Choppy, sideways markets
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Bit of a long shot I know, but does anyone have a component of an EA that can indicate when a market is entering a volatile, choppy and sideways phase. It would be great to avoid opening trades during these periods!
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There's lots of options... ADX is sort of designed to find trends.
Another nice option is to move to a higher timeframe and using RSI.
M30 market is usually choppy when D1 RSI is in 45-55 area.Eurusd seems to have a choppy nature most of the time - I'd just design my whole system to take advantage of the sideways moves, and limit risk when market enters to a stable trend.
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@sirboyce you should dig in deeper in "volume indicators", like roar said adx helps but there are more out there
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@roar i hate the whipsaw of eurusd lol its the worst for my system. But at the same time also a benchmark for me to see how well i can filter trades
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Generally, when the price is trading inside the previous' day range, it's a choppy market. You could set up your EA to trade only when the price is above or below yesterday's daily candle
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A little late here on a reply but thought I'd chime in. FX Moves in Ranges, and breaks out of the ranges for trends until it then again moves in ranges.
The following happens 95% of the time with this in mind.
At the top of a trend - or any time after you have had 1 pull back and a continuation.
If there's no prior pullback and a failure you've simply found a subsequent turn and the prior slow should be tested.
If there's a pullback and a continuation.. that pullback provides precedent for the next pullback. The next pull back will be almost the same in pips (magnitude) if it's greater than that, you are going into a range bound move. (95%) of the time. Do not trade until it breaks the extreme high, or the low of the most recent pullback.
If the second pullback is the same in pip magnitude, you're going to have a continuation.
The reason for this is volume and distribution. It stays the same and that's why prices move in diagonals and not round turns (most of the time +/- 97% of the time. When you have a larger pullback, sentiment is changing and volume on the weaker side is absolutely getting stronger just as the dominant side is fading.
I'm building a group of blocks to identify this with FXDreema. It's already in a Custom Indicator but I'd be glad to help along the way.
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@pan4pips I'm intrigued by your view on this. It's price action but I like your statistics.
If you have time, can you break apart what you said.
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Ranges (then) Trend (then) Ranges = 95% of the time. Is that what you see. I'm guess the other 5% is Ranges (then) Trend (then)Trend. No time for a range to form?
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"1 pullback and a continuation." This is the definition of a trend but I'm not sure what you're referring to.
3."If there's no prior pullback and a failure you've simply found a subsequent turn (95% probability of a reversal??) and the prior slow (I'm guessing LOW after reading it multiple times) should be tested (breakout on the reversal with previous LOW as a point of interest??)"
It sounds like the 1-2-3 strategy. Where #2 is the recent low or high and the distance between the #1-#2 is equidistant to the next continuation. With a stop loss at the opposite low or high (#3).
If you wish to know my trading style, look up TRO and visit him on the Kreslik forums. BambinoFlex is my other internet handle as well as my Gamer Tag.
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@titangeorge said in Choppy, sideways markets:
@pan4pips I'm intrigued by your view on this. It's price action but I like your statistics.
If you have time, can you break apart what you said.
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Ranges (then) Trend (then) Ranges = 95% of the time. Is that what you see. I'm guess the other 5% is Ranges (then) Trend (then)Trend. No time for a range to form?
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"1 pullback and a continuation." This is the definition of a trend but I'm not sure what you're referring to.
3."If there's no prior pullback and a failure you've simply found a subsequent turn (95% probability of a reversal??) and the prior slow (I'm guessing LOW after reading it multiple times) should be tested (breakout on the reversal with previous LOW as a point of interest??)"
It sounds like the 1-2-3 strategy. Where #2 is the recent low or high and the distance between the #1-#2 is equidistant to the next continuation. With a stop loss at the opposite low or high (#3).
Only 5 % of the time, will a secondary pullback that is smaller in magnitude than the first, lead to a change in direction. The 1-2-3 only happens when the second pull back is larger than any previous. Like clockwork!
When after a climb and series of pullbacks you see a pull back that is larger than the rest of the pullbacks in the climb. That by magnitude alone gives you the range bound move. Don't trade until it's broken the high, or after the pullback finds support... dont trade till it breaks that low.
I use aggregated volume so I have the benefit of seeing what volume's doing but in price action alone it turns the trending trades off without chop involved. - the ol' "I knew it would do that" syndrome.
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@pan4pips I sort of understand. I trade using RENKO, pull backs are easier for me to see but I don't 100% understand you
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This is actually a good strategy! Price tends to breakout of previous lows and highs a good percentage of the time.
Where did you learn/observe this?
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Alright pan, I digested your information. I like it. If I'm able to find a way to calculate pullbacks and use that number for continuation trades, then I'll PM you.
Two parts to this...Create a logic tree that detects a pullback and another on that detects a greater than previous pullbacks...I have an idea. Currently I'm using objects to show low and high. I can get the distance between this and compare with current data.
Overall, I'm pleased with your information and thank you for it.
