Discussion in 'Trading' started by abattia, Dec 1, 2009.
What's your "favorite" way to determine quickly whether the market is choppy or trending?
Eye-ball your charts.
Isn't that always going to be a bit too "after-the-fact" to be useful; i.e. it tells you that the market WAS trending, or WAS choppy, but doesn't give you any hints about what it might be about to do now (when you are trying to decide whether to go forward with a trending, versus a choppy, set up) ...
If you could predict future "trend vs. chop" ie. future volatility that's VERY tradeable information. Therefore it's hard to get.
"The future might look like the recent past" is somewhat helpful. That's what looking at charts boils down to.
Where I am heading is I've read that clues regarding potential future "choppy-or-trending" action can be identified from ...
... how the market is reacting around pivot levels, or
... E-mini volume at 10:00 am EST, or
Has anyone looked at any of these, or anything else, and "had a good experience" with them?
You will trade better if you forget about everything but identifying support and resistance. Chop can "trend" and trend can "chop." What counts is where they last were and where they want to go now.
If you plot the up volume on the NYSE versus the down volume as two separate lines and do the same for the Nasdaq, you will see on choppy days that the lines continuously diverge and converge ocassionally touching each other, crossing, and interweaving. On trending days one line stays above the other and the lines tend to diverge as the day wears on.
Naturally there is no certainty that a trending day won't morph into chop, though that is fairly rare, or a choppy day won't morph into a trend -- happens fairly often after 2pm EST.
Looking at the price chart is as good a way as any however.
All indicators based on time price and volume lag actual order execution, unless you can intercept orders on the way to being executed.
Thanks piezoe (and Bolimono, and The_Big_D) ...
I am wondering if there is any precedence here.
(a) The market that has continued to uptrend.
(b) Volume has continued to downtrend.
(c) Recently we are repeatedly vacillating with 50-point NQ swings every couple of days or so.
Perhaps someone can shed light, from a technical perspective, on whether or not this can be known as:
1. ADX breaking above 20 (from below)
2. Alligator indicator resolves
3. Guppy moving averages expand
4. 20 day frqequency distribution on a spreadsheet, rearranged in decending order, thus making a straight line from a choppy one and approximates one month's support and resistance. Breaking S or R suggests trendiness.
5. Break from a narrow 20 day ATR.
6. Bollinger width expands.
Volume? LOL The only volume that counts is your own (but it does satisfy the primal need of safety in numbers). Naturally, since there's another side to a trade, that volume represents order flow and either a aquired or dispensed inventory to the ax. His agenda is generally going to determine IF there's a "trend".
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