How Do You Deal with Choppiness?

My experience is that you do not know it until you are in it. Then you do not know what to do with it, getting in and out at the wrong times. Then when you finally decide to stay away from it, the big move takes off.

Any advice?

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Originally posted by jellob


My original idea is to trade only when the stock is trending and to sit tight when it is congesting. It will be great if the market stays trending or congesting for a period of time, like days or even weeks, but the market does not seem to operate that way.

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The nice thing about MP + 60 minute chart is on trend day's, they work together. For example, on a day that is in an uptrend all day, each new bar on the 60 min chart will be making new highs right along with each new MP bracket forming the trend day pattern. The charts confirm each other, thus no conflicting signals.

The problem of course is, most days are not trend days.

There are some basic clues from MP and other sources that give a reasonably early heads-up on the day type.

Looking at the longer term trend, spanning say 10 or 20 days. It is not uncommon for a trend to be comprised of a lot of range bound days (new value areas), connected together by a series of gaps or brief 1 or 2 bar directional moves. As this structure of value areas develops the 60 minute chart likes to form a channel with the 20 ema acting as a trendline. The objective here is to look for successful tests of the 20 ema as opportunities to build a position in the trend. For example, in an uptrend, new value areas will form above the rising 20 ema, often testing the ema intra-day then breaking out (or gapping up on the open) to form a new higher value area the next day...ect. This whole process is time consuming, thus it takes a lot of patience to ride one of these longer term trends.