If trend following, can money management save you in chop?

Discussion in 'Risk Management' started by swag, Nov 15, 2011.

  1. Handle123

    Handle123

    Whether I am scalping the ES or doing long term trading the Dow 30, I use the same methods with the exception of not having a defined target for long term stocks. And I only use yearly, monthly and weekly bar charts for long term.

    I define trends as having a bias to start as soon as I get in. Now we all have trades where after we get in, chop starts. My money management rules will get me out fairly soon after my entry if Price has not gone in my prefered direction. I use time stops, # bar stops and movement stops, since I often average down on my trades, even a breakeven trade, exiting at original entry is overall winner. I see no point in staying with ANY trade soon after my entry if it is just stagnating as per my backtesting results.

    There are a number of ways to stay out of chop and number of ways to make money in chop. Taking a 9 EMA, if the EMA is flat and cutting thru middle of bars certainly addresses chop. Lunch for ES is one of my favorite times to trade of buying lows and selling highs, looking for congestion. But once a 20 EMA has a defined slope, you can see it from other side of room (or see higher lows/higher highs), then wait for retracements for entry.
     
    #21     Nov 16, 2011
    beginner66 likes this.
  2. I'm amazed anyone posted here intraday. Today was a completely crazy day.
    As a case study, what I do is 75-80% trend trading, and today I got an early signal down and was absolutely biting my lip right through at around 2PM. But the trends I follow were all pointing down, so I had to stick with it.
    Sweetness from then on.
    I think I lost at least a week off my life today though. Sheesh.
     
    #22     Nov 16, 2011
  3. baro-san

    baro-san

    Investopedia:
     
    #23     Nov 16, 2011
  4. the simplest thing to do is switch to an instrument that's finished its 'chop' - correction
    one searches for instruments about to or just beginning a new trend

    using terms such as chop, noise, even sideways are imo unhelpful. they all refer to
    corrections, and corrections have to be paid attention to in order to understand the
    current and future trend
    one expects every trend to have corrections, that is within the major trend there
    will be corrections that separate interim, sub, minor trends within the major, so
    one basic strategy could be to be alert to a correction occurring, liquidate one's
    position then buy back in once the correction has completed, and this applies to
    any timeframe being traded
    whether or not corrections are traded is based on the trader's skills, but is it worth
    the effort trading the correction or profitable v trading a different instrument
     
    #24     Nov 16, 2011
  5. I do something similar

    I spot a trending instrument that's currently consolidating and when it finally escapes in the direction of the prevailing trend, I take my chances.

    FoN
     
    #25     Nov 16, 2011
  6. days, weeks, months and years??? You trade that noise crap?? Heck I have positions that were put on by my great great grandfather and have been passed down through the generations. Which reminds me, the bar on my hundred year chart is about finished, time to start a new one. So, what's a chop? It doesn't show up on century charts.
     
    #26     Nov 16, 2011
  7. baro-san

    baro-san

    From Alan Crary:
     
    #27     Nov 16, 2011
  8. Do the exact opposite of what makes sense. In the chop you get stopped out a lot so the logical thing to do is widen stops. Do the opposite. You are going to lose money in the chop no matter what, so tighten your stops, really tight and lose less.

    This bullshit that there's no intraday trend is baffling. Everyone talks about an up day or a down day. When it's trending you definitely know if you're on the right side or wrong side. The day trend is probably stronger than the long term trend in that it has none or very few corrections.

    A position may start and end in a day, but after being on the right side the first day, you may decide to hold for many days.

    When it starts trending again widen your stops quickly so you don't get stopped out of a good move.

    Messing around with size to combat chop is IMHO a very very bad idea.
     
    #28     Nov 16, 2011
  9. If I was to hand you a pile of charts, some of them 5 min and some of them daily and they had no information on them, just candlesticks, I doubt you could accurately separate them into the proper category. (other than the 5 min may have stronger smoother trends.)
     
    #29     Nov 16, 2011
  10. apage

    apage Guest

    +1
     
    #30     Nov 16, 2011