Orange Belt
is it true that most trading methods work well in a trending market and fail in a choppy market??
Brown Belt
Everyone's a winner in a trending market...of course, assuming you have identified it and are trading with it. Chop requires a skill in evaluating where your buyers and sellers are so that you can exit at the right times before the price shifts and moves against you. That's why we pay close attention to support and resistance over oscillators and other indicators.
I burn my candles from both ends.
Orange Belt
Seem that there are different conditions to judge...but once you do and adjust...you can succeed.
Looking and the higher timeframes is useful...even if you trade lower ones.
Red Belt
This is another one of those BS Forex myths. However, all myths have some truth to them.
Most traders can win in a trending market.
Most indicator based methods use lagging indicators. A lagging indicator pretty much tells you what direction the price is heading AFTER is starts heading in that direction. So in a trending market when a traders indicators line up and tell the trader the market is heading up the trader goes long. The trader closes the trade with profit yeyyyyy!
However, when an indicator based method is applied to a ranging (choppy) market things don't go so well. By the time the indicator realizes the market is going long and the traders takes the long the market has already turned around.
That's the problem with a lagging indicator!
In a trending market indicators point out the obvious and in a ranging market they utterly fail.
The thing is not all trading methods are indicator based. My method, Fetor's, keefb's are all price action based. They rely on identyfing areas in which traders will buy or sell i.e. s+r lines, candle patterns and trend lines.
Stay away from indicator based methods and you'll be fine.
Last edited by NickB; 07-03-2009 at 08:58 PM.
"History will be kind to me for I intend to write it. "
Winston Churchill
Green Belt
I have to agree with all the above. An indicator looks like it is telling you exactly what happens because in hindsight it does. It looks absolutely 100% but that's because it moves with the price. At any one particular point it might tell you something but it could be a false signal. As a funny point, in Steve Nison's lectures he says that indicators should ONLY be used IN ranging markets because the comparisons of highs or lows in price action need to be the same. He does go on to say it needs to converge with support and resistance at the sanme time.Originally Posted by NickB
However, every trader I've ever spoken to about this has said something along NickB's quote
However, when an indicator based method is applied to a ranging (choppy) market things don't go so well. By the time the indicator realizes the market is going long and the traders takes the long the market has already turned around.
White Belt
Its possible to make money regardless of whether the market is trending or rangebound, but as Fetor said its identifing the type of market you're trading thats key. I've attached (hopefully) a recent 4hr chart of mine from the GBP/USD you can clearly see the points of support and resistance.
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