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the "Avoid Chop" Indicator?
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Created: by lov2rev Attachments:6

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the "Avoid Chop" Indicator?

  #21 (permalink)
Market Wizard
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ThatManFromTexas View Post
@lov2rev

The World according to ThatManFromTexas ....

1. You can not predict chop.

2. You will know you are in chop after you have a couple of losing trades.

3. When you realize you are in chop ... stop .

4. You will know you are out of chop when you miss the breakout.

5. Most chop filters filter out as many good trades as they do bad trades.

6. Learn to watch for price compression / decompression

I have to agree with this. Whilst it doesn't sound like it, an indicator that could accurately detect chop in a timely manner would be pretty close to the Holy Grail of trading.

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  #22 (permalink)
Hi Mom!
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Howdy

Howdy, @ThatManFromTexas,

I just stumbled across this thread as it was a feature article on the main page. I thought that your chart setup was pretty interesting but I have a question I hope you can answer. How do you employ the the two sets of bollinger bands? I am assuming that you try to wait for a trend and make your buys/sells as close to the center line as possible? Maybe I'm way off base on this but very interested to find out.

I apologize to the OP, as this post really has no relevance to your original question about finding a way to stay out of choppiness. I would have PM'ed this but I thought others may benefit from ThatManFromTexas' explanation. If he decides to answer that is!

TheShrike

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  #23 (permalink)
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goldfish View Post
ThatManFromTexas, with 2 Bollinger Bands, how to have the cloud in the middle Bollinger Band like your chart? Can I have a template of your chart?

Thanks

@goldfish

Sorry I took so long ... I am old and slow...

Import attached zip

Two indicators; EmaMult21ByThatManFromTexas.cs , BollingerEma2.cs

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
Attached Files
Register to download File Type: zip EmaMujltiBollinger4GoldFish.zip (10.1 KB, 293 views)
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  #24 (permalink)
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TheShrike View Post
Howdy, @ThatManFromTexas,

I just stumbled across this thread as it was a feature article on the main page. I thought that your chart setup was pretty interesting but I have a question I hope you can answer. How do you employ the the two sets of bollinger bands? I am assuming that you try to wait for a trend and make your buys/sells as close to the center line as possible? Maybe I'm way off base on this but very interested to find out.

I apologize to the OP, as this post really has no relevance to your original question about finding a way to stay out of choppiness. I would have PM'ed this but I thought others may benefit from ThatManFromTexas' explanation. If he decides to answer that is!

TheShrike

@TheShrike

When price bounces back and forth within the 1 deviation bands and both bollingers

show compression .... is a good signal for chop.

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #25 (permalink)
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ThatManFromTexas View Post
@goldfish

Sorry I took so long ... I am old and slow...

Import attached zip

Two indicators; EmaMult21ByThatManFromTexas.cs , BollingerEma2.cs

TMFT, thank you for getting back to me, I still can't figure out how to put the BollingerBand deviation 1 in the shaded color like your chart.

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  #26 (permalink)
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lov2rev View Post
Hi everyone, been enjoying all the incredible information available on this site and spent a while searching for any answers I need. Found them all! Except this:

Is there any indicator that anyone knows of that can just keep me out of a chop? I love trading the CL, and I find it to be very trending for my style of trading (10-15 tics). Still, there are moments in the day that I can give back all my profits because it starts chopping up.

Now I know with experience this becomes easier to spot, but I guess what I'm thinking of is a non lagging ADX. Something that can tell me very fast that we are most likely STARTING A TREND, or.. trending.. or, for me most important: starting to not trend in any direction.

Any advice, or pointing me in the direction would be incredibly appreciated.

Thanks all, happy trading!


-Dan
Price action is KING. Human psychology runs this thing. Price will generally run in 2 to 3 pushes on a 5 min CL chart. Brother, there are so many rules to learn about the instrument you are trading. Indicators are nice but Price action is really where its at. I watch a 5 min chart and a 60 min chart. Price is always searching for areas of balance. If you miss the break than not to worry because it generally will come back to test it. LET it break. Watch volume. Watch the candle as it forms. it will tell you who is in charge. Utulizing those S/R lines from the 60 is monumental.


Last edited by Patrick S; August 5th, 2012 at 08:06 PM. Reason: spelling
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  #27 (permalink)
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goldfish View Post
TMFT, thank you for getting back to me, I still can't figure out how to put the BollingerBand deviation 1 in the shaded color like your chart.

@goldfish

I don't understand what you are saying ....

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #28 (permalink)
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Learn the instrument High Energy times

What has helped me the most is knowing the time frame when my instrument of choice will likely be moving.
For example, ES reversal time tend to be around 9:50 - 10:10
11:30 - 12:30, 1:30 - 1:45 tend to be Doldrums - Trending mornings often end a trend during these periods. Trendless mornings may begin a move here.
3:30 PM -- I am looking for either end of day dump or end of day ramp depending on the market internals.

This kind observation really helps me my trading plan.

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  #29 (permalink)
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I tend to agree with the ones who suggest we should embrace chop rather than avoid it, simply because I've found that as a 2 trick pony (capable of trend trading & some variety of range trading + knowing when to switch) it's better over all for the bottom line.

One reason (it benefits the bottom line) may be that if we can trend trade we can range trade, hence trade most conditions, since IMO the only differences between trend and range trading are trend slope (if slope of price, momentum & cycle are averaging zero--voila--we're range trading) and possibly time frame (when the range compresses enough; i.e., narrows to the point we're scalping). The trick here is turning what we already know (i.e., when to exit a trade) into more of what we know--how to identify a (counter trade) setup.

Another reason may be that if the only tool one has is a hammer everything looks like a nail (i.e. when trading trends exclusively we have to evaluate pretty much every wiggle as a potential breakout), and as boredom and fatigue turn into frustration this leads to mistakes.

That said, there is nothing like scalping to forcibly remind us that while we may imagine we are in business for ourselves (rather than working for the broker) in the very least we pay to play.

As a case in point my morning trading session (spot EUR/USD in this case) comprised 80 scalps for a total of +73.3 pips (approx. 0.92 pips per scalp). Of this the broker took a total of 39.85 pips in commissions (approx. 0.50 pips per scalp) leaving me with 33.45 pips (or approx. 0.42 pips per scalp). In $$$ terms, for 2 contracts per trade each trade on average grossed $18.32 of which the broker took $9.92, leaving me with $8.40 net per trade. Not bad for 5 hours work compared to, say, getting paid minimum wage to slam my hand in a door, but not as good as the house did.

ETA: In hindsight the total pips captured in 80 trades is the same number as if I'd captured 100% of the main trend in a single trade and paid only ~ $9.92 commission total (and pocketed the other ~$790 instead of giving it to the broker). Choice to scalp today rather than try to spot trends because it's rare I capture 100% of a trend but more probably had a lot to do with compensating for only a few hours sleep last night by drinking 4 cups of coffee spiked with Maca--tends to get the juices flowing :-/


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Last edited by bnichols; August 10th, 2012 at 02:30 PM.
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  #30 (permalink)
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"my morning trading session (spot EUR/USD in this case) comprised 80 scalps for a total of +73.3 pips (approx. 0.92 pips per scalp)."


holy smokes. Did you melt the keyboard...? Your broker will be sending you a Christmas card this year. Nice job to end up in the green/black/profitable side of things

“Be who you are and say what you feel because those who mind don't matter and those who matter don't mind.” - Dr. Seuss
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