it unless you don't have a method for trading chop or the method you have doesn't work well (fails to meet your expectations).
When you said how in the above quote...were you talking about types of orders or order entry approaches (e.g. bracket trader) ?
There are indicators that tell you how much chop is present. Some are public, others are private. Sorry, mine is private.
If you really need a private one and don't mind paying for it :
http://www.mindfire-systems.com/Catscan.html
In the context of a pure chop, how would you trade it? Be as generic or as specific as you wish. We've already seen a couple methods put forth in this thread : use martingale; turn the chop into ranges by moving to a quicker timeframe. Maybe something using orders will work. I don't know. That's why I'm asking.
oh shit, I should have known. "Indicators". I should subscribe to one of those, because I'm getting about half chopped to death. If there is any money left over after this trade I will check it out. It must be good if they are charging money for it.
Google choppiness index. There are formulas in some of the links. They may give you something useful to start with. Good luck.
I cannot vouch for how good Catscan is. I have no idea how my choppiness index compares to theirs. But I'm satisfied with mine so never felt the need to buy their system.
otherwise, if your system is good it already knows you are entering into chop and sta
well I can tell you my chop scan. It tells me that 90% of the time the market is chopping. Doesn't matter when you check it, it always says "Chop" and it is right 90% of the time. Can't do much better than that. I'm getting too old to make money, so I'm going to sell it. I figure, "Why not get rich selling my knowledge of how to make money?"
Pure chop does not exist via the prior definition you gave but chop does exist. Therefore, its a time waster for me pretend I can discuss a trade method for such when such type of price action will never appear except in the situation involving IPO. Yet, as stated...I"m not interested in IPO discussions.
In contrast, chop does exist via the chart example I linked to earlier in the other thread. The generic trade method in that old thread and the more detail trade method I posted in this thread is applicable to commonly seen chop. In addition, tons of charts posted elsewhere of typical chop I see (Google images, stocktwits, youtube, stockcharts, bigmikestrading and here at ET).
Without chart examples from you that shows "pure chop" via your earlier definition that greatly differs from my definition of chop...I doubt we'll ever be on the same page and the discussion will just be muddy.
As for common chop that I typically see every trading day, if such occurs with high volatility...the spreads tend to be larger except for the top liquid trading instruments. The price action may be seen as "too fast" to manually react to place trade execution orders. Thus, automation of the entry into chop and/or exit out of the chop may be useful considering you stated you're interested in trading the chop (not avoiding it).
Therefore, improving your cost to enter a trade and exit a trade in chop is obviously something useful to explore via automation.
Regardless, as suggested earlier, if you want to trade chop or its just a pure academic discussion...those "warning signs" posted by NoDoji can give you a heads up that you're in chop if you're having problems recognizing it in real-time as it occurs in comparison to recognizing it on hindsight charts long after the fact.
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Very seldom to me and rules I use, does chop actually happen. In some timeframe higher, you will see trend and lower timeframes have sideways action within trend. So 99% of the time, even in sideways action, I define trend either from price patterns, EMA's or Average swing length. I prefer to have a "bias" defined with rules.
