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What is noise?

  • Post #1
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  • 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.
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.
The same thing can happen when you trade currencies as technical analysis can be complicated by the so-called 'market noise'. This term refers to random fluctuations of the price - those that don't have any logic or volume behind them.
Well, if noise is an undesirable sound, then noise in the market can can also be an undesirable or unwanted moves. Call it whipsaw, chop or ranging market. Noise is part of the market. You can't completely eliminate noise as it is due to human behaviors. People see things differently, hence the noise. Without noise, market would have been easy to predict. Noise exist in every timeframe. But the smaller the timeframe, the more the noise. Instead of worrying about the noise look for ways of filtering them - you can even profit from it. Before now, I used to pursue every price fluctuations by overanalyzing all the timeframes and in the process I get dribbled by the noisy market. Now, I no longer bother about them but I embrace them.
Noise means there are phases when it's more difficult to make money in the market because of less movement or less gaining potential.
On the contrary there are moments when the market has swings and runners.

A good thing is when you know how to cut out the noise, then you can early spot runners.

Lately, I was able to build a system to see it easier.

Intraday spoken, there are basically 6 chart-combinations (all currencies included), 4 of them are 80% of the time noisy, meaning "they're moving quite the same".
It's harder to make there money because you have to bet on the right directional movement.

But there often occur only 2 combinations with opposite movements (the moment when the market "trades against itself").
Betting on that expansion is the key.
Noise could be a spike looking for stops.
I don't really believe in noise. Consider a vinyl record, noise are the clicks you get from dust particles i. e. sound that is not associated in anyway to the music. Even spikes as above have some relation.
To continue the music analogy CD's don't have all the sound information that was actually played/sung. They are sampled at high frequency before being converted to digital. Looking at higher timeframes is exactly the same. The lower tf's are like sampling at a higher rate.
The market is a continuous process and the 5min hourly bars are just the price at that instant of close, like the balance sheet of a company. You pay your money and take your choice of the timeframe that suits your trading style.
  • Post #14
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  • Last Post: Jul 20, 2020 4:22pm Jul 20, 2020 4:22pm
Noise is a word used in statistical data analysis. It points to some moves which are out of range of data and are actually not pointing to anything. If you want to see data trend then you have to exclude this noise to get clear picture
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