Identifying Choppy Days

[Soultrader 12]

Theres a couple methods to anticipate a choppy day. This is not 100% exact but gives me a good heads up. If you have pit noise this will help. The lower the pit noise, the likely the lack of interest. Hence a choppy market.

 

Also consecutive trend days happen on rare occasions. You can expect a market to take a breather after a trend. Fridays (Sept. 29) action was after 3 consecutive higher value placements. Usually indicates a choppy market.

 

Look at the opening half hour range as well. If the range is less than 20-25 points on the YM, expect a choppy market. Always better to sit tight and play the pullback of the breakout of the range.

 

The %TREND also helps. Try doing a search in the forum... there is a formula to obtain it.

 

Also notice the volume on Friday. If you are familiar with the average volume on the YM, we had significantly low volume. This also indicates a choppy market.

 

Remember, being flat is a part of trading. Alot of traders I know did not trade on Friday. They thought I was crazy to be trading that day. There will be days when its simply a bad idea to trade. Identifying days of no opportunity and good opportunity will be key to longevity.

[Follow The Trend 10]

Sometimes we just need to say "Im not trading today" if the market is looking too choppy, or there is nothing to trade.

 

Quite a few of my friends dont open new positions on a Friday, and are more likely to close a position. The reason is because so much can happen over the weekend, and you wont normally be able to trade until the Monday.

[Soultrader 12]

Hi FTT,

 

How do you determine to stay out of trading? It would be nice to hear about other traders methods on identifying a day with no opportunities. Would you decide before the markets open or do you watch the first 30-60 minutes of trading and decide that today will be choppy? Thanks

[Follow The Trend 10]

Soultrader

 

The first hour of trading very often determines the trend for the day, although major announcements can change this.

 

It is strange, but you often get a feel for market trends yourself, and whether the market may be due a small pull back, etc. The higher a market goes, the more cautious I get, because at some point the profit takers will come in.

 

I like to keep a very close eye on key graph points, as they can alert you to possible tricky days.

[Trade Up 10]

Spotting the days when not to trade is as important to a successful trader, as spotting the next 10 bagger.

 

While we can all make small turns here and there, it only takes one bad investment on a "choppy" day to undo all of our good work - I know this from past expriences!!

 

Knowing when to trade is something that comes with experience, although it can take years to get a real feel for the "market".

[Soultrader 12]

I literally spent hours and hundreds of days staring at price and tape until my eyes hurt. At first I didn't understand anything. But I figured I could forcefully brainwash myself to understand price action.

 

Eventually I did manage to understand it and somehow get a "feel" of price. During my early days, I met an intraday trader who seemed to know the short term market direction all the time. I was so impressed by the way he was able to look at price and determine market direction. He used no indicators. Just price and tape and seemed to know whether the market was going to lift of fall.

 

This motivated me since I thought his method of analysis was pure. I realized that by gaining skills to interpret price action and tape, this method will never get old or replaced. Hence, the key to longevity.

 

One of the key wisdom he taught me was: "The only surpise is for the trend to continue. If the trend in the morning is strong to the upside, expect a continuation of the trend in the afternoon." This simple wisdom has helped me save thousands of dollar as well as make thousands. Watching him trade was a true honor.