emini - choppy or trend determination

Discussion in 'Index Futures' started by esu2, Sep 14, 2002.

  1. esu2


    In both the 1 and 5 min emini sp
    charts, I am finding great setups
    the price action is trendless.

    What do you use to determine
    whether the mkt is in choppy or trend mode?
  2. tampa


    You could try looking at the chart - in my experience, prices go up in an up trend, down in a down trend.

    A smart-ass answer? Yes, and no. Over and over again on this board people try to make trading something it isn't. They try to find magic indicators to tell them what to do - and over and over again they fail.

    Trading is little more than common sense.

    My guess is that you are looking for some kind of an indicator that will allow you to in essence pick tops and bottoms - so that you can get in early, to follow the trend to fabulous wealth and riches. Well, it ain't gonna happen. Because there is no such animal. The best that you can do is to train your eye and mind to spot what is really going on, and then act accordingly.

    The market will always tell you what it is doing - an indicator can only tell you what it has done in the past.
  3. Magna

    Magna Administrator

    Priceless, tampa, priceless. I think I've found the Holy Grail. :)
  4. nitro



    I hear you - bring up a spoo chart. Look at how even in a "trend," there are coils galore trying to shake you out.

    I am beginning to belive that the best way to learn to trade spoo is to become a bull rider. To make it truly educational tho, you need to play that game with a slight modification.

    The idea would be, you would get on top of a 1 ton raging bull, with it's balls tied very tight by a rope. But instead of seeing how long you can stay on [not get shaken] you also have to ride the bull to a prescribed spot on the ring [riding the trend.] If you fall off you lose. Notice that there is no way to control a raging bull to any particular spot, if you get to the prescribed spot you get there because the momentum of the bull took it there - so in a way, you don't really win when the bull gets to the spot miraculously, you just don't lose. The bull REALLY doesn't like you on it's back, and it is pissed as hell and would trample you in a second. The question is, how long are you gonna stay on before it happens to get to that spot?

    There is no real way to know that you are in a trend until you look at it in hindsight. The closest you can get is to take a derivative type indicator that will give you positive or negative momentum, but geez, just looking at the price itself will give you that!

    Throw away all of your indicators except for S/R levels. Then, start to see how the spoos react around those levels. Form a hypotheses, then act on it and hold on for the ride. Get off the bull if the pain threshold has been reached...

  5. Ditch


    You can count on it to be in chopping mode more than 90% of the time, so adapt your strategy accordingly.
  6. esu2



    I am not looking for top bottom indicators,
    just want to determine the Mode (choppy or trendy) of the mkt.

    My strategy here is to scalp about 2pts
    risking 1 pt on a one min emini sp chart
    when it is channeling. I would sell at the channel
    tops and sell at the channel bottoms.

    The question is again.. how do you all
    identify when a mkt is choppy?

    You could look at the longer period 5 min
    chart trend.. or you could use longer moving avgs.

    On 9/11 between 12 and 3 est time (see attach charts), the
    mkt was in a truly choppy mode which was ideal for this method.
    After 3 est, it broke to a downward trend.

  7. esep, Nitro describes the current mkt very well. Lately, before it goes anywhere, it tries to buck and kick any trader off who tries to ride it.

    Moving averages do an excellent job of rating the trend. If you are not familiar with moving average crossover systems they are widely followed and much written about. But very simply, the strategy is to go long when the fast ma crossses above the slow ma, and go short when the fast ma crosses below the slow ma.

    Almost all trend following systems are based on the ma crossover logic. It is to trend systems what 5 card draw is to all the other poker games.

    So, getting back to your question, you can just simply look at any 2 moving averages and figure out how many times you would have got whipsawed trading the system to give you a quick idea of how strong the current trend is.

    Or for that matter, just find a moving average that works for you and your time frame and see how many times prices cross above and below it. Each cross represents another vote for a choppy mkt.

    There are many other indicators used the same way. I'm sure you realize that this is not necessarily predictive, but it does give you an idea of how things have been going.

    But, I am curious about your setups. What setups are you using that look good, but apparently don't work unless the mkt trends?
    Because offhand, I can't think of anything except maybe candle sticks that would do this to you.

    (Also, the Boy Scouts just take a stick and if they can lay it across three lower highs or 3 higher lows, rub it against the chart until it breaks out in a trend.)
  8. sorry esep, I missed your post. Oh well, maybe somebody will find something in my primer on discovering trends to disagree with me on.

    Yeah, I get it now. You are looking for a warning sign that the market is about to trend. lol!

    As far as chop indicators go

    I've had a small measure of success with bb by removing (at least mentally) the price and following the relation between the bands and the ma. But not enough to come up with anything more than anecdotal stuff.

    The idea is to watch when the upper band takes out an old high of the ma or even an old high of the lower band. But the whole thing is extremely volatile and a 1 pt stop will get blown out so fast you won't even have time wonder what the heck you were thinking.

    Another chop indicator is to set up n channels and trade bb tags which occur when the bands are almost directly in the middle of the channel, far away from the edges.

    But a trend indicator? You gotta be kidding? If you are looking for some indicator that chopping prices are about to trend, you are looking for the same thing that almost everybody who hasn't given up trading and has decided to just trade the chop is looking for!
  9. to make it more clear, If the ma can't take out a low by the upper band, or a high by the lower band, I would be hesitant to try to trade the chop.

    also, if a tag occurs near a price channel, that would to me represent possible increased risk in fading.

    another one is dmi crossovers that occur near price channels.

    But I am talking about n channels, not trend channels.

    but generally speaking, with 1pt or less stops, I think it is foolhardy to fade anything. anything at all.

    a lot of the fading I did in the past was because I wasn't thinking right.

    you would think betting the market won't trend is a high percentage bet, but it has never worked over time for me personally.

    Man it's a good thing they don't charge rent for space around here, cause I have just wasted a lot of it trying to say nothing because I didn't understand the question in the first place but I didn't want to admit that I really have nothing to offer on the subject so I just tried to keep talking until maybe by accident something would come out which would make me look smart.

  10. theres a indicator called "ADX". livechart did not have it. it is used by linda raschke and so. imo it can pretty mark the END of a consolidation period by dropping under a critical level. raschke is calling this "low low adx" situation. her site is down in the moment, but is worth a trip anyway.

    if you trade on 1min + 5min another piont is to study the daily charts to get some feel for what could happening on the session...will this be a trend day ? or a zigzag-day ?...in the end you just need to take a few years to train your eye and - the most important part - make yourself a believer in the patter/setup you trade...this is no game for a non-believer :)
    #10     Sep 14, 2002