Friday 22 January 2010

I Love Food but not Chop(s)

This is adding a little to today's earlier post and answer some questions.

I had a few people ask about avoiding chop and/or trading sideways markets. For me, it really isn't a problem because I use range bars. Yesterday was a pretty dead day. Kiki was never even close to getting into trouble, but she was very bored, and found it hard to keep her focus.

For me, the only untradable "trend" is when I don't have the expectation of reaching my first scale point. If I think this is the case, I'll pass on the trade. However, if it's clear that the first scale point should be reached then I'll take the trade because by the time price gets to T1, anything can happen and there may be more in the trade.

I give myself the chance of making money by being in the trade.

Sideways markets for me are when there is a clear horizontal channel around the 33EMA with the 99EMA almost superimposed on the 33EMA. I'll trade the channel using the VB and when the CCIs get overbought.

VWAP is something I did look at but that and the 33EMA are very similar and I prefer the 33EMA. If someone has VWAP but not MP then they could use VWAP with the 1st and 2nd Standard deviations  as VAH, VAL.

The CVD is a lagging indicator and I often trade against it. The risk is higher and I need to be confident that the VB and the CCIs support the trade and that the bar pattern does too. Newbie traders should leave this type of setup alone until they have a lot more screen time, as there are lots of nuances to discover to make it a successful trade.

4 comments:

  1. "Sideways markets for me are when there is a clear horizontal channel around the 33EMA with the 99EMA almost superimposed on the 33EMA."

    Which to begs the question: because your Keltner Channel is based on a 30EMA, why not just set it to 33 and have it's center line replace your 33EMA? The difference between the two is negligible.

    ReplyDelete
  2. Glenn, I've used those settings for ever. I don't use Keltner midpoint.

    ReplyDelete
  3. Hi Tom,

    Do you place entry orders above or below the signal bar? For example, if you're going short, would you place an order one tick below the close of the short signal bar? Or do you enter with a limit order and to get a better price?

    ReplyDelete