Help, I've been chopped!
- Thread starter NoDoji
- Start date
Use moving averages to filter from non trending environments.
If no trend, dont trade, because chances of chop increase.
If trend is up, buy low sell high.
If trend is down, short high cover low.
If wrong, take small loss, if right, ride the trend, this will allow you to get good R:R.
Dont add to being wrong, only when being right but small and gradually.
What is wrong with most is that people overtrade, particularly in non trending environments, or worse, dont believe in trends.
It not any harder than what I just said.
If no trend, dont trade, because chances of chop increase.
If trend is up, buy low sell high.
If trend is down, short high cover low.
If wrong, take small loss, if right, ride the trend, this will allow you to get good R:R.
Dont add to being wrong, only when being right but small and gradually.
What is wrong with most is that people overtrade, particularly in non trending environments, or worse, dont believe in trends.
It not any harder than what I just said.
I will answer this question but do not want to get away from the purpose of Nods thread.
When using the ORB method its main attraction is to capture the days "INITIAL" runner. It has been well documented that on many days the HIGH and/or LOW price is printed early. There is not a trader out there that has not missed a one-way-trend day and wondered why they missed it. Been there, done that.
I have had a copy of a older book that describes his take on the opening range breakout, it was first printed in 1990 (sorry marketsurfer and others that say the mkts are always changing and yesterdays signals are useless today). The book is called: Day Trading with short term price patterns and opening range breakout by Tony Crabel.
When I bought that book years ago, I knew it was outdated but still had a nugget or two. The one nugget that will always be a part of everyday until the sun burns out is "there will always be an ORB trade". What better way to start the day to get the juices flowing than catching the start of those pretty in pink one-way-trend runners?
How many times have we witnessed the pit times open and get a "head fake" small pop that reverses before our very eyes just before we were to book an initial profit and it prints what is proven later to be the H/L of the day? Then price travels through the OR and proceeds to run what ends up as the days entire range?
We must strive to capture at least one-half of every single days RTH range, it is easier when we herd price like cattle. Remember, we are not out collecting as many ticks per contract, we are out to herd a certain amount and increase the size of the herd by adding cars..........chasing an ever higher amount of ticks per toy is an exercise in frustration.
Well, a method had to come along to solve that problem. Thanks Tony, you got me to never forget the ORB. many ways to tweak it but that comes with experience and not from a book. Ideas come from books, implementation of the ideas comes from the gray matter between the ears.
So, no, it is not about scalping, but indeed it is not a sure way to catch a trend day.........it is a start. As Donna would say: set profit targets and bite off chunks as you go. Momentum laced with what the "20" is doing will guide you.
Personally, I drop the ORB either after a target is booked or maybe 2 stops are tagged-- one for each side, if a second STOP is tagged, I must revert to damage control, HA!! Once a target is taken you will reenter for another target but have an eye toward a reversal signal if the second target does not come easy. Do not be scared away with a normal retrace either..........retraces are better than girlfriends (at my age), they are EXCELLENT spots to do ADD_ON for a continuation of the previous trend.
Adding to a loser to get back to even is a tactic, not a strategy. trading is really not so cut and dried that being cute now and then does not pay off.
you sure you read the book?...it's Toby Crabel
fwiw...anyone interested in reading it can find it on the net for free if you're too cheap to buy it...I personally don't think it's worth the exorbitant price others try to sell it for...nothing breath-taking, kinda old, but Toby was ahead of his time
Toby, tony, tootsie whatever, lol
The point is that the simple uncomplicated basic stuff is what gets the job done.
I believe one reason trading is so hard for new boys/girls is because they over complicate the whole process.
I did not recommend the book, and indeed I did say it is older. I would not even sell it to anyone, but I will eventually give it to someone for free. I paid maybe $40, I forgot. These days everything anyone wants to learn about trading futures is on Google. How to actually trade what they learn is still individual sport.
Passing a couple nuggets to others is really not necessary but lets put it this way. Why not?
The best way to learn is to LISTEN to others and then try with live ammo, if still standing, move on to the next chapter in the learning curve. Always be positive because it is no easy task to get to the cherry tree. OK, done, this is Nod's thread, not mine...
Expensive toys are not needed when basic stuff can be used properly........... http://www.youtube.com/watch?v=6RdrYt1eFGk
The point is that the simple uncomplicated basic stuff is what gets the job done.
I believe one reason trading is so hard for new boys/girls is because they over complicate the whole process.
