Do markets really change? | Forex Factory

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Do markets really change?

  • #1
  • First Post: Mar 19, 2019 1:35pm Mar 19, 2019 1:35pm
I read here and there that no strategy lasts forever and if you have a strategy that works today, don't rely on it because conditions will change and your strategy will become unprofitable.

I totally disagree. I'm strictly talking about currency trading here. So if a country's economy suddenly crashes and the general direction of their currency changes, that's not a market change. Currencies go up and down all the time. Even interest fluctuations in carry trade are part of what markets do and have always done.

If someone has been shorting a declining pair for years and suddenly the fortunes of that pair changes and the trader is caught not knowing to do, that is not a market change. It is the individual trader really not knowing how to trade.

So, clear this for me: how are the markets going to change to make the principles of trading become obsolete?
  • #2
  • Mar 19, 2019 2:25pm Mar 19, 2019 2:25pm
Quoting OutThere
I read here and there that no strategy lasts forever and if you have a strategy that works today, don't rely on it because conditions will change and your strategy will become unprofitable. I totally disagree. I'm strictly talking about currency trading here. So if a country's economy suddenly crashes and the general direction of their currency changes, that's not a market change. Currencies go up and down all the time. Even interest fluctuations in carry trade are part of what markets do and have always done. If someone has been shorting a declining...
The important thing is that strategies require to be adapted to market changes, and one cannot assume it will never happen. The conclusion is that one must know why the strategy works and how to develop a new one when needed.
  • #3
  • Mar 19, 2019 2:54pm Mar 19, 2019 2:54pm
Quoting scherzi
{quote} The important thing is that strategies require to be adapted to market changes, and one cannot assume it will never happen. The conclusion is that one must know why the strategy works and how to develop a new one when needed.
So what these people mean is that sometimes some strategies may stop working but they are not sure about that so they just repeat what they read someone smart say and now they say it to also sound smart.
  • #4
  • Mar 19, 2019 3:03pm Mar 19, 2019 3:03pm
Quoting OutThere
{quote} So what these people mean is that sometimes some strategies may stop working but they are not sure about that so they just repeat what they read someone smart say and now they say it to also sound smart.
No need to be smart to understand that if you change your market or your instrument same principles may apply but with different approach.

No need to be smart to understand that if you are under mental distress your perception of reality will change accordingly and you will also have to change your strategy due to that.

For instance.
  • #5
  • Mar 19, 2019 5:06pm Mar 19, 2019 5:06pm
Quoting OutThere
I read here and there that no strategy lasts forever and if you have a strategy that works today, don't rely on it because conditions will change and your strategy will become unprofitable. I totally disagree. I'm strictly talking about currency trading here. So if a country's economy suddenly crashes and the general direction of their currency changes, that's not a market change. Currencies go up and down all the time. Even interest fluctuations in carry trade are part of what markets do and have always done. If someone has been shorting a declining...
wow. An intelligent post on ff.
100% the markets have NEVER changed.
Only moronic price indicator sytems will claim they do to explain why there "strategy sucked.
  • #6
  • Mar 19, 2019 6:08pm Mar 19, 2019 6:08pm
Quoting scherzi
{quote} No need to be smart to understand that if you change your market or your instrument same principles may apply but with different approach. No need to be smart to understand that if you are under mental distress your perception of reality will change accordingly and you will also have to change your strategy due to that. For instance.
Yes, if you change your market or your instrument same principles may apply.... but it wasn't the market that changed. It was you that changed.

Yes, if you are under mental distress your perception of reality will change accordingly....yes but first relax and review and change your strategy but that doesn't mean the market has changed. It is the same old market. It still goes up and down and fast and slow etc.
  • #7
  • Mar 19, 2019 6:27pm Mar 19, 2019 6:27pm
Quoting Cools81
{quote} wow. An intelligent post on ff. 100% the markets have NEVER changed. Only moronic price indicator sytems will claim they do to explain why there "strategy sucked.
I don't speak sarcasm much but I can detect it. It is usually spoken by people that have a hard time speaking straight.

