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What is noise?

  • Post #1
  • Quote
  • First Post: May 11, 2008 10:20pm May 11, 2008 10:20pm
I've heard a lot of things about noise on this forum, such that anything less than M5, M15, M30, H1, H4, Daily, etc. is just noise, but there is never any proof or logic spoken when people claim it. So, I was hoping to start a thread asking the question, "What is noise?" Not what timeframe is noise, if we did that there would be a lot of contradiction, but rather what IS noise? After that question is answered we can then figure out if certain timeframes are really noise, and if noise on timeframes is just a myth. Obviously tick charts are noisy because it either goes up or down, but I'm talking about the main timeframes refered to previously. I currently have no idea how to answer that, but I've got this thread started so someone can vent some ideas. Thanks in advance to the best FOREX community on the internet.

P.S. I'm using a bugmenot.com account because for some reason the email verification hasn't arrived yet. My real account is a newbie named "Bonzaii" I have read the rules and this doesn't appear on it, so I hope it is OK.
Quoting nakamura
I've heard a lot of things about noise on this forum, such that anything less than M5, M15, M30, H1, H4, Daily, etc. is just noise, but there is never any proof or logic spoken when people claim it. So, I was hoping to start a thread asking the question, "What is noise?" Not what timeframe is noise, if we did that there would be a lot of contradiction, but rather what IS noise? After that question is answered we can then figure out if certain timeframes are really noise, and if noise on timeframes is just a myth. Obviously tick charts are noisy because it either goes up or down, but I'm talking about the main timeframes refered to previously. I currently have no idea how to answer that, but I've got this thread started so someone can vent some ideas. Thanks in advance to the best FOREX community on the internet.

P.S. I'm using a bugmenot.com account because for some reason the email verification hasn't arrived yet. My real account is a newbie named "Bonzaii" I have read the rules and this doesn't appear on it, so I hope it is OK.
Now I'm very new to the forex game and investments in general (september), however I believe 'noise' can be defined quite easilly.

In my opinion, it is "price fluctuations which do not indicate or otherwise represent general consensus in the market."

This could be banks transfering funds for a corporation, etc etc. In higher timeframes we see more money being moved in a specific direction from multiple investors throughout the globe and this is what we're looking for to trade with, not the 'noise'.
noise is what i listen to.... according to my dad. lol

as renegade7 said "price fluctuations which do not indicate or otherwise represent general consensus in the market."
if people don't understand the move they call it "just noise", lol
Quoting trevman
noise is what i listen to.... according to my dad. lol
Rofl...my mom called Led Zeppelin "organized noise".
Quoting renegade7
Now I'm very new to the forex game and investments in general (september), however I believe 'noise' can be defined quite easilly.

In my opinion, it is "price fluctuations which do not indicate or otherwise represent general consensus in the market."

This could be banks transfering funds for a corporation, etc etc. In higher timeframes we see more money being moved in a specific direction from multiple investors throughout the globe and this is what we're looking for to trade with, not the 'noise'.
Thank you for your precise definition of noise. However, how do we tell what is noise and what is not? Even on Daily, Weekly, and Monthly charts there is some ranging periods and some red candles among an uptrend. So, under that definition, we should just be trading fundamentals, or trading the noise. Sorry if I sound like a noob, but I'm kind of confused right now.
Quoting trevman
as renegade7 said "price fluctuations which do not indicate or otherwise represent general consensus in the market."
Yes, that would be the right definition. However lower time frames don't mean noise.
Quote
Yes, that would be the right definition. However lower time frames don't mean noise.

Problem w/ smaller TFs is they don't always represent the larger trend and are more easily effected by large lot exits/entries. So if unless you're using larger TFs for reference it's easy to get caught on the wrong side of the trend or get stopped out by smaller spikes (big entries or small news events).

Counter bars (shorts among an uptrend and vice-versa) are not noise, there is a very predictable sense to them and they often strengthen the trend. Large whippy spikes or huge tails... that's noise. Tough to trade.
  • Post #9
  • Quote
  • Last Post: May 12, 2008 4:11pm May 12, 2008 4:11pm
Noise is the "fog of randomness" that exists about price action. Most technicians define noise as anything inside of 3 ATR. To mindlessly say a particular time frame is noise would be inappropriate. Noise is always relative to the chart of interest.

You can plot noise by applying Keltner Channels to your charts.
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