My ass
=============
Contextualize it
Fade the extremes
And shorten up the PTs
RN
How do you avoid choppy markets?
- Thread starter Golden Retriever Trading
- Start date
My ass
=============
Contextualize it
Fade the extremes
And shorten up the PTs
RN
As Dr Brooks mentioned, you should not trade a barb wire formation. Also, 1 min charts are just noise, so if you keep getting chopped in a lower time frame as some posters noted, you need to be trading on a higher time frame.
Now what I am about to talk about is how to manage a bad trade instead of just taking a loss in for example a choppy market.
In this chart, all entries can be seen by a blue arrow. The 1st trade I did earlier in the day on a lower time frame was good. The chart is shown in a higher time than I normally use just for easier reference.
Now the 2nd trade, I expected price to go higher and break resistance, but I jumped in close to the resistance level because I was feeling angry about a previous trade on a different future that got stopped out. However, I made a mistake in my favor for that trade since it turned out that other future I was in sim mode since I actually was not planning on trading more for the day.
As noted, I got in near resistance and trade went against me right away. So as we approached the support level, I added another contract. I then set my 1st target to BE, which was hit. Now I was looking to add another contract back on if price went lower and I now set target back up at the resistance level which was hit. However, in hindsight we see that my previous theory that we were in an upward trend and not chop was correct as price did in fact break resistance and go higher however I had no more contracts in this trade to take advantage of it. Hopefully, in the future I will be able to trade this setup much better to get more profit.
Now even if the resistance was not broken, if the market was choppy, we still are able to manage this trade to take a profit instead of just getting stopped out on a bad entry. This does not mean you should always just average down on a trade. However, be aware that markets trend, chop, range, and are sometimes random. If you realize you are trading against a trending market, yes just take the stop. However, if you believe you are in a chop or range market, you might be able to manage the trade.
Now what I am about to talk about is how to manage a bad trade instead of just taking a loss in for example a choppy market.
In this chart, all entries can be seen by a blue arrow. The 1st trade I did earlier in the day on a lower time frame was good. The chart is shown in a higher time than I normally use just for easier reference.
Now the 2nd trade, I expected price to go higher and break resistance, but I jumped in close to the resistance level because I was feeling angry about a previous trade on a different future that got stopped out. However, I made a mistake in my favor for that trade since it turned out that other future I was in sim mode since I actually was not planning on trading more for the day.
As noted, I got in near resistance and trade went against me right away. So as we approached the support level, I added another contract. I then set my 1st target to BE, which was hit. Now I was looking to add another contract back on if price went lower and I now set target back up at the resistance level which was hit. However, in hindsight we see that my previous theory that we were in an upward trend and not chop was correct as price did in fact break resistance and go higher however I had no more contracts in this trade to take advantage of it. Hopefully, in the future I will be able to trade this setup much better to get more profit.
Now even if the resistance was not broken, if the market was choppy, we still are able to manage this trade to take a profit instead of just getting stopped out on a bad entry. This does not mean you should always just average down on a trade. However, be aware that markets trend, chop, range, and are sometimes random. If you realize you are trading against a trending market, yes just take the stop. However, if you believe you are in a chop or range market, you might be able to manage the trade.
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That looks like a recipe for trading the chop. Which still doesn't answer the question: how to avoid chop.
What hasn't been pointed out heretofore is that trading chop and avoiding chop both have the same prerequisite: finding the chop, or knowing when you're in the chop. That's the hardest part. If and when one can distinguish between chop and non-chop, then one can decide whether to exploit chop or to avoid it. But let's not minimize that first step .... it's a doozy.
Constantly think about 2 -- the two sides of the market that are constantly fighting each other
It's kind of more profound then it may seem.
Yeaaaaa we have balloons...
I designed method to trade ES/Nasdaq to 50% trade chop and out of chop comes trend-other 50%. So when you learn to adapt and trade both you might be able to have balloons too. Here is the secret, assign a trend even when you are in chop.
Yeaaaaaa we have balloons....
%%
Well all data, liquid markets help some
Help avoid whipsaw????? SOME; But Not Much.
GR;I call those sideways= slop= chop= trends-my least favorite trend, but i still consider it a trend[slop chop trend].
Having a good written idea-plan of a profit,[ like a moving average] , or loss helps more,[ than trying to avoid some least favorite trend[ that is not our favorite trend.] In other words Its profit or loss; wisdom is profitable to direct. ==========================================
Got to learn to think of it all as chop with trend, so if the market is going up no matter how slight, trade Longs using the chop.
Tight SLs are your enemy, loosen or remove, reduce your trade size, average in to a position until your trend is no longer valid, then exit.
How many times has whipsaw hit your SL and 5mins later you'd be in profit? Occasional big losses are imho better than many small SL hits which soon add up.
Tight SLs are your enemy, loosen or remove, reduce your trade size, average in to a position until your trend is no longer valid, then exit.
How many times has whipsaw hit your SL and 5mins later you'd be in profit? Occasional big losses are imho better than many small SL hits which soon add up.
What about turning the question on its head: When do you want to trade a market/instrument, and when do you not want to trade it?
When you find an answer to the first question, the second gives itself, though researching the second can help answer the first
Point is, your tactic / strategy will not work all the time, so you need a filter, not necessarily a filter to when not to trade, but a filter to when your trade plan is not invalidated by the market yet (always remember, we really don't know). It'll leave some opportunities on the table. There are an abundance of opportunities anyway, though might involve even more homework.
In other parts of your life, are you prone to wagering, betting and indiscriminately throw money around 24/7?
Then why should trading be different?
Of course, risk management may also help, either to include the noise or to fade it.
I've been working, when to and when not to trade for well 10years I guess, I can't see a way to pick good times and I've tried hard, market never as easy as that 
I stick to some direction bias and that's enough, sideways could break out either side, but if heading higher even slightly odds are that momo will grow and you'll make good $$'s, just give up on trying to lock in the bottom or out with a tight SL, just not possible ever.
I stick to some direction bias and that's enough, sideways could break out either side, but if heading higher even slightly odds are that momo will grow and you'll make good $$'s, just give up on trying to lock in the bottom or out with a tight SL, just not possible ever.
Choppy market occurs when you bet up. market goes down. You bet down, market goes up.
What more do you need to know???
What more do you need to know???
Barbed wire as Brooks defines it, as a tight trading range on the ES of 1-2 points, often during the noon hour, is extremely uncommon now that automated trading programs have taken over the futures markets post-2008. Sometimes the ES can start extreme HFT-based trending moves which recent price action suggests is unlikely during the 12:00 EST hour.
You can't say 1 minute charts are just noise and think 5 minute charts are meaningful. Brooks says every tick means something on the ES. 1 minute charts do have some information, but it's impossible to trade them without some form of automation, because often the big moves on the 1 minute chart are at the 1-30 second timeframe, this is where Brooks' dangerous claims of the ES being tradable for discretionary traders on such low timeframes raise alarm and concern.
For example, on Wednesday 3-23 at 10:30 EST there was a 15 minute buy signal on the ES suggesting a gap fill to 2042 or atleast a test of 2040 was a high probability. On the 1 minute chart the ES moved 5 points to make the high of the day, probably in under 30 seconds due to HFT. Any discretionary traders who bought near the highs of that HFT move would be forced to sell out at signifigant loss with a stop below that 1 minute bar or scale in even lower into what could be a new downtrend, increasing their risk:reward and risk of ruin. The market moved to 2031.50 in the next few minutes before testing 2036 and selling off to 2025. It's not noise, it just can be traded profitably and consistently by point-and-click traders while having any favorable risk:reward.