If I had to change my strategy every time the market changed the way you think market changes, It would have to be every tick...every few minutes, hours etc. But the rate of a pair changing isn't the market changing. The simplest and oldest strategy is to "BUY low and SELL high". Tell me if you can talk normal, how the market changing according to the way you think, will undermine that simple strategy? How does the market need to change to make that strategy not work any more?

You might have a hard time deciding when the price is low or the price is high and apply some technique to convince yourself to buy or sell at certain levels but the market hasn't changed. The market does its thing as usual, going up and going down, but you might need to change your view to keep up.

So instead of saying the market changes and no strategy stays valid or whatever variant of that statement, "My strategy can't keep up with the market and I need to change it" is a better way of saying it. To boldly claim that no one else has come up with a strategy that keeps up with the market's ups and downs, is plain misleading. To say everyone should keep ditching their strategy left, right and center is plain dumb. If you haven't figured out the market and haven't built a decent method yet and find yourself looking for new ones...well, apparently you are intelligent enough to decipher intelligent posts so you should have no problem figuring something out. Good luck.
  • #8
  • Mar 19, 2019 6:53pm Mar 19, 2019 6:53pm
Quoting OutThere
I read here and there that no strategy lasts forever and if you have a strategy that works today, don't rely on it because conditions will change and your strategy will become unprofitable. I totally disagree. I'm strictly talking about currency trading here. So if a country's economy suddenly crashes and the general direction of their currency changes, that's not a market change. Currencies go up and down all the time. Even interest fluctuations in carry trade are part of what markets do and have always done. If someone has been shorting a declining...
You've touched on many debatable points, but to respond only to your final question:

First, what is your definition of "principles of trading?" This can mean different things to different people. To debate any matter, everyone must be using the same definitions.

Regardless, I believe the general phrase: "the market keeps changing" refers to the 'same' perceived causes having a different perceived 'effect' relative to some time frame in the past.

For hypothetical examples:

Sell in May, and go away used to work ... then stops working ... now the opposite happens.
As January goes, so goes the year (or something like that) ... ditto.
Lowering rate in a particular month ...
Santa Claus rally ...

Etc.

In other words, perceived reliable patterns stop working, or do the opposite than they did in some time frame in the past.

Buy low, sell high doesn't stop working. But, whatever may allegedly causes the market to go low, or go high, may seem to shift over time. This is what I think they mean when they say the market changes. It's nothing rigorous; nothing serious; just anecdotal.

Systems are either designed with such changes in mind; or they are not. Some systems work; some don't. The market can change (using my above definition), and many system can't adapt. In conclusion: they both are true.
  • #9
  • Mar 19, 2019 8:29pm Mar 19, 2019 8:29pm
Quoting userque
{quote} You've touched on many debatable points, but to respond only to your final question: First, what is your definition of "principles of trading?" This can mean different things to different people. To debate any matter, everyone must be using the same definitions. Regardless, I believe the general phrase: "the market keeps changing" refers to the 'same' perceived causes having a different perceived 'effect' relative to some time frame in the past. For hypothetical examples: Sell in May, and go away used to work ... then stops working ... now...
I could turn on my computer, start the platform and pull up for example the Eur chart with my handy dandy S/R indy on it and see the green support lines on the bottom of the range and the red ones on top of the range and then say to myself: THIS IS THE MARKET! Then I could apply nifty strategy of buying at the support and selling at resistance and make money. Then after dinner, some news hits on the other side of the world and Eur leaves it's range for the stratosphere. Then I can go and cry that the market changed. Ya well of course the market changed. It changed because my definition of the was wrong. My application of S/R and time frame was wrong. It was me who was wrong. It was my strategy that was wrong to begin with. It wasn't suitable for a market that by it's inherent nature changes all the time. otherwise it wouldn't be a market.

