If trend following, can money management save you in chop?

Whether I am scalping the ES or doing long term trading the Dow 30, I use the same methods with the exception of not having a defined target for long term stocks. And I only use yearly, monthly and weekly bar charts for long term.

I define trends as having a bias to start as soon as I get in. Now we all have trades where after we get in, chop starts. My money management rules will get me out fairly soon after my entry if Price has not gone in my prefered direction. I use time stops, # bar stops and movement stops, since I often average down on my trades, even a breakeven trade, exiting at original entry is overall winner. I see no point in staying with ANY trade soon after my entry if it is just stagnating as per my backtesting results.

There are a number of ways to stay out of chop and number of ways to make money in chop. Taking a 9 EMA, if the EMA is flat and cutting thru middle of bars certainly addresses chop. Lunch for ES is one of my favorite times to trade of buying lows and selling highs, looking for congestion. But once a 20 EMA has a defined slope, you can see it from other side of room (or see higher lows/higher highs), then wait for retracements for entry.
 
Quote from RCG Trader:

swag, bookmark this.

Study it.

It will help you.
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I'm amazed anyone posted here intraday. Today was a completely crazy day.
As a case study, what I do is 75-80% trend trading, and today I got an early signal down and was absolutely biting my lip right through at around 2PM. But the trends I follow were all pointing down, so I had to stick with it.
Sweetness from then on.
I think I lost at least a week off my life today though. Sheesh.
 
Investopedia:
What Does Trend Trading Mean?

A trading strategy that attempts to capture gains through the analysis of an asset's momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in a down trend (successively lower highs).

This strategy assumes that the present direction of the stock will continue into the future. It can be used by short-, intermediate- or long-term traders. Regardless of their chosen time frame, traders will remain in their position until they believe the trend has reversed - but reversal may occur at different times for each time frame.
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the simplest thing to do is switch to an instrument that's finished its 'chop' - correction
one searches for instruments about to or just beginning a new trend

using terms such as chop, noise, even sideways are imo unhelpful. they all refer to
corrections, and corrections have to be paid attention to in order to understand the
current and future trend
one expects every trend to have corrections, that is within the major trend there
will be corrections that separate interim, sub, minor trends within the major, so
one basic strategy could be to be alert to a correction occurring, liquidate one's
position then buy back in once the correction has completed, and this applies to
any timeframe being traded
whether or not corrections are traded is based on the trader's skills, but is it worth
the effort trading the correction or profitable v trading a different instrument
 
Quote from Wallace:

the simplest thing to do is switch to an instrument that's finished its 'chop' - correction
one searches for instruments about to or just beginning a new trend

using terms such as chop, noise, even sideways are imo unhelpful. they all refer to
corrections, and corrections have to be paid attention to in order to understand the
current and future trend
one expects every trend to have corrections, that is within the major trend there
will be corrections that separate interim, sub, minor trends within the major, so
one basic strategy could be to be alert to a correction occurring, liquidate one's
position then buy back in once the correction has completed, and this applies to
any timeframe being traded
whether or not corrections are traded is based on the trader's skills, but is it worth
the effort trading the correction or profitable v trading a different instrument
More...

I do something similar

I spot a trending instrument that's currently consolidating and when it finally escapes in the direction of the prevailing trend, I take my chances.

FoN
 
Quote from intradaybill:

You people stop please using "trend following" and "daytrading" in the same sentence.

No intraday movement can be considered a true trend.

The morons that taught you that crap did that for giving you the false impression of doing something valuable instead of noise trading.

If you daytrading, you are a noise trader whether you trade patterns or trends, period.

Trend following means days, weeks, months, even years. Please do not insult trend following. A daytrader is a noise trader and nothing else. Any trends you see in intraday data are random, where any trends you see in daily data are due to fundamental factors and momentum, they are the non-random part of the data series. You cannot catch random trends with any non-random indicators. You will be ruined at the end.
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days, weeks, months and years??? You trade that noise crap?? Heck I have positions that were put on by my great great grandfather and have been passed down through the generations. Which reminds me, the bar on my hundred year chart is about finished, time to start a new one. So, what's a chop? It doesn't show up on century charts.
 
From Alan Crary:
Just finished an analysis of the SP market. For the analysis I used the SP data from 1989 - 2001. Here's my results:

The data from 1min. resolution per-bar through 30min. resolution per-bar is primarily in a trending mode. If planning on building a trend following system or intraday breakout, then these are the bar intervals I'd review.

The data from 60min. resolution per-bar through 1 week resolution per-bar is primarily in a contra-trend mode. If planning on developing reversal systems, then these are the lengths I'd consider.

The monthly data reverts back to trending mode, so if you need something to time long term investments (like mutual fund infusions), then this is the interval I'd use.(ex. 200 day MA).

The data itself proved to be remarkably stable within the time frames. For example, the 30 min. bars had good trends in 11 of the 13 years. Likewise, the 60 min. bars had good contra-trends also in 11 of the 13 years.

I did this analysis to get ready to build a really good daytrading system. Since daytrading is primarily concerned with the shorter bars, I'll have to look to building a system with the 1-30 min. bars using either a breakout or outright trending idea.
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Do the exact opposite of what makes sense. In the chop you get stopped out a lot so the logical thing to do is widen stops. Do the opposite. You are going to lose money in the chop no matter what, so tighten your stops, really tight and lose less.

This bullshit that there's no intraday trend is baffling. Everyone talks about an up day or a down day. When it's trending you definitely know if you're on the right side or wrong side. The day trend is probably stronger than the long term trend in that it has none or very few corrections.

A position may start and end in a day, but after being on the right side the first day, you may decide to hold for many days.

When it starts trending again widen your stops quickly so you don't get stopped out of a good move.

Messing around with size to combat chop is IMHO a very very bad idea.
 
If I was to hand you a pile of charts, some of them 5 min and some of them daily and they had no information on them, just candlesticks, I doubt you could accurately separate them into the proper category. (other than the 5 min may have stronger smoother trends.)
 
Quote from oldtime:

Do the exact opposite of what makes sense. In the chop you get stopped out a lot so the logical thing to do is widen stops. Do the opposite. You are going to lose money in the chop no matter what, so tighten your stops, really tight and lose less.

This bullshit that there's no intraday trend is baffling. Everyone talks about an up day or a down day. When it's trending you definitely know if you're on the right side or wrong side. The day trend is probably stronger than the long term trend in that it has none or very few corrections.

A position may start and end in a day, but after being on the right side the first day, you may decide to hold for many days.

When it starts trending again widen your stops quickly so you don't get stopped out of a good move.

Messing around with size to combat chop is IMHO a very very bad idea.
More...

+1
 
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