Thanks NoDoji for your earlier comments. I will definitely need to consider the higher time frame remark. Since we're on the subject of chop, I'd like to include a discussion on complex retracements. Pullbacks that don't really change the trend, but still scare the living daylights out of us .. ... How do we handle them ? The attached chart is the ES on 8/09. Entry number 3 is in the complex retracement, a short against previous support, now hopefully resistance. It was the 3rd pullback in the trend, so a bit higher risk. How would you have managed this ? Initial stop at stop 1 ? Move stop to stop 2 after some positive excursion ? Re-enter at short 4 ? Thanks, TZ.
Most traders seem to view the markets' price action as either "trend" or "chop". Some can trade one or the other fairly well but fail at the other... most likely because of their (apparently) hard-wired bias. Part of the art of trading is to recognize "either trend or chop" and trade both with some degree of effectiveness.... not commonly done, however.
Hi there, new to the forum and this is my first post. (Yay!) Anyway, I really enjoyed this thread, but I was wondering--early in the thread the screen shots included Volume activity at the bottom, but later people stopped including them. Are those who are posting not using Volume during their intraday trading? I would have thought it would be an added factor for determining entry and exit points... I'm pretty new to all this, so please excuse me if it's a silly question.
Obviously... some use volume and some don't. Read the posts by NoDoji and DbPhoenix and you'll be off to a good start (which probably puts me in the "no volume unless it's important"-camp ).
You were not chopped. You had a LL. Then a LH, then another LL. You took a counter trend trade for no good reason. Trend was down, no HH's were ever made. Your Problems: 1) You don't know what chop is. You got stopped out a bad trade. Chop is sideways range bound movement that is not wide enough to trade profitably. Brook's also talks about "barbed wire" pattern. Chop also occurs more frequently during non standard market hours where the market may be open for example, but where most traders are not in fact trading. 2) You were unable to recognize a short setup. 3) Even if you were waiting for a long setups only, you were not patient enough to wait for a real setup to occur which may occur in the future not shown in your chart. Also, if I was going to wait to be long, I would need to see a bull market over the longer time frame for example over a week.
Well, what other choices are there? Price is either running or puttsing around gathering strength to do what it will do. When price consolidates (chops) maybe it is wiser to NOT beat yourself up and "trade both with some degree of effectiveness". That is admitting you are tripping over yourself trying to make gold from fools gold. Yes, "not commonly done" is correct but must also be understood as "not commonly attempted". NoDoji, is helping others RECOGNIZE chop and how to stay out of trouble from it. A retrace is not chop, a retrace is a part of the trending process, chop is NOT part of the trending process. They are separate and not equal. Look at the picture like this: You are a breakout trend follower, you darn well understand the inevitable breakouts that fail and have your own set of safeguards how to handle them. With that in mind, why would ANY wise trader attempt to "trade both with some degree of effectiveness" ? Would that not get your signals crossed? Recognize chop as she wants you to do. Trade it at your own peril. To attempt both, well that is silly at best and goes against common sense. PS: The "20" is itself the best trendline on a chart, rather than trendlines why not just use THE TREND of the "20" as your guardian angel. Sure the "20" is always late, but being a bit late actually enhances the setups by giving them a bot more room to gather the strength to make the next leg of a trend..........that is the real purpose of consolidation. Listen to NoDoji, do not try to frontrun her. :eek:
Absolutely right. No trader on earth ever has, does now or ever be able to identify pending price action as directional or sideways. Everyone sees what it was in hindsight, and most failing traders keep themselves stuck in the hindsight rut of what they should/could have done. The reality is, consistent edges are created by repeated similar acts in the market. You can look for trading sideways or you can look for trading directional periods. But nobody can look for both AND figure out which will be what ahead of time. They will always have conflict, confusion, fear, hesitancy in mind... and break down of discipline will soon follow. Want to avoid sideways chop? Once the first 5-minute bar of any pit-session for trading (any stock, commodity, financial market/symbol) opens, apply the high-odds price measurement grid. Lean aggressively to the long side at/above top of open range. Lean aggressively to the short side at/below bottom of open range That simple, effortless, no-brainer price action study will ALWAYS show you the trend bias side of price for EVERY directional trend move
austinp............. HA!! You nailed it. The OPENING RANGE BREAKOUT METHOD. It can not be easier for a way to start the day. Whatever happened overnight, yesterday, last leap year, your ex's birthday all are MOX-NIX when using the ORB. Wait for the regular pit times to open, let that 5 min bar close. If price goes above the OR (opening range) you BUY, if below it you SELL. You set a target for each toy used and sit tight, your STOP can be the other side of the OR if mechanical or anything in between (including the borders) if using discretion STOPS. Picking "butt fuzz orders" might save a few ticks here and there but mechanical requires no thinking. The OR can be wide at times in CL (50 ticks +), but I have been tagged for that loss and have recovered. When picking fuzz, STOPS you can get in trouble. I hate trouble so keep to the boring side of trading. There are plenty of ways to get in trouble as it is. I do like to double up losers as a way to get half way back and be even to start over, ha, that requires knowing if we are in chop or a simple retrace move.........retraces are candy then. NoDoji is probably the only person I see on ET or anywhere else that can use the 1m chart as an adjunct to the 5m. She knows chop from slop. Aside from her, I would say almost everyone else is going to waste time in the 1m. PS: once you have hit a target using the ORB, you decide if momentum is suitable to reenter for another target or just leave well enough alone......that is when the ORB is done for the day and you revert back to regular TA signals. A sweet start is when 4 targets are hit right out of the gate. SIMPLE IS AS SIMPLE DOES. Whipsaws are handled from experience.......trading is never a breeze, but COOL, certainly...........