if you keep trying to trade the chop and you keep losing, it is probably a trend. And if you keep trying to trade the trend and you keep losing, it is probably a chop. You can still make money either way if you realize the error of your ways before it ends.
So I got off to a bad start by mislabeling the thread I meant chop or trend For the most part you can tell by how vertical price moves if it sustainable. At the same time isn't price doing the same thing (on smaller TF's) regardless of the plane it is on? So same strategies, different entry/exit parameters? Seems to me the difference in approach is: Jump in on smaller pullback's the more vertical price moves (with tight stops) And look to fade once volume dies Wait for pullbacks to the old range broken S/R or some mirror of the breakout distance back into that old range for sustainable trends With chop look to fade breaks of hi/lo's By the time I realize it's chop I've put on several bad trades. You could wait for break, retest, and follow thru before entering any trade but that will take away many opportunities
the anecdotal observation (not mathmatically time tested) is 80% of the time the market (any market) chops and 20% of the time it trends. That is just a rule of thumb (the same rule they devised back in Bible times to keep you from beating your child to death.) So you can look at it many ways, one way is to know that if you are betting on the trend, 80% of the time the trend will fizzle out. If you consistently bet on the chop, 20% of the time the trend willl wipe you out, and I mean in a serious way. Your question is a good one and one which should always be asked.
Old Floor methods? Narrow, low volume opening range for possible trend days. Wide, well traded, wide Initial balances for possible chop. What happened yesterday, 2 back. Stuff like that still seems to work ok.
I think it makes sense to observe the market multiple time frames to make this determination? Look in a smaller time frame and determine if the smaller time frame is trending, that would be a first clue that your trading time frame may also be moving into trending phase. Here's the idea... If the smaller time frame is showing clear signs of moving up (ie. higher highs / higher lows and consolidations either move higher or test back to prior consolidations and hold support and then move higher, its trending UP). If the smaller time frame behavior is such, then you can begin with an assumption/hypothesis that the time frame you are trading "could" be moving higher or into a trending phase higher. The next step would be to look at your trading time frame and a higher time frame to look for roadblocks to the smaller degree trend. If there is major resistance in these time frames, its likely that the smaller degree will not sustain its move. Whether it does or doesn't, you can take an objective look at these things and use the smaller time frame to set up entry and control risk and then see what happens on the larger time frame. Just my .02 (maybe .01).