Get ready for the Veg-O-Matic Markets

Posted on by The INO.com Team

"This is Veg-O-Matic, the world-famous food appliance! . . . the only appliance in the world that slices whole, firm tomatoes in one stroke, with every seed in place. . . . French fries? Make hundreds in one minute! . . . Isn't that amazing?!"

Let's face it, the really big money is made in the big trending markets. What happens after a big trend comes to an end? Well, that is when you enter into a period of uncertainty.

Some traders like to characterize this as a trading range. I would refer to it as a Veg-O-Matic market, as it cuts and slices most traders to pieces.

No matter what you call it, trading range or Veg-O-Matic market, it is important to remember that you remain patient and wait for another defined trend to begin.

So how do you tell if a market is in a trading range?

The easiest way is to use MarketClub's Trade Triangle technology. When you see a Chart Analysis Score of around 55-65 on the chart, it indicates that there is no discernible trend present. Trading range markets, or Veg-O-Matic markets, are best left to the professionals.

If you do feel the urge to trade in a market like I described above, you are better off using some sort of oscillator like the Williams %R indicator or a fast stochastic indicator. These indicators allow nimble traders to catch the swings, up and down. For the average trader, this is a time to be on the sidelines and looking at other opportunities in other markets.

Make no mistake about it, trading range markets are generally difficult to trade and generally do not give up profits easily.

So remember, if it's a big Veg-O-Matic market, you're better off waiting on the sidelines until you see a clear trend develop.

All the best,

Adam Hewison
President, INO.com
Co-creator of MarketClub.com

P.S. Samuel J. Popeil invented the Veg-O-Matic. He also created the frenzied ads that made his product a late-night television sensation in the late 1960s and 1970s.

23 thoughts on “Get ready for the Veg-O-Matic Markets”

  1. Hi Adam,

    Re your response to Scott: would you mind explaining why the difference between stocks/indices and forex/futures? i.e. why the longer cycle (montyly/weekly triangles) for the former, and shorter cycle (weekly/daily) for latter?

    Thanks!!
    Dave

    1. Dave,

      The time frames mentioned are the suggest ones that I believe work well. Many member move the filters around to find approaches that suit there own personalities.

      All the best,
      Adam

  2. Adam....when do you use the "Monthly Triangle for Trend, and the Weekly Triangle for entry and exits" vs. "Weekly Triangle for Trend, and the Daily Triangle for entry and exits"....thanks.

    1. Scott,

      Stocks Indices: Monthly for trend. Weekly for timing.
      Forex: Weekly for trend. Daily for timing.
      Futures:Weekly for trend. Daily for timing.

      That's it.

      All the best,
      Adam

  3. Hi Mr Snitch,

    If you trade the double and triples you don't need to wait for market drops that may not happen for a good long time. Swing trading works in trending and choppy markets if you use the right settings. Short term settings work but long term default settings are out the door in choppy markets. ADX will also lead the way to the next trending market.

    There are also bull and bear etfs. If you only trade long you're only trading half the game. Good luck.

    Cheers,
    Dan

  4. I'm fairly new to trading, have watched the tutorials and done a lot of reading, but am frustrated with getting stopped out just before a trade makes a nice move. I'd love to hear from some of you successful traders out there that are using MarketClub. How do you use MarketClub? What scans do you find the most helpful and what strategy are you using for entering a trade and setting your stop losses? I get really nervous during a market sell-off and am wondering how others handle it. Thanks

    1. Jane,

      Here is what I suggest, study you past losing trades. Find out what went wrong. To close a stop, over leveraged, bad entry point etc, etc. Once you discover what you are doing wrong you will have a better idea on what to do in the future.

      I would recommend taking a 30 day risk-free trial to MarketClub as I strongly believe you will learn a lot about trading and the markets from this service.

      There are many successful traders using MC everyday.

      All the best,
      Adam

  5. I am just starting with trading and have done a lot of reading, watched tutorials etc... I'd like to hear from someone who considers themselves successful. How do you use MarketClub? What strategy are you using? Which scans do you find the most useful? How are you entering your trade and implementing your stop losses? I am getting a little frustrated with getting stopped out only to see the trade go up a few days later. The market sell-offs make me nervous and I'm wondering how everyone else handles it. I'd love to hear from sucessful traders out there using MarketClub. Thanks.

