Subscribe Feed (RSS)Choppy conditions
March 28th, 2008 by eyal | Filed under Day Trading. |
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I haven’t been trading for the last 2 days due to sickness. I’m getting better now so might be back to work today. From what I could see there was a lot of chop, especially yesterday. That’s typical after a few strong trending days in the overall market as we’ve had earlier in the week. This got me thinking about coming up with some rules to either keep away from such choppy market conditions or at the very least scale down my size or limit the number of trades I take. I have a bad tendency to press harder trying to find trades that will work when encountering choppy conditions. I think it stems from feeling that if I catch just 1 or 2 good trades then that will help avoid ending the day with a loss. I’ll be looking at my trading journal and past data to see whether I can identify any evidence backed insights.
I have the same problem. I think it comes from the old saying, “When the going gets tough, the tough get going.” Plus, I enjoy a challenge. However I don’t enjoy losing money. The one thing I do that alerts me to choppy conditions is divide the number of advancing issues by decling at 10:00EST. If this number is between .4 and .8, I consider the market to be sideways, or without direction. I’m thinking about cutting my position size in half on these choppier days.
I started a little blog finally. I didn’t realize it was completely free with blogspot. I’m using Paint and Bigcharts right now so don’t expect mindblowing charts :)
Rick, that’s an interesting idea. I look at Adv/Dec at the start of the day but haven’t looked at a computed ratio or anything like that. I’ll check that out.