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"Structure" of the market

  • #61
  • Edited 6:25am Apr 4, 2018 5:56am | Edited 6:25am
Apparently Newtonian physics doesn't fit into the structure narrative. The picture I posted above is now updated here. This is what I am talking about. What Newton understood is that for every action there is an equal and opposite reaction. Another way it has been put is, "As above, So below". While I was attempting to show a like sized pullback, instead it doubled out the range of the median lines, almost to the tick and you'll also notice that it is very close to equal time to the flat pullback.
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  • #62
  • Edited 8:15am Apr 4, 2018 7:55am | Edited 8:15am
Quoting Sossos
Apparently Newtonian physics doesn't fit into the structure narrative....
OK...This post demands response and then I am truly done here...

NO!!! Newtonian physics has NOTHING to do with the structure of the market. The only thing remotely having to do with physics would be Einstein's equation applied to the movement of electrons when you are connected to your server. THAT'S IT. While price does appear to be in motion it is NOT a physical body and thus one cannot apply the laws of physics. What goes up doesn't always come down...price in motion does NOT stay in motion...and if you apply an order (outside force) it does not react in an equal and opposite fashion...if this last rule applied, NO ONE would make money because if you bought, price would always drop in an equal and opposite manner to your order...this is just lunacy.

I will say this as simply and S-L-O-W-L-Y so even the math geniuses here can understand: Price movement is the result of people interacting with each other in response to their beliefs and emotions. That's it...the "rules" of physics, mathematics, trigonometry, engineering, yes even astrology do NOT apply. There is no (a+b)=(c+d). A support or resistance line would never exist unless people took action at that perceived level. Price in motion does NOT tend to stay in motion, (or at rest for that matter). And there is NO equal and opposite reaction of price to some outside force (what ever that may be).

Any appearance of these principles in price is mere coincidence and causality, and cannot be repeated with any accuracy or precise measurement...if that were so EVERYONE with a science degree would be wealthy...we all know that isn't true. I'm sure we are all familiar with the story of the monkeys placed at the typewriter. If one eventually taps out "E=MC2" does that make it a genius? Or if he taps out "GOD" does that make it a prophet?

Let me give here the simplest most effective way I can think of to say this:

  1. If neither you nor I (or anyone else) places any orders into the market, THERE IS NO PRICE MOVEMENT (TIME)
  2. If only you enter a 1 lot buy and only I enter a 1 lot sell, THERE IS NO PRICE MOVEMENT (Order flow)
  3. If You and I both enter buy orders (regardless of volume) and there is no one else to be counter party to the trade, THERE IS NO PRICE MOVEMENT (Volume)

These basic principles are the "structure" of the market. It requires many people with differing view points to place opposing orders in varying sizes to create price movement. The only way anyone makes money is by SPECULATING the near or distant future price movements and placing and order (read bet) to that effect.

That's it...it is no more complicated than that.

OK...rant over. I will now leave you to your pedantic sophomoric mathematics.

@xxxx§|[::::::::::::::::>
  • #63
  • Edited 8:50am Apr 4, 2018 8:36am | Edited 8:50am
So you didn't want to have a conversation about structure. You wanted to tell everyone what you think is the way markets move. Can you explain the lines of my chart using your theory? Actually all the sciences apply that your mentioned. Humans ARE involved and because they are all attempting to apply some theory or measurement to the market they are trading.

Dr. Tim Morge, the last living Andrews student, who has 3 PHD's would disagree and has traded using this tool for 40 years, very successfully. I think I'll stick with his body of work.
  • #64
  • Apr 4, 2018 8:51am Apr 4, 2018 8:51am
Quoting DonPato
{quote} OK...This post demands response and then I am truly done here... NO!!! Newtonian physics has NOTHING to do with the structure of the market. The only thing remotely having to do with physics would be Einstein's equation applied to the movement of electrons when you are connected to your server. THAT'S IT. While price does appear to be in motion it is NOT a physical body and thus one cannot apply the laws of physics. What goes up doesn't always come down...price in motion does NOT stay in motion...and if you apply an order (outside force)...
What you described is market mechanics, in the simplest terms. Unfortunately, this is not structure. "people interacting with each other in response to their beliefs and emotions" is a byproduct of structure.
  • #65
  • Apr 4, 2018 9:05am Apr 4, 2018 9:05am
Quoting DonPato
Hello all...I've tried several times to stimulate some conversation around this topic. I don't know if it's too boring or if no one is really interested. But I am going to try one last time...HELL OF A WAY TO START A THREAD... I would truly appreciate any and all points of view on the topic of the "structure" of the market...meaning how and why do you think the market actually functions? Further...knowing this, how does this knowledge assist you or facilitate your trading? I ask this because I see many threads out there with many different...
I Think you are right in what you have said in a certain way.After Thoroughly researching various markets and seeing how it behaves in all various patterns and conditions i have came to the conclusion that markets are not purely technical nor they are fundamental But Markets are natural Like a fractal.Although you can predict the markets using certain mathematical principles but it would not be applicable in the sense which what many people would have imagined.

