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Sideways or Trending


In my opinion Day Trading the Eminis is exciting to all, profitable to a few and devastating to many. Why??? The answer is right direction but wrong timing for most of us are right in the long run. Many of us use indicators that have been around for a long time and have proven their worth beyond doubt; a good example is the moving average cross. But everything comes to a stand still when the market enters a sideways or non trending zone. Here is where most of us especially the scalpers take a big hit that eats up the profit quickly. So the question arises as to how one can detect that the market is about to enter a sideways zone and or that it is about to come out of one. People may say the formation or disintegration of a narrow trading range. But you find it only after it forms or properly disintegrates thus making it a lagging indicator. Please be generous with your thoughts on this topic.
This is, in my opinion, THE question in trading because it's easy to use oscillator based indicators to make money in sideways markets and moving average based indicators in trending markets to make money.
It is good that you have hit the nail on the head and brought out the question of using oscillators and MA based indicators. So now how to we ascertain when to use which. Should we go by the time of the day e.g. 9.30am to 12 am (EST) is a good time to use MA'S and after that Oscillators like stochastic? Or do we confine our MA approach to the time when major Economic news comes out and oscillators to the rest of the day?
There is no rule kbi. The art is in working out the day type before the action starts and pick the oscillators or MA's. I have not mastered that art yet...
We appear to have slightly deviated from the topic. The main focus of this topic is to share an approach/indicator that lets us that a trending market is about to enter a sideway/chop zone or that a chop zone is on the verge of a breakout.
kbi
Knowing if a market is going to be range bound or trending has always been a difficult question to answer. IMHO, the closest and most accurate way to answer that question is thru the use of Market Profile. Obviously, nothing in the market is going to work 100% but I have found, for myself, since learning Market Profile, I have a much better grasp on the type of trade we are in. In addition, it also can alert a trader to when conditions are changing. For me, learning Market Profile has without question changed the way I view the market. Good luck to you.
Thanks for your reply. I too am deeply interested in learning about market profile and how it is calculated? Any software/formulae associated with it as the market unfolds during the day?
If you understand Market Profile, its not necessarily software unfolding during the day, it's the market unfolding and using Market Profile to interpret the moves. A few charting platforms include Market Profile but most do not. It can be purchased thru many 3rd party services for a one time cost of around $100 to $150. Maybe if you search the web hard enough you can find it cheaper?