So, yes, I can see those who define the market incorrectly and think of it as something that they are looking at at this moment are the ones that claim market changed. But again, market didn't change in the broader view. It did what it has always done and always will do. I guess, sadly, those who are in the NOW state of the market, have to continually change their strategies because they won't accept the market as a flowing phenomenon. It is similar to perceiving the weather. You look out, it's nice and sunny, you decide to go for a stroll and suddenly it rains and you get soaked and you complain the weather changed. I suppose the people who wear a hoodie would be a little more prepared because they know that the weather can change.

My definition of the principals of the market? Just that it goes up and down, little or a lot and no one knows when and not really can tell for sure why or how long. Also, there isn't one market. There are many and they influence each other. To me principals of the market are facts about the market and not myths. The fact that some markets go down while at the same time others go up is a principal. Market exhaustion is a principal. A pair can go up and up and up but it will eventually come down because it can't sustain itself going in one direction forever. There are mathematical principals that govern the markets like they do other things. For example, it can not be denied that (1+1+1+1)/2=2. That and many other varieties of that formula is applicable to the markets. The fact that certain patterns repeat in the charts is a principal. You can't deny that it happens. One of the principals I deeply believe in is the existence of fractals in the markets. A one minute chart has the same characteristics as a 2 minute and 3 minute and to infinity chart. Based on that, I believe that a good strategy should be able to apply to all time frames and to all charts. Seasonal effect on the market is a principal but I ignore it. I'm sure there are more and they cause change so to complain or to scream markets change and you can't make consistent strategies to deal with it and you have to constantly change to keep up is a bit of a stretch.
  • #10
  • Mar 19, 2019 8:55pm Mar 19, 2019 8:55pm
Quoting OutThere
{quote} I could turn on my computer, start the platform and pull up for example the Eur chart with my handy dandy S/R indy on it and see the green support lines on the bottom of the range and the red ones on top of the range and then say to myself: THIS IS THE MARKET! Then I could apply nifty strategy of buying at the support and selling at resistance and make money. Then after dinner, some news hits on the other side of the world and Eur leaves it's range for the stratosphere. Then I can go and cry that the market changed. Ya well of course the...
Again, anyone can have their own definition of what "the market changing" means. You disagree with "the market changes," but you first have to hear what that phrase means to someone that agrees with it--as your definition may be different. I proposed that it means that the market is reacting differently to stimuli than it has in the past. Why can't the market do that if it wants to? Why is that so hard to accept as being ... a change?

Again, the market always goes up and down. No one is going to debate you on that. Everyone knows that. But when they say, "it changed," again, they are referring to: what once seem to make the market go up, now makes it go down. You see, it still goes up and down, like you vigorously argue. But that's not what they are talking about when they say "it changed." Again, they are referring to it's reaction to the same perceived stimuli is different now than it was in the past.

To use the weather, since you mention it. Yes, everyone knows it can be hot or cold, sun or rain, but we expect hot during certain months, and cold during other months--a pattern. We further expect a certain level of hot and cold. If we get snow in August (U.S.) and Monsoon rains in typically dry areas, some my say "the weather has changed."

The change means a change in frequency. For example, Sell in May was never meant to work every year. It worked within a certain probability. So if the frequency of it working drastically changes, then some might say, "the market changed." This is not to say that the market no longer goes up and down. It is to say that a certain long standing pattern no longer occurs with long standing frequency.

I can't explain it any better. If you still believe that no one should ever say, "the market changed," then we simply have to agree to disagree.
  • #11
  • Mar 19, 2019 8:56pm Mar 19, 2019 8:56pm
Quoting OutThere
{quote} I don't speak sarcasm much but I can detect it. It is usually spoken by people that have a hard time speaking straight. If I had to change my strategy every time the market changed the way you think market changes, It would have to be every tick...every few minutes, hours etc. But the rate of a pair changing isn't the market changing. The simplest and oldest strategy is to "BUY low and SELL high". Tell me if you can talk normal, how the market changing according to the way you think, will undermine that simple strategy? How does the market...
huh? LOL seriously NO sarcasm. I was serious. The MARKETS do not change. I agree with you.

