How to know trend or chop in REAL time

[dbphoenix]

I think what's really being asked is ''how do you know when price is about to start chopping aorund?''. (answer: I don't know. I don't think anyone does)
I mean, you can identify chop in realtime with your eyes, and when you see that moves either way seem unsustainable and longs and shorts are all being stopped out and price isn't going anywhere.
The problem is that this information is inevitably too late to act upon.
Once you realise you are in 'chop', you've already been stopped out a few times.
Even worse, once you have identified 'chop' you decide to stay out, and that's when you miss the big move! Or you decide 'Right, we're in chop. I'm gonna short move up and buy moves down. Bollinger band style trading'', and that's when it makes the trend move and you are stopped yet again

Again, it depends on the plan. With mine, you're stopped out twice. That's it. This is, of course, assuming that one is entering the chop at all. If one is already in the trade, then there's a different management question: at what point do I exit the trade rather than ride it out? Again, this is a question answered by the plan. Everyone knows that traders take a breather during trend days before continuations. But it's up to the trader to determine what behaviors signal a range/consolidation and which signal a reversal. If the trader exits for some reason, he is then in a position of re-entering the trade as he would any other range. But, yet again, this is a question answered by the plan. If, for example, the trader doesn't know what a range is, he won't be able to recognize it. If he can't/doesn't recognize it, he won't be able to take advantage of a breakout from it.

There is no mystery here. It's just a matter of study, data collection, analysis, testing, implementation, none of which most traders bother with.

 

[Gringo]

Everyone knows that traders take a breather during trend days before continuations.

Everyone equals not everyone.

 

[wrbtrader]

...I haven't seen any "guru" ever show this (e.g. how to know chop or trend in REAL time) with any high accuracy (more like 50%/50% the best ), even those supposed to be the "famous" or legend one.

Anyone has something to share ?

You can show in real-time if the price action is "currently" a trend or chop or range or low volatility or high volatility or whatever with high accuracy.

Yet, there's no guarantee that such will continue and I think that's what you meant to say in that nobody (doesn't matter if guru or not) can guarantee that such will continue as such with high accuracy after its been identified in real-time. For example, its easy to say XYZ is in a trend at this very moment along with providing verification of such. The issue is 5mins from now, 15mins from now, 1hour from now, one day later from now or one week later from now...there's no guarantee that it will still be in a trend.

That's the reality of trading. For example, as soon as a trend trader identifies a trend and then if he/she gets a trade signal in that trend...there's no guarantee that the price action will continue trending. That's where the trade management (after entry) becomes important..a trading plan. You need a trading plan from entry to exit of what to do if the price action continues to trend after your trend entry and a trading plan from entry to exit of what to do if it chops after your trend entry...most traders don't have the latter when they should because its equally important.

Simply, if you prefer to trade trend...you need to also be able to recognize chop when it shows up and have a trading plan for managing your trade in that chop. Just as important, if you prefer to trade chop...you need to also be able to recognize trend when it shows up and have a trading plan for managing your trade in that trend.

Map out your trade (how you're going to react to different types of price action that shows up after your trade entry) prior to trade entry. Most don't do such because they are consumed with entries into a trade that they forget or underestimate everything else...resulting in not knowing what to do after they enter a trade.

 

[dbphoenix]

Everyone equals not everyone.

True. One first has to know what a consolidation is and what it looks like.

Should have said "experienced traders" know . . .

 

[loyek590]

Again, it depends on the plan. With mine, you're stopped out twice. That's it. This is, of course, assuming that one is entering the chop at all. If one is already in the trade, then there's a different management question: at what point do I exit the trade rather than ride it out? Again, this is a question answered by the plan. Everyone knows that traders take a breather during trend days before continuations. But it's up to the trader to determine what behaviors signal a range/consolidation and which signal a reversal. If the trader exits for some reason, he is then in a position of re-entering the trade as he would any other range. But, yet again, this is a question answered by the plan. If, for example, the trader doesn't know what a range is, he won't be able to recognize it. If he can't/doesn't recognize it, he won't be able to take advantage of a breakout from it.

There is no mystery here. It's just a matter of study, data collection, analysis, testing, implementation, none of which most traders bother with.

wow! so that's the secret we have all been looking for. "Stopped out twice." Well there you go young blades, take it from an expert. "stopped out twice, move on, get flat, lick your losing tail." Shit man, I wish I had somebody like you to tell me the magic formula when I was starting out. So that's it? Get stopped out not once but twice? And move on. And that is the secret?

 

[dbphoenix]

You can show in real-time if the price action is "currently" a trend or chop or range or low volatility or high volatility or whatever with high accuracy.

