What to do about a choppy market...

Discussion in 'Trading' started by jboydston, Aug 20, 2002.

  1. What are some strategies for trading when the market gets choppy?

    1.) Tighten stops

    2.) Loosen stops

    3.) Take losses and ride it out

    4.) Stop trading and attempt to identify the end of the consolidation.

    I have been following #3, but my patience grown thin... any ideas would be greatly appreciated.
  2. Quiet1


    use a choppy friendly trading strategy?

    a choppy friendly strategy might have payout features different from a typical 40-70% wins 3:1 to 1:1 win loss ratio...that most people target.

    why is no one interested in 10% winners 15:1 or 95% winners 1:8?

  3. I don't know about anyone else but I don't think my psyche can handle consistently having 9 losing trades in a row, sometimes with the odd 20, 30 or 40 trade losing streak.
  4. Rigel


    In a choppy market the only activity I can see is MM's faking trends and then goosing it fast in the opposite direction to capture the spread. Difficult, if not impossible IMO.
  5. In a choppy market, either stop trading or bend over and kiss your ass goodbye. This kind of market almost always results in losses (commissions and/or P&L).
  6. My trading plan performs poorly in choppy markets too... but how can you see the chop coming?

    I can't see chop coming any easier than I can see a top or bottom, that's why I follow a strict system.

    However CHOP (or consolidation could be another name for it) still is the weakest link in most trend following systems.

    Is there any way to avoid this? I've toyed with the idea of sitting out of the market any day following 2 positive trading days. Figuring it's time for consolidation...

    Any other ideas?
  7. To those of you who stop trading when the market gets choppy:

    How do you identify chop? On an intraday basis?

    When then do you resume trading?

    I have found that when trying to wait out the chop, I miss the breakouts.


    Are you guys saying that you stop trading in markets like these? Why?! This market is great for day trading. Up 200 points one day and down the next. "Up an down all day long." That is what an old friend of mine told me when I asked him the type of markets he like to trade in. "Up and down all day long." He did not speak very good english.

    Don't get scared and leave, shorten your stops and go after this beast! It's great!:D
  9. We might be missing each other here...

    Is it too general of me to describe choppy as "sideways trend?"

    I'm not saying what we have now is necessarily choppy. I meant for this thread to be hypothetical.