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Chris,
| Isn't this just another attempt to find a holy grail indicator ?
|
| Say your indicator says the market is now "choppy". Is it also going to
| tell you what is going to happen next ? Will the market start to trend
| tomorrow? next 4 trading days ? If not it is not really of any practical
| use. By this I mean it does not "add" anything that you did not already
| know with respect to what "might" happen next.
|
| It may be a 3-5 day ABC correction or ABCDE or an x day sideways market.
| One just does not know.
|
| Any other thoughts ?
|
|
|
I guess a Choppiness Indicator is a bit absurd on its own - you need to
combine
it with something else. After a while most eyeballs will see a market as
"Choppy",
so a Choppiness Indicator may be not useful for the more visual disposed of
us.
However, the average System/Techie head may want to use a
Choppiness Indicator as a filter for keeping a simple Trend Following
System
out of harm's way. Then it is useful. Or for the flip side to turn to
trading the ranges for a while with a
ranging system. Chris is right is that the impulse waves are best to
trade.
Sometimes patterns are not clear unless they are Al Gore rythmed (sick
joke).
On that note aren't we all a bit complacent about this Iraqi situation.
The big Astro
setup and Eclipse come in in a few weeks. The Jan 1991 Ground War started
on the Eclipse.
I think the whole world ain't really on the US Side this time. There is no
emotional trigger (ie Iraqi invasion of Kuwait) to keep many of the Arab
nations on side of the US. Any US war action
could start the entire Islamic World on a Jihad against the Christian
World. These guys actually
have a great incentive to go to war for what they believe in. We are in the
60 year cycle from 1938
when Hitler started all his bad stuff by stealth and with the agreement of
many of the Super Powers ie Russia and England while the US turned a blind
eye until 1942.
Strange that the market was panicking in 1991. This time it doesn't care
it seems to think that a war
is a BUY SIGNAL. The US may swat Iraq at the risk of enraging the entire
Arab/Islamic world. That may
be bad. But then again we did need a WWII to get out of the depression!!!
David Hunt
http://homepages.tig.com.au/~adest
----------
| From: Chris Jackson <chrisj@xxxxxxxxxx>
| To: tropinc@xxxxxxxx
| Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
| Subject: Re: Trading System Design-choppiness index
| Date: Sunday, February 15, 1998 4:19 PM
|
| J.P. Oliver wrote:
| >
| > Paul Cote wrote:
| >
| > Realtraders:
| >
| > I would like to know if anyone has a method for determining
| > or
| > evaluating the choppiness of the market in order to
| > determine a
| > choppiness index. This will be to switch the trading system
| > from say a
| > volatility breakout to a trend following system when a
| > strong trend
| > comes underway.
| >
| > Dear Paul:
| >
| > Robert Barnes published a volatility index called "Directional
| > Relative Volatility" in his book Trading Choppy Markets, Richard D.
| > Irwin Publishers, 1997. This is the "choppiness index" I think you're
| > looking for. I confess that I have been unable to utilize it myself
| > because I cannot yet quite grasp the practical application (makes me
| > feel a bit dense, but I'm still working on it).
| snipped
|
|