Yet, there's no guarantee that such will continue and I think that's what you meant to say in that nobody (doesn't matter if guru or not) can guarantee that such will continue as such with high accuracy after its been identified in real-time. For example, its easy to say XYZ is in a trend at this very moment along with providing verification of such. The issue is 5mins from now, 15mins from now, 1hour from now, one day later from now or one week later from now...there's no guarantee that it will still be in a trend.

That's the reality of trading. For example, as soon as a trend trader identifies a trend and then if he/she gets a trade signal in that trend...there's no guarantee that the price action will continue trending. That's where the trade management (after entry) becomes important..a trading plan. You need a trading plan of what to do if the price action continues to trend after your trend entry and a trading plan of what to do if it chops after your trend entry...most traders don't have the latter when they should because its equally important.

Simply, if you prefer to trade trend...you need to also be able to recognize chop when it shows up and have a trading plan for managing your trade in that chop. Just as important, if you prefer to trade chop...you need to also be able to recognize trend when it shows up and have a trading plan for managing your trade in that trend.

Map out your trade (how you're going to react to different types of price action that shows up after your trade entry) prior to trade entry. Most don't do such because they are consumed with entries into a trade that they forget or underestimate everything else...resulting in not knowing what to do after they enter a trade.

This is where a thread such as this bumps up against the probability issue (see game's probability thread). A very great many traders can't wrap their heads around the fact that each moment in the market is unique with the concept that one can nonetheless anticipate moves with an acceptable level of probability ("significance"). This is at the core of Auction Market Theory.

IOW, one can look at a particular level, such as an all-time high, and anticipate with X degree of certainty that price will reverse there -- or continue -- but not be able to say with 100% certainty that it will due to the fact that each moment is unique.

But rather than try to puzzle this out at some sort of metaphysical level, one can simply plan for either occurrence and trade accordingly. This takes only a fraction of the thought, though it does -- as Mark points out -- require planning.

 

[Gringo]

wow! so that's the secret we have all been looking for. "Stopped out twice." Well there you go young blades, take it from an expert. "stopped out twice, move on, get flat, lick your losing tail."

There is no secret. This is one man's rule. Others may prefer some other criteria for stopping out. Maybe a statistical measure or volatility measure or something else. Those looking at price alone must make decisions based on price behaviour.

Shit man, I wish I had somebody like you to tell me the magic formula when I was starting out. So that's it? Get stopped out not once but twice? And move on. And that is the secret?

Please define what "and move on" means. One person may define it as quitting for the day (assuming an intra-day trader). Another may think of taking a break based on some time parameter. Yet another may choose to wait for price to leave the trading range being formed before re-engaging the market. The devil's in the details - and so are the profits.

 

[loyek590]

otherwise, I really like galvinlee

This is where a thread such as this bumps up against the probability issue (see game's probability thread). A very great many traders can't wrap their heads around the fact that each moment in the market is unique with the concept that one can nonetheless anticipate moves with an acceptable level of probability ("significance"). This is at the core of Auction Market Theory.

IOW, one can look at a particular level, such as an all-time high, and anticipate with X degree of certainty that price will reverse there -- or continue -- but not be able to say with 100% certainty that it will due to the fact that each moment is unique.

But rather than try to puzzle this out at some sort of metaphysical level, one can simply plan for either occurrence and trade accordingly. This takes only a fraction of the thought, though it does -- as Mark points out -- require planning.

yes, I totally agree. I started out on the roulette wheel in Tahoe when Ross Perot and EDS forced me to take a vacation at their condo even though I repeatedly told them they didn't pay me enough even to pay the gas for the trip.

 

[loyek590]

There is no secret. This is one man's rule. Others may prefer some other criteria for stopping out. Maybe a statistical measure or volatility measure or something else. Those looking at price alone must make decisions based on price behaviour.



Please define what "and move on" means. One person may define it as quitting for the day (assuming an intra-day trader). Another may think of taking a break based on some time parameter. Yet another may choose to wait for price to leave the trading range being formed before re-engaging the market. The devil's in the details - and so are the profits.

ok, I like this reply, so the question is "stopping out"?

 

[loyek590]

There is no secret. This is one man's rule. Others may prefer some other criteria for stopping out. Maybe a statistical measure or volatility measure or something else. Those looking at price alone must make decisions based on price behaviour.



Please define what "and move on" means. One person may define it as quitting for the day (assuming an intra-day trader). Another may think of taking a break based on some time parameter. Yet another may choose to wait for price to leave the trading range being formed before re-engaging the market. The devil's in the details - and so are the profits.

"and move on" means you bought a lot of bullshit and there is nobody to sell it to but losers on ET