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How to determine the current type of market environment?
I realise this may be a very naive question and also potentially quite broad.
What do you look for to determine the current type of market environment (choppy / trending / mean reversion)?
I guess it could be PA, different indicators and time frames, does anyone have any go to 'principles' to help determine with a high probability of being correct?
Thanks
Can you help answer these questions from other members on NexusFi?
An important question from the "ask any question" thread. Probably there are as many ways to gauge the current state of the market as there are traders.
The more who chime in, the better -- how do you approach this issue?
Bob.
When one door closes, another opens.
-- Cervantes, Don Quixote
I'll start this off to give context and to help give ideas.
To determine if the market is in a trend, and filter out long/short trades, I'll put a 100 SMA on the timeframe above the one I use for entries.
For example, if I use the 1 min time frame for entries, I'll put a 100 SMA on the 5 min time frame. If the SMA is up, I wait for an entry signal (pullback to a tested MA) for a long entry, and vice versa for a short.