PS. There IS a strategy that never fails because the market does NOT CHANGE. this is not price indicators though. Its not fibs or rsi or macds. Its very simply insto liquidity. Simple but no education out there on it and if you ever get it TAKES YEARS of experience to master.

So yes I agree the markets have never changed and never will. I ask you this... has the auctioing of price ever changed? NO not since man traded rocks in caves.

People who say the marlets change are the same "educators" who know dick all and blame market changing when there price indicators (which are useless) fail.
  • #12
  • Mar 19, 2019 9:04pm Mar 19, 2019 9:04pm
Quoting userque
{quote} Again, anyone can have their own definition of what "the market changing" means. You disagree with "the market changes," but you first have to hear what that phrase means to someone that agrees with it--as your definition may be different. I proposed that it means that the market is reacting differently to stimuli than it has in the past. Why can't the market do that if it wants to? Why is that so hard to accept as being ... a change? Again, the market always goes up and down. No one is going to debate you on that. Everyone knows that. But...
interesting take. Definition of MARKET CHANGED to me is that price action has changed over time. I will fight anybody on this.

What youre talking about is BIAS. and of course bias changes all the time .Weather for certain markets changes the BIAS yes of course BUT does the marlet suddenly not adhwre to the rules of auction in wet weather? no.

OR are we saying the value of which markets go up or down can change over time? possibility but rare i would think. weather would always affect some markets for instance.

So Im talking purely price action.
  • #13
  • Mar 19, 2019 9:12pm Mar 19, 2019 9:12pm
Quoting Cools81
{quote} huh? LOL seriously NO sarcasm. I was serious. The MARKETS do not change. I agree with you. PS. There IS a strategy that never fails because the market does NOT CHANGE. this is not price indicators though. Its not fibs or rsi or macds. Its very simply insto liquidity. Simple but no education out there on it and if you ever get it TAKES YEARS of experience to master. So yes I agree the markets have never changed and never will. I ask you this... has the auctioing of price ever changed? NO not since man traded rocks in caves. People who say...
I'm sorry. I have had to deal with people that said something but meant another recently. I think I got PTSD from it. I take it back. I guess I am not so good at deciphering sarcasm. Also, Thanks.
  • #14
  • Mar 19, 2019 9:35pm Mar 19, 2019 9:35pm
Quoting Cools81
{quote} interesting take. Definition of MARKET CHANGED to me is that price action has changed over time. I will fight anybody on this. What youre talking about is BIAS. and of course bias changes all the time .Weather for certain markets changes the BIAS yes of course BUT does the marlet suddenly not adhwre to the rules of auction in wet weather? no. OR are we saying the value of which markets go up or down can change over time? possibility but rare i would think. weather would always affect some markets for instance. So Im talking purely price...
Again, to have meaningful debate, we have to be using the same definitions. The original post should have included what the OP considers to be "change."

No, price action hasn't changed. Full stop.

If you define volatility as part of the price action, then that has, in fact changed from way back then, to now. If you don't, then it hasn't.

So many online debates are really arguments, with each side using a different definition of the subject matter. Or semantics.

So, let me restate using your phrase of choice:

What once caused the market to exhibit a particular price action at a particular frequency ... can change. It may even reverse. Many construe this as "a change in the market."

More simply:

Price goes up and down. Doesn't change.
How high or low? Changed since the past. More volatile since the past.
Stimuli causing up or down. Changes. Same exact things that cause up reaction, can later in time cause down reaction.

