[bobcollett]

Originally Posted by rgudgeon »

I am basically a trend trader. I have been out of this market now for some time as it (the market) has been up a down and sideways now for months. We have been in a sideways pattern for weeks and now we have seen a parabolic up move that just looks like it might blow off at any time.

The problem is that when I am out of the market I make no money - but don't lose any either.

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

Hi rgudgeon
Strange name?
If you are not trading, how are you supporting your family?
The present conditions are NOT going to change before 2013
Trade small , BUT trade.
Kind regards
bobc

[BlowFish]

Originally Posted by rgudgeon »

I am basically a trend trader. I have been out of this market now for some time as it (the market) has been up a down and sideways now for months. We have been in a sideways pattern for weeks and now we have seen a parabolic up move that just looks like it might blow off at any time.

The problem is that when I am out of the market I make no money - but don't lose any either.

Is it better to sit back and do nothing when the market is like this or should I just look for setups and work them regardless of having no direction from the market?

One of the reasons 'old school' trend traders tend to trade multiple markets is for this very reason. On a well chosen basket of instruments (not too correlated of course) one or two will usually be trending.

Another possibility is to sample your data differently (a pretentious way to say look at another time scale ) For example an instrument that has been stuck in a range for weeks and months will often (usually) be making great 3 4 5 + day 'trend' runs from the top to the bottom of the range (and back again). If you observe this on lets say on an hourly chart these they can look like (and be traded like) epic trends.

Incidentally quite a few commodities and currencies have had some great trends recently (depending of your perspective of course).

[bobcollett]

Originally Posted by BlowFish »

One of the reasons 'old school' trend traders tend to trade multiple markets is for this very reason. On a well chosen basket of instruments (not too correlated of course) one or two will usually be trending.

Another possibility is to sample your data differently (a pretentious way to say look at another time scale ) For example an instrument that has been stuck in a range for weeks and months will often (usually) be making great 3 4 5 + day 'trend' runs from the top to the bottom of the range (and back again). If you observe this on lets say on an hourly chart these they can look like (and be traded like) epic trends.

Incidentally quite a few commodities and currencies have had some great trends recently (depending of your perspective of course).

Hi Blowfish
I rate this best advise given in 2011
MMS will have to give you a prize.
Kind regards
bobc

[BlowFish]

That's kind of you to say Bob. The bit on price behaviour was a bit of an aha moment for me. "Looking at a higher time frame for context" is a fairly well established concept however that idea is seldom fully explored. If you scratch a bit deeper and really look at how things fit together, you can come up with a really robust understanding of overall market structure.

[khamore1]

here is a quote for you: when in doubt get out

[Obsidian]

I never thought that I have to be in the market everyday. Sometime not trading is the best trade. Markets give us plenty of opportunities, missing a couple of them wouldn't kill you...

[MightyMouse]

Originally Posted by Obsidian »

I never thought that I have to be in the market everyday. Sometime not trading is the best trade. Markets give us plenty of opportunities, missing a couple of them wouldn't kill you...

It is true that there are a lot of opportunities to enter the market, but it is completely untrue that missing a few will not kill you. If you miss the good trades, at best, you could end up the year as wounded shark bait.

[TheDude]

Originally Posted by BlowFish »

One of the reasons 'old school' trend traders tend to trade multiple markets is for this very reason. On a well chosen basket of instruments (not too correlated of course) one or two will usually be trending.

Another possibility is to sample your data differently (a pretentious way to say look at another time scale ) For example an instrument that has been stuck in a range for weeks and months will often (usually) be making great 3 4 5 + day 'trend' runs from the top to the bottom of the range (and back again). If you observe this on lets say on an hourly chart these they can look like (and be traded like) epic trends.

Incidentally quite a few commodities and currencies have had some great trends recently (depending of your perspective of course).

adding to this, we can also look at spreads. calendar spreads are probably the best place to start.

Take a look at heating oil:



(image from Scarr Trading if i can say that - im not affiliated or even subscribe to their service, but this just shows the point graphically)

Its usual for the back months to trade at a premium to front months due to insurance and storage charges. This market isnt. Buy the July, sell March contracts?

Spreads to trend more than out-rights with less volatility due to the fundamental drivers behind them. You also get margin offsets meaning you can take bigger positions to make up for the lower volatility or trade in a more risk adverse way, risking little.

So with BlowFish's idea of looking at other markets, you have 100's in which to find a trend. When you include calendar spreads you have 10,000's. Including inter commodity spreads you have 100,000's of markets. Taking BF's idea of other time frames to all of the above, you have 1000000000000000000000000 000000000000000's of different markets.

Still say you cant find a trend?