I did not recommend the book, and indeed I did say it is older. I would not even sell it to anyone, but I will eventually give it to someone for free. I paid maybe $40, I forgot. These days everything anyone wants to learn about trading futures is on Google. How to actually trade what they learn is still individual sport.
Passing a couple nuggets to others is really not necessary but lets put it this way. Why not?
The best way to learn is to LISTEN to others and then try with live ammo, if still standing, move on to the next chapter in the learning curve. Always be positive because it is no easy task to get to the cherry tree. OK, done, this is Nod's thread, not mine...
Expensive toys are not needed when basic stuff can be used properly........... http://www.youtube.com/watch?v=6RdrYt1eFGk
It's very common for new traders, or traders that don't have a trend following strategy to get caught up in chop and quickly lose a day's worth of profits in very short order. As a trader becomes more familiar with the market, one can determine when chop will likely begin and choose to exit the market, or even better, not enter the market during that time. One positive aspect of chop is that times of low volatility in the market typically leads to times of high volatility, which gives the astute trader with a solid stratgy plenty of opportunity to capitalize on the move!
How do you remember these things. This is classic.
"That gun shoots straight..."
And this is part of the answer. Draw a straight line and keep it simple.
"Surrendering to simplicity, it is fair to say, does not come natural to the human mind... And it is a journey that must be traveled alone."
-Bob Volman "Forex Price Action Scalping"
-Al
Yesterday afternoon, I spent some time revisiting the ORB. I set up a spreadsheet, added several columns for info I wanted to review, and manually recorded price action.
I've only captured 19 data points so far (yeah, I'm kinda slow), but the patterns that are beginning to emerge are interesting. For example, price movement after large gap openings is not what I expected. More data is needed however.
Did I find this small sample size to be profitable so far? Yes.
So how do we bring the ORB idea back to the topic of CHOP?
Here's what Toby (aka "Tony") Crabel says...
"In general the earlier in the session the entry is taken the better the chances for success. In fact, the ideal is an entry within the first ten minutes of the session. In that case an immediate continuation in the direction of the breakout is likely."
So, if you can book profits derived from an edge generated from price action continuation (ORB), maybe it will avoid the chop which may or MAY NOT come latter in the session.
Just something to think about...
-Al
I've only captured 19 data points so far (yeah, I'm kinda slow), but the patterns that are beginning to emerge are interesting. For example, price movement after large gap openings is not what I expected. More data is needed however.
Did I find this small sample size to be profitable so far? Yes.
So how do we bring the ORB idea back to the topic of CHOP?
Here's what Toby (aka "Tony") Crabel says...
"In general the earlier in the session the entry is taken the better the chances for success. In fact, the ideal is an entry within the first ten minutes of the session. In that case an immediate continuation in the direction of the breakout is likely."
So, if you can book profits derived from an edge generated from price action continuation (ORB), maybe it will avoid the chop which may or MAY NOT come latter in the session.
Just something to think about...
-Al
The ORB is a tactic for just that...........opening range breakout. It is a tool used to capture the days "initial" run out of the gate.
Lets say as an example price "chops" around for about an hour and fails to take off. You are in whipsaw territory and will need to adjust tactics. Switch to the "first hour breakout rule" if you think the range has a chance to expand. Regular TA takes over after you conclude the ORB is done. Switching gears during the day is basically the stock-in-trade for day traders. I use 4 ORB instruments for now, they are (subject to change depending on volatility) GC, CL, ES more cars than the other 3) and ZB.
If you believe you're in "CHOP" I would definitely call Donna because that is where she shines and knows what it takes to play in that sandbox.
NoDoji will keep you out of trouble when in chop when she returns and takes her thread back.
Lets say as an example price "chops" around for about an hour and fails to take off. You are in whipsaw territory and will need to adjust tactics. Switch to the "first hour breakout rule" if you think the range has a chance to expand. Regular TA takes over after you conclude the ORB is done. Switching gears during the day is basically the stock-in-trade for day traders. I use 4 ORB instruments for now, they are (subject to change depending on volatility) GC, CL, ES more cars than the other 3) and ZB.
If you believe you're in "CHOP" I would definitely call Donna because that is where she shines and knows what it takes to play in that sandbox.
NoDoji will keep you out of trouble when in chop when she returns and takes her thread back.
Anyone trading crude oil today was kept out of trouble if they followed the Chop Protection Plan:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=277421&perpage=10&pagenumber=2
http://www.elitetrader.com/vb/showthread.php?s=&threadid=277421&perpage=10&pagenumber=2