Is there an indicator to predict choppy versus trending markets?


Steve,
Hope all is well.  Been struggling with something in my trading and thought I’d send you a quick email to see if you had an indicator that could help me out.  I’ve been using TW, your ashi’s, etc to take some great trades, but I’ve been giving a good portion of my profits back in periods of consolidation or when the market is sideways.  I’ve used Bollinger Bands inside Keltner Channels in the past of a means of staying out of these time periods with mixed results.  Do you have anything you’ve used in the past to stay out of the chop?

Thanks,
Dustin

Hello Dustin,
There’s not an indicator in the world which accurately predicts trendy and choppy markets. If there was, we would all be rich as we would trade bounces off bollinger bands during choppy times and trade breakouts during trendy moves. The best thing to do is use a strategy that is best for each market condition. If you are seeing lots of chop, then trade a chop strategy. If your true aim is to get the trendy moves, then make sure you start trading only when the markets are already in vertical directional moves, and you are trading during hours which are most conducive to trendy moves. For example, don’t trade the Asian session looking for trendy moves. If I am specifically targeting trendy moves, I will trade the London session and first three hours of NY only. Any trades outside of these hours looking for trendy moves is asking for trouble. Best bet is wait for a trendy move to already be started, wait for a pull back, then jump in. Don’t expect trendy moves from choppy markets. Hope this helps.

regards,
Steven Michael Matrix

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2 Comments to “ Is there an indicator to predict choppy versus trending markets? ”



  • John Applewood

    thanks Steven

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  • Peter Dweller

    Excellent; Thanks Steven!

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