EDIT: By 'volatility,' I mean actual volatility. Not the derived index. Stand back, look a SP500 chart going back to the 70's, and determine whether volatility has changed.
  • #15
  • Mar 19, 2019 9:56pm Mar 19, 2019 9:56pm
Quoting userque
{quote} Again, anyone can have their own definition of what "the market changing" means. You disagree with "the market changes," but you first have to hear what that phrase means to someone that agrees with it--as your definition may be different. I proposed that it means that the market is reacting differently to stimuli than it has in the past. Why can't the market do that if it wants to? Why is that so hard to accept as being ... a change? Again, the market always goes up and down. No one is going to debate you on that. Everyone knows that. But...
Ok. I understand. It depends on what 'changed' means.
I guess what I am advocating is that accept change but hang onto things that never change. That requires identifying things that never change. For example it doesn't matter what the price level is or what season, buying/selling on pullbacks works. Yes, there are times that the price shoots straight up or down but that is part of the definition of pull backs that they are not present when the price shoots up or down.

"what once seem to make the market go up, now makes it go down". Okay so that is like an external factor applied to a currency like they raise the interest rates and that move always always made the price go up and this time it did the opposite. Hmmm, I guess this is why I leave out fundamentals, interest rates, news, politics and such out of my trading. They are out of my control, they come out suddenly from whichever direction and they effect the markets in various ways and as you eluded in contrary ways. What can I say, I didn't include those factors in my description of market principals. They don't configure in my view of the markets. I only deal with how the pair reacts to those jabs. I don't consider myself smart enough or connected enough or around enough to care for them.

Now that you have mentioned that, my heart goes out to those that have to deal with all that. To use a sports analogy (not that I know much about baseball) If I was a mid fielder, I might not see perfectly how the ball is thrown, how it is curved, how the injuries of the batter and pitcher and their and right handed-ness or left handed-ness and all the many other issues that effect the ball flying through the air. All I know is that it is airborne and I have to catch and throw it. Yes, now I can see if the pitcher always throw a curve ball and suddenly decides to throw a straight ball...jeez I am way over my head on that stuff.

Alright, my advice and no one needs to follow it, leave the external factors to experts at them.
  • #16
  • Mar 19, 2019 10:14pm Mar 19, 2019 10:14pm
Quoting OutThere
{quote} Ok. I understand. It depends on what 'changed' means. I guess what I am advocating is that accept change but hang onto things that never change. That requires identifying things that never change. For example it doesn't matter what the price level is or what season, buying/selling on pullbacks works. Yes, there are times that the price shoots straight up or down but that is part of the definition of pull backs that they are not present when the price shoots up or down. "what once seem to make the market go up, now makes it go down". Okay...
Now we agree!

Here's how I interpreted your earlier positions:

{I have a system that trades strictly price action. My system doesn't care about external factors. Price moves; and my system reacts! Man, it's all on it! You folks that scream that the markets are changing are clueless. The markets can't be changing because my system doesn't change and isn't replaced every so often, but it still outperforms most benchmarks ... so you all must be dummies.}

I knew what you wanted to convey, but you were throwing out the baby with the bath water.

