How to Avoid Getting Whipsawed in Chop?

Discussion in 'Risk Management' started by macattack, Dec 13, 2012.

  1. Lucrum

    Lucrum

    What time frame(s) are you looking at?
     
    #71     Mar 2, 2013
  2. kut2k2

    kut2k2

    Deleted
     
    #72     Mar 2, 2013
    lawrence-lugar likes this.
  3. Zyker

    Zyker

    I would go further in stating (as boldly as I dare): It does not matter, and one should not care as long as the trading plan is followed with meticulous care. Even if one has a sound system - a fact that should have been verified before ever participating in the game - he/she should be prepared for periods of sub-par performance. It just happens.

    By tweaking the trading methodology parameters (such as time frame) you essentially just change the stochastic process generating the return series, i.e. HOW the returns occur as trade outcomes. During the course of years I have found that, without exception, these tweaks always involve a tradeoff. You simply cannot change "this one thing" without affecting others. For example, while moving to a higher time frame does help keeping you out of the chop, it ensures that you will be late when the next big move begins. Now which is better - to avoid chop or be early in a trend? It basically depends on your mental makeup.

    As a consequence of this, my advice would be to familiarise how each such "obvious" tweak affects the performance of the system. This enables you to better tolerate drawdown periods and choose the tweaks that help you sleep better as you then understand the tradeoffs you commit to.
     
    #73     Mar 3, 2013
  4. Daring

    Daring

    +1 :)
     
    #74     Mar 3, 2013
  5. Hahahaha, I did the same exact thing today into which it developed a large H&S pattern. Gave back most of my profits I made in CL and TF.
     
    #75     Oct 6, 2015