Set-ups for Chop

Discussion in 'Strategy Development' started by abattia, Jun 15, 2010.

  1. I need to expand (or even start?) my "stable" of intraday set-ups for choppy days.

    Can anyone suggest any favorites?

    Any good books/references to get me started along the right track?

    As always, thanks in advance.
  2. OK, here’s a potential intraday strategy for a day that’s turned choppy …

    1. Once you have grounds to believe price may be chopping in a range, fade the range extremes by either
    a. waiting for indications of a retracement from a first re-test (but never from a second, or higher, re-test) of the range’s High or Low, or
    b. waiting for indications of a retracement from the establishment of a new High or Low for the range.

    2. Set TARGET in front of entry price @ + ATR(14 period, on 5-min chart) + commissions

    3. Set STOP behind entry price @ - {2 x ATR(14 period, on 5-min chart) - commissions}

    So, you need a win/loss ratio of at least 67% for the strategy to work over time (ignoring slippage).

    The key elements for success will be the trader’s skill at judging
    1. whether price is indeed chopping in a range,
    2. whether price is indeed retracing in 1(a) or 1(b) above.

    What do the “pro” scalpers think?

    BTW, I trade ETFs and some single company stocks intraday (mainly on an automated basis).

    But perhaps the above is agnostic in terms of the instruments it might work for?