To Understand how markets work people need to give up on "conventional means" or following what mainstream media has taught them about markets and research it in a completely different way,So i did research the markets in a completely different way unlike others and now i am quite a profitable trader.i am just sharing some wisdom which i gained through this journey.

For example when i first heard about ganns square of nine i thought,,,,,,,hey this looks weird hehe but when looking deeply and understanding the princicples behind it and after seeing the results i was surprised by the uncanny accuracy it has when used properly.no indicators,trading system or whatever technical systems can come close to predicting the markets as the ganns square of nine.And i was wondering why did gann used square of "nine".then i saw teslas video of 369.he said
“If you knew the magnificence of the three, six and nine, you would have a key to the universe.” – Nikola Tesla.
No one ever Discovered anything new by colouring inside the lines.
  • #66
  • Edited 10:10am Apr 4, 2018 9:12am | Edited 10:10am
Quoting Sossos
So in a nutshell, your saying that a TPO shows demand? And if so. What's the proper look back period for a TPO to judge demand?
In a nutshell......A TPO is a "unit" of measure, used to measure demand in auction market analysis,

To quantify and measure something accurately you need a uniform unit of measure.

The millimeter (mm) is the smallest (unit) metric measure of length
1 mm = 1 unit of measure
1 meter = 1000 1mm units.

Just like a mm is the smallest unit of measure in metric length,
a TPO is the smallest "unit" of measure in auction market analysis (price and the time which it occurred)

OHLC time series data is not formulated into a statistically measurable and logically sound arrangement of data which provides information
You can't quantify OHLC data (candlesticks). There is no uniform "unit" of measure in which to compare, count, measure

Lets say you have 10 coins on the table. And we divided them between them us. We both have 5 coins just because we have equal amount of "coins" doesn't mean we each have the same amount of money.

If you have 5 nickels (nickel= 5 cent coin) $ .05 x 5 = $ 0.25,
If I have 5 dimes (dime =10 cent coin) $ .10 x 5 = $ 0.50

We have "equal" amount of coins but I mathematically/quantitatively have more money. I can prove it because I have standard uniform "unit" of measure ($.01 ) All US currency can be broken down to it's smallest unit of measure…….. $.01

We may have an "equal" amount of coins but if I break it down and analyze(count) the "units" (cents), I have more money.

Candles/bars are much like the "coins" in my example, but coins, unlike candlesticks, have a standard uniform "unit" of measure (.01).

That’s why technical analysts cant ever prove or disprove their strategies. There is no standard uniform "unit" of measure to mathematically/quantitative prove or disprove any strategy that uses candlesticks. They can only give you examples (chart pictures) of "happenstance". There's a lack of mathematical "evidence"

No 2 candles are ever the same, 5 red candles and 5 green candles implies a balance/equilibrium
But when you break the data into uniform "units" of measure (tpos)and count them you'll find an imbalances exist.

We both can have a "barrel" of apples each. You may see that as being equal (qualitative). You cant mathematically "prove" that statement until you break the barrel down to it's smallest "unit" of measure, 1 apple (quantitative)

You can't quantify candlesticks /bars because there is no standard uniform "unit" of measure in which to compare or use as reference.

No 2 candles are ever equally the same at anytime and can never be used as uniform unit of measure to measure. To determine a balance or equilibrium or an amount, you need a uniform unit of measure.

"For most quantities a unit is necessary to communicate values of that physical quantity. For example, conveying to someone a particular length without using some sort of "unit" is impossible, because a length cannot be described without a reference used to make sense of the value given."

