Mastering the Trade, Third Edition: Proven Techniques for Profiting from Intraday and Swing Trading Setups by John F. Carter

Author:John F. Carter [Carter, John F.]
Language: eng
Format: azw3, pdf
Publisher: McGraw-Hill Education
Published: 2018-06-28T16:00:00+00:00

Trending versus Choppy Markets

For the most part, the setups we just went through cover trending markets. I also wanted to take a look at choppy markets to show how the pivots work under those circumstances. Figure 8.16 shows the mini-sized Dow on a day when it stayed locked in a confined, narrow trading range through the majority of the day. In fact, most of the initial move down happened before the 9:30 a.m. eastern open for the cash markets. I also inserted some basic indicators onto this chart to show how far they can lag behind on a choppy day compared with a setup that is based purely on price. The indicators I’m looking at are basic exponential moving averages as well as an RSI index. This doesn’t mean that these indicators don’t have any value—it’s just important to keep in mind that for the most part, an indicator-only-based trading approach is a lagging approach, and this fact is heightened on a choppy trading day.

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