So yes, you can do with S/R, supply and demand, mass psychology, bla bla bla... I'm not denying it. It is just not as efficient as they would have you believed.
"To believe that there is nothing beyond S/R, Supply and Demand, Mass Psychology, etc... is naive and utter stupidity."
"3.141592653589793... is one of the construct of the intangible, transcribe into a physical form."
DislikedLet's imagine the market is an irrational normal number (being PI or any other). Let's also imagine some genius finds the equivalent of the Bailey, Borwein and Plouffe formula for this "market number".Ignored
May I express one significant reason for my skepticism?
Earlier this week a 6.7 strength earthquake rocked parts of New Zealand, and NZDUSD fell 40 pips almost immediately this was announced. So, if there is a causal link between the "market number" and the 40 pip fall, what might I reasonably conclude?
either
(i) the earthquake had no bearing on the 40 pip fall — the latter would have happened anyway; or
(ii) the "market number" incorporates some predictive capacity to know that the earthquake would occur, the precise time that it would do so, and its effect on the NZD, for this to have been pre-factored into its value; or
(iii) the "market number" somehow caused the earthquake, in order to make the necessary 40 pip fall occur.
In case it's not obvious where I'm coming from, let's take another event: the decisions made last August by the SNB that have supposedly caused the EUR and CHF to enjoy almost perfect positive correlation since that time. Again, what might I reasonably conclude?
(i) the decisions made by the banking authorities had no bearing on the change in correlation — it was mere coincidence; or
(ii) the "market number" incorporates the predictive capacity to know exactly what decision would be made, at what time, and what the effect on EUR and CHF would be; or
(iii) the "market number" somehow caused the folk responsible for the decision to make the decision that they made, in spite of themselves.
Hopefully two examples are sufficient: we could apply the same logic to every other event that we've been led to believe has an impact on the way that markets behave.
All jesting aside — and I don't intend this post to be as sarcastic as it might appear — my point is this: if we believe that a number (whether real, imaginary, rational, irrational, whatever) is the overriding driving force behind price movement, then we must somehow explain how and why this number relates to, or impacts on, the conventionally understood drivers: macroeconomics, geopolitical factors, decisions by sovereign entities, the necessity to maintain triangular equilibrium, national agendas, heavyweight bank agendas, non-speculative transactions, algorithmic traders, arbitrageurs, .....
All of these factors make forex one of the most complex markets to analyze. Let's not forget that, first and foremost, the price of a currency pair reflects the fluctuating relative strength between the TWO constituent economies.
And moving beyond this, to the outside observer, the market consists of a vast assemblage of anonymous participants whose agendas are constantly changing and completely unknown....... except possibly to the "market number", that has supposedly always existed, and whose existence necessarily incorporates some kind of divine predictive omniscience.
For a single pre-existent number to be the overriding driver behind all money markets, further necessitates a kind of absolute determinism. The willing buyers and willing sellers who come together to create the market are therefore apparently not so willing; their decisions must be completely involuntary, in order to allow price to follow the inevitable pattern that has been mapped out for it from the point in time that the "market number" gained its existence.
This line reminds me of comments made by Skunny, which (if I recall correctly) were along the lines of price having to always complete its pre-determined fibo-based cycle, no matter what forces threw it temporarily out of orbit; hence his conclusion that it was entirely possible to trade with a 100% win rate. Again, note the implied determinism.
The way I see it: either markets are the product of willing participants who create orderflow, and the voluntary nature of their decisions necessarily introduces a level of randomness; or price follows a pre-determined path that's been mapped out by an "intangible construct" or a "market number" (call it what you will). Given that it is humans that must ultimately push that buy or sell button, the bottom line is this: either we act freely, or we don't.
It would further seem to me that, if we pursue the line of determinism, that the "intangible construct" would affect many more aspects of our lives than merely the way in which traders make their decisions. Contrariwise, I'm a strong believer in the doctrine of free will. It seems self-evident to me that the decisions that I make today will have a very definite bearing on the direction that my life will take tomorrow, and beyond.
Hence it just doesn't seem possible to me how the first 39 decimal places of pi (or whatever this secret "market number" is) can possibly be the underlying driver behind all future price movement.
Explanations are most welcome.