Pasted from <https://en.wikipedia.org/wiki/Units_of_measurement>
Markets are not efficient, rather they are effective - Jones
  • #67
  • Apr 4, 2018 9:33am Apr 4, 2018 9:33am
Quoting DonPato
{quote} This post demands response

And mine was too boring to start a conversation, I assume. Guess people do come to the forums just to pick a fight. Too bad *shrug*
  • #68
  • Apr 4, 2018 9:49am Apr 4, 2018 9:49am
I wasn't looking for a fight. Just wanted to know how to use or apply what he is talking about to enhance what I already use.
  • #69
  • Apr 4, 2018 10:04am Apr 4, 2018 10:04am
Quoting DonPato
{quote} Let me give here the simplest most effective way I can think of to say this: If neither you nor I (or anyone else) places any orders into the market, THERE IS NO PRICE MOVEMENT (TIME) If only you enter a 1 lot buy and only I enter a 1 lot sell, THERE IS NO PRICE MOVEMENT (Order flow) If You and I both enter buy orders (regardless of volume) and there is no one else to be counter party to the trade, THERE IS NO PRICE MOVEMENT (Volume) These basic principles are the "structure" of the market.
I guess you never heard of a "Market Maker" It is the job of the MM ……to facilitate and encourage trade. They do this by using the "price discovery process"

The purpose of any market is to facilitate trade. Lack of trade facilitation inevitably causes price to move. This price movement behavior is as true in the organized markets as it is in a grocery store or any other everyday market. Thus, price changes to satisfy the condition of the market and every price is a result of the condition of the market.

"Financial markets are the grease that lubricates national and international commerce. These markets are in a continuous state of "price discovery". Included are stock and options markets, commodities, bonds, forex and a wide variety of derivatives. All have a general commonality; they are openly traded and reported, price is set by auction and they must follow government and industry rules. Markets that meet these conditions are termed auction markets. The primary data generated by auction markets are their transactions, or ticks and sometimes, other items such as volume of trade and bid/ask."

Price is nothing more than an "advertising mechanism". It's part of the "price discovery process" used by Market Makers to encourage trade. The Price/ticker/quotes are "advertisements" It moves to solicit and encourage trade (looking for a response) It moves in search of participants in order to facilitate trade. Different prices at different times attract different TF participants. Price auctions too high in search of sellers and auctions too low in search of buyers. That is the purpose of auction markets, to facilitate trade. If you have equal amount of buyers & sellers, the market is at a virtual stalemate (equilibrium).The purpose of the markets is to "facilitate trade" To upset the stalemate (equilibrium) Market Makers advertise prices/quotes by auctioning up & down (price discovery) looking for new participants or to "advertise" prices/quotes at an attractive enough price to get the participants already holding trades to change their position to upset the imbalance.

in the markets price discovery process, the search for new participants. Price quotes are used to solicit traders, to enter a trade, and if you are already in a position, eventually you will be quoted a price high enough that it encourages you to exit the market by taking profits, or you will be quoted a price low enough that will force you out of your position That is the sole purpose of auction markets, through the price discovery process, is to facilitate trade . Every tick change is a change in the price being quoted .

In order to facilitate trade, through the price discovery process, the advertising mechanism will start quoting/soliciting higher & lower prices, In search for new participants to enter the market to upset the balance, or to move to an attractive price high enough to get existing buyers to exit the market by taking profits or by auctioning high enough to force weak sellers out of their existing positions. And in the reverse, to move to an attractive price low enough to get existing sellers to exit the market by taking profits or by auctioning low enough to force weak buyers out of their existing positions.

Price discovery is what gets a specific buyer and specific seller to move from establishing a general price, to agreeing on a specific price for their transaction, based on the size of the transaction, location of the transaction, cost of the transaction, and many other factors. It is a dynamic process, and in a way, it is the true mission of any market and any exchange.

Price discovery is one of the central functions of financial markets. In the market micro-structure literature, it has been variously interpreted as, the search for an equilibrium price (Schreiber and Schwartz (1986))

Price moves because it is a function of the Auction Process...

Pasted from <https://www.forexfactory.com/showthr...ry#post9938417>
Markets are not efficient, rather they are effective - Jones
  • #70
  • Apr 4, 2018 10:15am Apr 4, 2018 10:15am
Cool, so there is the why it moves. Trading involves a couple of other W's. The what, where, when and why of life. So what is covered in whatever market your participating in, mzvega just explained the why it works the way it does. That leaves where and when.

Just to keep it simple and uncomplicated.
  • #71
  • Apr 4, 2018 10:23pm Apr 4, 2018 10:23pm
Quoting DonPato
{quote} ~~ Price movement is the result of people interacting with each other in response to their beliefs and emotions.
and, you sure found a lot of it in this thread!

So Don decides to give of his time to explain how he reads the market, only to have those (some of whom should know better) insist on posting their own views and taking over the thread to argue their own case.

Now we will never know if we could have learnt something from Don, to improve or change the way we trade.

and, you watch, the disrupter's don't even care!
Good Trading
  • #72
  • Apr 4, 2018 11:12pm Apr 4, 2018 11:12pm
Team , you have to be careful, in becoming too specific about any one particular area.

Fundamental issues are the driver of any market on a more than short term basis , and price action/technical ..is just the timing of the entry.