You're correct. Some systems are based upon factors that can change. Yours isn't. Congratulations on your success!
  • #17
  • Mar 19, 2019 10:37pm Mar 19, 2019 10:37pm
Quoting userque
{quote} Again, to have meaningful debate, we have to be using the same definitions. The original post should have included what the OP considers to be "change." No, price action hasn't changed. Full stop. If you define volatility as part of the price action, then that has, in fact changed from way back then, to now. If you don't, then it hasn't. So many online debates are really arguments, with each side using a different definition of the subject matter. Or semantics. So, let me restate using your phrase of choice: What once caused the market...
good post. I agree. and blaming volatility on lack of ability to trade is something the so called experts (cough scammers cough) say quite a bit. Load of shite.
  • #18
  • Mar 19, 2019 11:06pm Mar 19, 2019 11:06pm
Quoting userque
{quote} Now we agree! Here's how I interpreted your earlier positions: {I have a system that trades strictly price action. My system doesn't care about external factors. Price moves; and my system reacts! Man, it's all on it! You folks that scream that the markets are changing are clueless. The markets can't be changing because my system doesn't change and isn't replaced every so often, but it still outperforms most benchmarks ... so you all must be dummies.} I knew what you wanted to convey, but you were throwing out the baby with the bath...
I wasn't even thinking along those lines. I misinterpreted Cools81 too so I guess it happens. All I am trying to do is to debunk the myth that markets are so slippery and elusive and shift shaping so much so that a trader can't keep up and configure them. It would be so disheartening to come up with a system, see it work and then the nest day it crumbles and blows away in the wind. That would be like the ending of Avengers last movie. And to dole it out as a fact that isan't even disputed by anyone over and over again, it seemed like I had to say something.

So still, saying markets change all the time and there isn't any system that lasts forever I think is not true. Would you say that yourself? It is easy to say it if someone is thinking that their strategy of buying a pair based on interest rate fluctuations needs to be evaluated and reevaluated all the time. If it is considered everyone knows their Macroeconomics well and they answered the questions of how interest rates and bond yields and employment numbers effect each other and yet, in real life sometimes those factors check in and sometimes they don't where they should, then yes, I can see the frustration.

I have long ago sat down and had a talk with myself and decided to implement what were factual and consistent in trading. I continue to push aside still the things that give me varied results across different time frames and different pairs. I probably miss a bunch of goodies in ignoring all the news and fundamental analysis that some traders swear by. At the same time, I don't receive the ill effects of them when they don't work.
  • #19
  • Mar 20, 2019 12:04am Mar 20, 2019 12:04am
Quoting OutThere
{quote} I wasn't even thinking along those lines. I misinterpreted Cools81 too so I guess it happens.
Understood.

Quoting OutThere
All I am trying to do is to debunk the myth that markets are so slippery and elusive and shift shaping so much so that a trader can't keep up and configure them. It would be so disheartening to come up with a system, see it work and then the nest day it crumbles and blows away in the wind. That would be like the ending of Avengers last movie. And to dole it out as a fact that isan't even disputed by anyone over and over again, it seemed like I had to say something. So still, saying markets change all the time and there isn't any system that lasts...
So you're asking me IF(markets change 'all the time' AND no system lasts forever)

Well, with my previous definition of 'change market,' and with the new condition of 'all the time,' and without a definition of what 'all the time' means; I'd have to say:

Since we've established that markets change, using the definition I've provided; we only here need to consider the newly introduced condition, 'all the time.' Since no definition was provided, I'll presume 'all the time' to mean very frequently. I'll further define 'very frequently' to mean weekly. That said, I agree, the markets don't change all the time.

Regarding the second part:

I'll assume 'last forever' to mean lasts at least 30 years, all things being equal. So here I also agree with you.

More simply, Yes, I agree with you. I believe systems exist that can either adapt to a changing market (as I've previously defined it); or are impervious to a changing market. I believe such systems can generate consistent and impressive profits over the course of decades.

Quoting OutThere
It is easy to say it if someone is thinking that their strategy of buying a pair based on interest rate fluctuations needs to be evaluated and reevaluated all the time. If it is considered everyone knows their Macroeconomics well and they answered the questions of how interest rates and bond yields and employment numbers effect each other and yet, in real life sometimes those factors check in and sometimes they don't where they should, then yes, I can see the frustration. I have long ago sat down and had a talk with myself and decided to implement...
Sounds like you've found a system that fits your personality. This is key, imo.
  • #20
  • Mar 20, 2019 12:41am Mar 20, 2019 12:41am
Any openly traded financial market (stocks, bonds, commodities, forex etc ..) will change in order to "consume" the largest amount of money from the largest number of accounts.
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