Trading in choppy markets.

Does anyone use the ADX to filter out chop? How do you use it, what are your settings, and what are your results? Do you use an additional filter for chop?

I currently use it with a 15 period setting on all my charts; 1,3,5,30. It seems to work good but there are still times that I get whipsawed and when it happens I'm usually entering at or near the top of the move. I enter my position as soon as the ADX goes at or above 30. Testing to see if I should allow more bars above 30 to form before entering w/ out eating up too much of the move.

TIA
Whamo

DPSUTTS, I haven't found a way to break out the volume on Realtick. Try sending their support an email, they're very responsive.
 
Originally posted by DPSUTTS
Forgive my ignorance but...

all I get on my RealTick charts is Total Volume. Is it possible to obtain buying volume and selling volume as separate items?

I currently guess whether it's a buy or a sell by seeing if the price of the trade is closer to the bid or the ask price.

Thanks in advance.
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Well I don't use RealTick so I am not sure how it works. When I look at my tape I see the ticks in red, green, and black. The red ticks are called sales because they trade on the bid. The green ticks are called buys because they trade on the ask. The black ticks are trades in between the bid and ask.

I have posted some pictures of how my tape looks. The tape on the left shows some decent buying (notice the price jumps from 29.15 to 29.23 in around one minute with a lot of green). The tape on the right shows some decent selling (notice the price goes down from 29.21 to 29.11 in about one minute with a lot of red).

If my tape was showing this type of buying or selling at an S/R level I would use this as a good confirmation to enter the trade. It would tell me that the market was thinking how I was thinking. I like to have the market behind me to support my trades.:D :D :D

Like I said I don't use S/R too often so this is just an observation.
 

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Now here is a look at heavy volume. I look for heavy volume on my 2 minute chart. Notice how the 2 minute volume bars are flat until about 12:03. The stock was closing in on a 2 day resistance level. You would think that you would see decent selling at the resistance level. But what you see is very heavy buying. 2 minutes of heavy volume with a price jump up over the resistance level. This would be a good indication that the stock will move higher above the resistance level. It should be a good confirmation to get you into a trade while still at the start of the trend. If you would have entered the trade right above resistance level when you see the heavy buying you could have made .30 on this trade before there was any kind of significant pull back.
 

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Originally posted by DPSUTTS
Forgive my ignorance but...
all I get on my RealTick charts is Total Volume. Is it possible to obtain buying volume and selling volume as separate items?
More...

Wait... it sounds like you want to split the total volume seen on charts into two categories - buying and selling(?). Well, total volume is all there is. Each individual trade is a buy as well as a sell. If someone is buying, then someone is selling to them. So buying and selling volume is always the same.

Is this what you mean? Honestly... if you don't understand this you really shouldn't be trading right now. But good luck.
 
As William stated for every share sold there is a share bought
I guess its more like a pressure (supply & demand) you have to look to see which way the price moves the most to see the pressure. Emotions drive the price causing people to accumulate or distribute if they want in they will pay the ask if they want out they will sell at the bid.

Trading, Tape reading, TA, is a skill or an art that cant be completely taught but must be learned and interpretation in your own way Through your eyes (Everyone see's thing in there own way)

Trained eyes (not me yet) are able to see this clearly
 
Well its true every buy is also a sell but if the majority of the trades are going off at the ask its a pretty good indication that price is headed higher.
 
I can't believe that TS6 doesn't color code its T&S. Maybe TS7 will.

Whether a range trader or breakout trader, both are buying support and selling resistance. The resistance that the range trader is selling becomes the support that the breakout player is buying. Conversely, the support that the range trader is buying becomes the resistance that the breakout trader is shorting.

The beauty of choppy markets is they lead to trending markets. Having the patience and diligence to scan for choppiness/consolidation affords an excellent opportunity to pick up a trend at its beginning / continuation, thus negating the concern that you might be entering a trend at the end of the move.

All in all, whether a trend or range trader, the fact is...
 
Originally posted by inandlong

The beauty of choppy markets is they lead to trending markets. Having the patience and diligence to scan for choppiness/consolidation affords an excellent opportunity to pick up a trend at its beginning / continuation...
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This is a nice point, inandlong. Something worth keeping an eye out for.

So, TS6 doesn't color code T&S. Weird. Maybe you can play with the settings.
 
Originally posted by DPSUTTS
I currently guess whether it's a buy or a sell by seeing if the price of the trade is closer to the bid or the ask price.
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ANCHOR has two excellent posts with very good observations on page 4 of this thread. Anyone who has not read them should, and be sure to look at both of his attachments.

DPSUTTS

You are definitely on the right track with the type of observation you mention above. But, you must be very careful how you interpret what you see or sometimes even what you think you see. A trade at the bid is often just the opposite of a trade just above the bid. Trades just above the bid are often the Specialist or people in the crowd stepping ahead of the bid at the inside market to build inventory. The same is true for a MM being willing to pay just above the posted inside best bid (even his) to build inventory or fill a larger order (just the opposite for ask and just under ask)

In my opinion volume is not just volume.

Good Luck! :)
 
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