  7. Stochastics work well in chop-o-matic markets. Trading the 2x and 3x etfs in 2 or 3 day swings can be very profitable too.

    If you're really aggressive you can use 60 minute charts with default macd settings.

    1. What 2x and 3x etfs are you using? I am interested in your plan of attack.
      Thanks,
      Gale
      PS: Please put my name in the subject line of the email.

  8. I really like this comment, because it is so true... using trend trading in a ranging market is definately akin to the veg-o-matic. Most of my own strategies are trending strategies. From past experience I have learnt (the hard way) when in doubt - stay out...! it is much easier to ride a trend than play short term reversals, you have to be a much better trader... Thanks adam

  9. Thanks Adam, I will take your advice.

    Regarding the present moment: with the DJU, SP500 & Nasdaq each scoring +90, one would conclude this is a trending market, right?

    Thanks,

  10. Adam: This post just screams for one of your video 'tours' of you system, showing how to keep tabs on the up/down, sideways-trading market. You could try it on the Shanghai Composite INdex, which has been trading in a 15%-ish range for a couple of months.

  11. Trikaal,

    Thank you for your feedback.

    The key factor in my mind when you're looking at our score system is that when the market is in the 55% range is neither bullish or bearish.

    Once a market moves out of that range, let's say plus 70 it could be the start of a new upward leg. With a 70+ reading you now have a very key area to place stops which would be below the recent lows.

    Obviously when the markets moving from 70 to 80 to 90 in the plus column you have a lot of momentum building in this market. Depending on the volatility of the market you cannot place stops too closely because it will stop you out and the frustrating part is you'll probably be right on the direction but not on the money management side of the equation.

    I hope this helps.

    Adam

    1. Hi Adam,

      Let me see if I have understood you corretly and correct me if I am wrong.

      1) Have a list of +55 stocks on the list.
      2) Enter the trade when the score goes to +70
      3) Set a stop just below the price which triggred the +70

      Does this make sense?
      How do I revise my stops as the chart analysis score fluctuates between
      +70 and +100?

      Thanks for any help.y biggest problem has been in correct stops. Being with an uptrend is uselss unless I can ride the trend.

      Thanks,
      Trikaal

      1. Trikaal,

        Thank you for your feedback.

        When we are showing a -55 or a +55 that means a market is in a trading range. However it is a market to watch as trading ranges either evolve in a trend reversal or a trend continuation pattern.

        I would tend to put more emphasis on the trade triangles rather than just the numbers of buying at +70. I'm not sure where the +70 buy signal recommendation came from I do not believe it came from anyone here at marketclub.com.

        There is a very good article on stops that we did that you may want to look at. Here is the link:

        http://club.ino.com/trading/2009/06/how-to-use-money-management-stops-effectively/

        All the best,
        Adam

  12. Hi Adam,

    Thanks for another great post!

    If I did feel the urge to trade a trend-less market, couldn't I use the daily triangles as well as the indicators you suggest?

    Dave

    1. Dave,

      I would let me urge pass. Look for the markets that have big trends, you always make more money that way.

      All the best,
      Adam

  13. Hi Adam,

    So is it OK to get into the trade when the score is 70+? In fact ideally I would like to get into a trade when the price is going up high enough to move the score from 65 to 70. How can I do that (A buy-stop at a specific price which will make the score to 70?).

    And then set stop loss at a price which will bring the score below 70.
    In other words I am trying to catch the early part of the trend and also protect myself with stops based on the trade triangles score. Can you share your thoughts on this?

    I am bit frustrated to buy a stock based on the Monthly only to be stopped out and see the stock go up in the next few days. I would appreciate any thoughts you may have on the questions I have asked above.

    Thanks,
    Trikaal

  14. Veg-O-Matic trading is a great description of what we just went through in crude oil. It felt like we traded 67-73 for months [sic]. MarketClub tools pointed the way, thanks for everything Adam!

Comments are closed.