To much focus is put on this for newbies. Work a large stop and shoot for 1:1 . When you can read a market better, you can get cuter with your stops.

Time means something only in the context of the holding period. (8 hours of asian session direction is neither here nor there for eurgbp)

Risk events are the beast which roars and creates new cycles and new beginners and also endings to current movements.

The question was asked "How do YOU view the structure of the market "

....any structure in price movement is secondary to the drift the fundamentals create. Forget about structure early on and focus on the economic macro drivers....only then consider structure through primarily phases of expansion /contraction as a way to maxmise output. From there you can zone in even greater, with risk management strategies basis price structure to step it up again. Dont walk before you can run and forget any process which gives any underlying default period influence in an outcome thats ever changing.

Trader Jack Kiss
  • #73
  • Apr 4, 2018 11:53pm Apr 4, 2018 11:53pm
[quote=jackbequick;10936306]Team , you have to be careful, in becoming too specific about any one particular area. Fundamental issues are the driver of any market on a more than short term basis , and price action/technical ..is just the timing of the entry. To much focus is put on this for newbies. Work a large stop and shoot for 1:1 . When you can read a market better, you can get cuter with your stops. Time means something only in the context of the holding period.
(8 hours of asian session direction is neither here nor there for eurgbp)

it is if you are trading the breakout .
A really good method to use.....
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #74
  • Apr 5, 2018 4:26am Apr 5, 2018 4:26am
Quoting aud
{quote} and, you sure found a lot of it in this thread! So Don decides to give of his time to explain how he reads the market, only to have those (some of whom should know better) insist on posting their own views and taking over the thread to argue their own case. Now we will never know if we could have learnt something from Don, to improve or change the way we trade. and, you watch, the disrupter's don't even care!
In post #6 of this thread, I wrote,"Do you want to limit discussion to the 4 components you've listed? My view of market structure is quite different from yours." His reply was, "No limits." He encouraged open discussion, to his credit, but was unable to manage the flow.
  • #75
  • Apr 5, 2018 7:17am Apr 5, 2018 7:17am
Well, you can just go to his other forum at what about volume. It's the same discussion without .......
  • #76
  • Apr 5, 2018 10:16pm Apr 5, 2018 10:16pm
Quoting GEfx
{quote}~~ "No limits." He encouraged open discussion, to his credit, but was unable to manage the flow.
Not sure if there is a pun in there or not, but fair enough. Just seemed a pity.
Good Trading
  • #77
  • Apr 6, 2018 7:43am Apr 6, 2018 7:43am
Quoting aud
{quote} Not sure if there is a pun in there or not, but fair enough. Just seemed a pity.
I agree.
  • #78
  • Apr 23, 2018 8:49am Apr 23, 2018 8:49am
Quoting DonPato
Further how these structural components result in the price bars you see on your chart. In my understanding the markets (yes any and all markets) have four main structural components: Time, Order Flow, Volume, and Price. Each of these components is an integral, dynamic and indispensable part of the market. [...] Shall we explore these concepts together?
I would dig even deeper that that with my question.

We can ask what causes the move of the price? The forst answer is that orders cause the move, buys and sells - precisely amounts of buys and sells distributed in certain order (??? might be not the proper word here) in the space and time. And from traders perspective - are there packets of orders we can find and trade every day? What is your recipe for this challenge?

I would describe my solution, at least one of, I would search for traders (buyers or sellers) trapped on the market due to more or less volatile moves and try to find where their stops are and enter there for a "high probability move". Sometimes there are artificial bareers created to lure traders and then hit their stops...
  • #79
  • Apr 23, 2018 3:04pm Apr 23, 2018 3:04pm
a trade wars
a game that each part play it to win has a "structure" !!!!

maybe has rules, maybe has good days, peace days, comedy days but never has and it will never have a structure

just saying

kings regards
  • #80
  • Edited 4:07pm Apr 23, 2018 3:48pm | Edited 4:07pm
Quoting DonPato
{quote} OK...This post demands response and then I am truly done here... NO!!! Newtonian physics has NOTHING to do with the structure of the market. The only thing remotely having to do with physics would be Einstein's equation applied to the movement of electrons when you are connected to your server. THAT'S IT. While price does appear to be in motion it is NOT a physical body and thus one cannot apply the laws of physics. What goes up doesn't always come down...price in motion does NOT stay in motion...and if you apply an order (outside force)...
Well, I mean, he did say Newtonian physics. He's working towards quantum mechanics. Give him some time; it took me years to break through that dimensional barrier. But, then again, I never took calculus or statistics.

For all you know he's only 20.
"The fun is in the hunt. Not the kill."
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