Chop

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wrbtrader said:
I'm now convince that you're really talking about range versus trend. Thus, you're really calling range as chop via your statement its opposite of trend.

Regardless, there's an old thread that may be useful about chop and it has chart examples.

@ http://www.elitetrader.com/et/index.php?threads/help-ive-been-chopped.277421/

As for scalping, I know scalpers that only prefer trend. I also know scalpers that only prefer range and I know scalpers that only prefer chop. Thus, I really don't know what your definition is about chop but that link above should be useful to you because it does get into the definition of chop.
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I answered Autodidact's question before I saw your response here so the answer to how I see chop is there.

If as you indicate scalping can be profitable in all types of markets then maybe that's the answer to how to trade chop. Frankly it sounds too good to be true. If scalping is that versatile, why aren't we all learning how to do it?
 
kut2k2 said:
I answered Autodidact's question before I saw your response here so the answer to how I see chop is there.

If as you indicate scalping can be profitable in all types of markets then maybe that's the answer to how to trade chop. Frankly it sounds too good to be true. If scalping is that versatile, why aren't we all learning how to do it?
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I didn't indicate scalping is profitable in all types of markets. I said I know traders that prefers to scalp these types of markets. Most are not profitable but they prefer to do it.

The primary reason why I don't scalp and instead prefer day trading is because I don't have a scalping system that involves special commission rates (those I know have seats on the exchange), automation (some have moved into algo trading), special trade execution platform, particular types of charts for scalpers using charts in comparison to those scalpers that don't use charts and so on.

I know too many traders that scalp unsuccessfully mainly because of the above...they just do not have the proper resources to do such properly...most don't even realize anything about the above resources when they decide to become a scalper or call themselves scalpers.

The above discussion is one reason why I tell people that trading successfully is more than just entry/exit signals...we gotta have the proper resources too and if we don't have the proper resources...best to stay away.

Anyways, don't want to sound like I'm bashing scalping because this really is a conversation about "trading chop" (your topic) and I would rather just be able to identify (define) chop and just avoid it as much as possible...its just price noise to me as shown in that chart example I found in a prior conversation about chop and I trade poorly in chop like that when caught in it.
 
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Back to the topic of chop and using that chart @ http://www.elitetrader.com/et/index.php?attachments/screen-shot-2013-08-13-at-8-38-35-pm-png.138424/ that I found in that other thread...

Although I avoid chop as much as possible, if I'm caught in chop...the past few years I have a great improvement in my trading of such mainly because I've realized that it leads into other types of price action that I trade well...there's a flow to it between trend, range and chop.

Chop can occur within trend continuation price action or chop can occur as a slow turning point as a trend reversal or chop can occur as slow turning points within range. Simply, there's a flow between trend, range and chop price actions.

In fact, that understanding of the flow reveals that chop itself has s/r levels along with eventually leading into a change in supply/demand until a breakout occurs. Thus, I don't have as much fear of chop with the above understanding but I would still rather avoid trading in it as much as possible.

The issue now is recognizing chop in real-time (as it is developing) versus hindsight chart analysis. There's clues for that too but it gets into other concepts I rather not discussed and can easily take this thread into another direction.
 
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wrbtrader said:
I didn't indicate scalping is profitable in all types of markets. I said I know traders that prefers to scalp these types of markets. Most are not profitable but they prefer to do it.

The primary reason why I don't scalp and instead prefer day trading is because I don't have a scalping system that involves special commission rates (those I know have seats on the exchange), automation (some have moved into algo trading), special trade execution platform, particular types of charts for scalpers using charts in comparison to those scalpers that don't use charts and so on.

I know too many traders that scalp unsuccessfully mainly because of the above...they just do not have the proper resources to do such properly...most don't even realize anything about the above resources when they decide to become a scalper or call themselves scalpers.

The above discussion is one reason why I tell people that trading successfully is more than just entry/exit signals...we gotta have the proper resources too and if we don't have the proper resources...best to stay away.

Anyways, don't want to sound like I'm bashing scalping because this really is a conversation about "trading chop" (your topic) and I would rather just be able to identify (define) chop and just avoid it as much as possible...its just price noise to me as shown in that chart example I found in a prior conversation about chop and I trade poorly in chop like that when caught in it.
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Excellent post. You're right, chop trading no matter how it is done is going to generate a lot more commissions than trend trading. That alone is reason to avoid it. So I'll be sticking to trading trends.

Thanks much for your inputs.
 
I'm in all the time hoping to catch a trend. So chop for me is Public Enemy #1. That coming from a trader who believes most of the time the market just chops. If I could figure out a way to make money in the chop all my problems would be solved. All my efforts are on how to survive a chop.

However, trading for the chop while putting on a trade can sometimes save me money, and then switching back to trend strategy once you have a full load on is a compromise. I don't want to say what that simple strategy is, because it is bad word and you get scolded if you use it, but it involves adding to positions you wouldn't otherwise be adding to if you were strictly trading for the trend.
 
kut2k2 said:
chop trading no matter how it is done is going to generate a lot more commissions than trend trading. That alone is reason to avoid it.
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That's a nonsensical reason. Like saying a 2-wheel vehicle is preferred because tire maintenance is halved. Using the chart of "chop" posted earlier, there were 2 visible 20 tic (at least) "zones". The real question is what do YOU consider a "scalp"? The purist definition is 1 to 3 tics. In MY world it's 2 to 8 tics. Now tell me, if you had a method that was able to convert a $5 bill into a $10 bill, why wouldn't you do it, at least when it's applicable and appropriate to do so? Yes, execution costs matter, but not deploying a proven strategy for the sole reason of cost is stupid. Of course, cost must be properly accounted for when determining the efficacy of the strat in the first place.
 
tiddlywinks said:
That's a nonsensical reason. Like saying a 2-wheel vehicle is preferred because tire maintenance is halved. Using the chart of "chop" posted earlier, there were 2 visible 20 tic (at least) "zones". The real question is what do YOU consider a "scalp"? The purist definition is 1 to 3 tics. In MY world it's 2 to 8 tics. Now tell me, if you had a method that was able to convert a $5 bill into a $10 bill, why wouldn't you do it, at least when it's applicable and appropriate to do so? Yes, execution costs matter, but not deploying a proven strategy for the sole reason of cost is stupid. Of course, cost must be properly accounted for when determining the efficacy of the strat in the first place.
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What proven strategy? You saying scalping is a proven strategy? Thatsounds pretty stupid, based on the previous exchanges. Me, I don't know scalping, but I do know stupid is investing in something that has two strikes against it before I even get started.
 
Yes, there are PROVEN scalping strategies, methods, and techniques. And you are too mentally tainted and biased to succeed at such. Don't waste your time.

Happy 4th!
 
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