Identifying chop

A

Ansare

At times I have a blind spot about this. I mean, how hard is it to see sidways action? What I find, though is that while in the middle of things I get too "close" to the chart and somehow fail to see what should be quite clear. The old "forest from the trees" syndrome.

I need to develop a reliable and mechanical method and wonder what you guys and ladies have come up with. Thanks in advance for any ideas.

Ansare
 
OK, either I asked the stupidest question this month, or one of the hardest. Please say so if it IS the former and I'll work harder knowing there is apparently a very good answer easily available.
 
Not a stupid question at all imo. It took me a while to realize that trying to trade during a choppy market negates my edge. I look at a time frame 3-5 times longer than the one I use to enter my trades to get a better picture if there is a trend or not. Sometimes I switch over to sim trading to get a feel for the market before risking actual money.
 
Quote from Boss302:

Not a stupid question at all imo. It took me a while to realize that trying to trade during a choppy market negates my edge. I look at a time frame 3-5 times longer than the one I use to enter my trades to get a better picture if there is a trend or not. Sometimes I switch over to sim trading to get a feel for the market before risking actual money. [/QUOTE

I do need to more regularly check the longer time frames.

Your second suggestion sounds intriguing and I never would have thought of it. Thanks very much.

Ansare
More...
 
Actually, it's one of the hardest questions to have a good answer to, and one which you will have to discover for yourself.

Using multiple time frames is one way of doing it, using a confluence of time frames will generally work better than just one, IMHO.

Good Lucik.
 
consider using market profile.

analyzing the first hour's range is a good indication of whether or not the day will be choppy.

good luck to you :)
 
Quote from Ansare:

At times I have a blind spot about this. I mean, how hard is it to see sidways action? What I find, though is that while in the middle of things I get too "close" to the chart and somehow fail to see what should be quite clear. The old "forest from the trees" syndrome.

I need to develop a reliable and mechanical method and wonder what you guys and ladies have come up with. Thanks in advance for any ideas.

Ansare
More...

Ansare,

If you find that you're over analyzing the price action and try to still execute trades when the market is sideways, than set up some rules to prevent this from happening.

Also, make sure you have a complete definition for sideways action, that way, when it occures you'll be able to identify it immediately. If necessary, mark-up your charts on a daily basis (to include, labeling s/r, breakouts, narrow ranges, pullbacks, et cetera). This will help you identify different types of price action and overall you'll get better at identifying different scenario's to include sideways price action.

In the beginning, this has helped me tremendously with spotting the price action. From then on, it was a matter of having the discipline not to trade when the conditions weren't favorable.

Good luck and I wish you the best in your trading!!!
 
Quote from stock777:

Chop is what happens just before they shake you out of your winning trade.
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Yeah but you know you can't let the noise (chop) force you out of your trade. Especially a winning trade, you have to force yourself to be disciplined and sit thru the noise by managing the trade properly.
 
Quote from Awash:

Ansare,

If you find that you're over analyzing the price action and try to still execute trades when the market is sideways, than set up some rules to prevent this from happening.

Also, make sure you have a complete definition for sideways action, that way, when it occures you'll be able to identify it immediately. If necessary, mark-up your charts on a daily basis (to include, labeling s/r, breakouts, narrow ranges, pullbacks, et cetera). This will help you identify different types of price action and overall you'll get better at identifying different scenario's to include sideways price action.

In the beginning, this has helped me tremendously with spotting the price action. From then on, it was a matter of having the discipline not to trade when the conditions weren't favorable.

Good luck and I wish you the best in your trading!!!
More...

Thanks, Awash, really appreciate the response. You make a great deal of sense and I plan on taking your suggestions.

I wish you the best in your trading as well.

Ansare
 
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