What is a Choppy Market?
Choppy market is a market condition devoid of any clear direction or trend. The prices move up and down without forming any major trends. Choppy market is a term derived from the phrase choppy seas where the waves prevent the boats from moving large distances in a direction. Choppy markets can be formed due to many reasons like lack of any significant news or economic development, no significant changes in international relationships, stable politics/economy/rates/growths/etc.
Choppy markets usually occur after an extended bullish or bearish trend, and the prices remain on their high or low levels for an extended period of time without moving significantly higher or lower. The period of a choppy market can be from just a few weeks to even years. The phenomenon is more evident in specific sectors or stocks than a broad market.
Choppy markets are not the best times for investors and less-experienced traders to profit from the market; but are very good occasions for active traders who buy lower and sell high. The trading volume, the highest high, lowest low, day highs and lows, daily price ranges, etc can be used to find a good trading strategy. Choppy markets are also good for automated trading and for using various trading indicators. The lack of any significant trend can also help beginners to better educate themselves and test their trading strategies.
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Choppy markets usually occur after an extended bullish or bearish trend, and the prices remain on their high or low levels for an extended period of time without moving significantly higher or lower. The period of a choppy market can be from just a few weeks to even years. The phenomenon is more evident in specific sectors or stocks than a broad market.
Choppy markets are not the best times for investors and less-experienced traders to profit from the market; but are very good occasions for active traders who buy lower and sell high. The trading volume, the highest high, lowest low, day highs and lows, daily price ranges, etc can be used to find a good trading strategy. Choppy markets are also good for automated trading and for using various trading indicators. The lack of any significant trend can also help beginners to better educate themselves and test their trading strategies.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
7:49 AM
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