Xelite is saying, don't trade until price is above 20/50. His way to avoid initiating a trade into (current) chop. You are saying, since nobody knows whats going to happen next, getting into chop is unavoidable. You both are stating parts from the "chop" faq manual. Inter weave what you both said with a few other bits and pcs and you have a complete answer.
On the other hand, some new monitors have auto rotate image when tilted (like on smartphones) With that feature not even tilting the screen gets you out of sideways... and then you are totally screwed :eek: I guess you could always lie sideways on your desk LMAO
All I am saying Tonkadad is that the trader has a much higher chance of finding REAL breakouts in a trending market than in a choppy, going-nowhere market. For example a symmetrical triangle has more chance to break to the upside than to the downside if the price at that moment is also above the 20 and 50 periods moving averages. We are just playing the odds here. And this is what trading is all about, looking for (and entering) trades with a high probability of success and ignoring the weak ones.
There are dozens and dozens of different types of "breakout" price actions. Which ones is the OP specifically having problems with I strongly believe that folks here that trades them profitably or not profitably are trading different types in comparison to each other along with application to different trading instruments in comparison to each other. Also, I think it was either tw2 forum or traderslaboratory forum where someone documented the different types of breakout price actions and he/she posted several types of chart examples for each. May be worth looking for those message posts for those interested in trading breakout price actions so that he/she can properly document trading results. If you don't know what type of breakout you're trading or you're not able to define the different types of breakout price actions...may be best to leave them alone especially if you plan on doing some sort'uv statistical analysis about them.
Don't believe everything that's in a book (or because it's in a book). Test it yourself. Oh, and yes, you can always find a period where almost any system comes out profitable for a while. Like if you need to make a point in a book. To the OP (buwa84): Always without exception do your own research. If you want ideas for testing or further research you can use the ET "search" button. Threads like "Help, I've been chopped!" (NoDoji) are well worth reading. There are no shortcuts. So far I think the most valuable advice posted in this thread was by RedNeck. A good laugh is always welcome .
re: Original Topic I think the overall consensus is that you can reduce it by only trading during trending states but it cannot be avoided as a whole. It's also important to mention that most furious breakouts initiate from periods of consolidation which raises the question, is consolidation and chop the same thing?
Well, did you test it, or even read the book? Nonsense. There are mathematical ways to determine if a trading system has a real predictive power or if the results are just due to the sample itself ( the chi square test being one of them). In other words, pure luck.
Your response tells me you didn't test it. The example you refer to was tested by the author over 11 months in 1997 with a total of 274 trades. Take that same system and slide the test window forward (and backward) in time to retain the 11 months and see what you get (make sure to extend the testing period to something like 10+ years in total). Just because you happen to have a period of profitability does not mean that the metrics you use to validate that period are of any use whatsoever. Not when you've curve fitted the system to a period in time (or to a market, or to a basket of instruments, or ... ). May I suggest Evidence-Based Technical Analysis: Applying the Scientific Method and Statistical Inference to Trading Signals and The Evaluation and Optimization of Trading Strategies as an introduction to testing. Then you have to do the work, of course.