Chop & Trend - Spot Changing States Early to Maximize Returns
I recall the first time I was asked about how to identify the switch between Chop and Trend. The question came to me as ""what indicator can I use to spot the shift between chop and trend before anyone else sees it"". The answer was of course ""none"" - you can certainly get indicators that show it but the ""early"" part is the problem. Indicators need too much information to make this assessment but the good news is - you don't. In fact, few people ever take a step back and consider how significant it is to be able to see these switches between trend and chop. The 2 conditions require the opposite approach to trading and so it ends up being one of the most important rule in your setup The cause of trends & chops. Holding times - understanding which recent activity may be relevant & which is unlikely to play a part. Time of day/overnight action. Types of chop to be on the lookout for. Early warning signs of transition - trend to chop. Early warning signs of transition - chop to trend. Tools you can use - not all will be required. Putting it all together. The benefits.