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Forex is random

  • #61
  • Mar 28, 2020 8:21am Mar 28, 2020 8:21am
Quoting dkrock
{quote} Patterns are created by measuring buyers against sellers. There is nothing magical about it. It is not an illusion in our mind, lol. It is no different than measuring the height of everyone in your city, getting the average, and determining who is over/under the average. The measurement of buyers and sellers creates predictable price cycles that are easily traded.
Dkrock, hope you are making some good coin with patterns but let me explain my point better.
When you enter a trade using patterns, candle structures or some other price cycles, the change of winning is just slightly higher than 50%.
Lets face it, it could go up, it could go down.
However, when you enter a trade at the edge of the chart (Exhaustion), the chance of winning now averages around 85% going by my data.

Doesn't it make sense to enter a reversal trade when price hits a boundary and then snaps back because of thin Liquidity and hidden gaps. No pattern offer these high win rates in my experience and the good thing is we don't need to care about buying the next trading guru's pattern book.
Trading thin liquidity at the boundary of the charts
  • #62
  • Mar 28, 2020 8:52am Mar 28, 2020 8:52am
Nothing new ... that's real fact about that market it' random that's why there is risk plans ... MM plans ... R:R ....
  • #63
  • Mar 28, 2020 2:18pm Mar 28, 2020 2:18pm
Quoting rover99x
{quote} Please accept my apologies if I've missed something in your argument here, but I can't see what volume has to do with randomness with occasional Levy Flight. Even with very low volume markets can move a lot!
I mean to say that random walks, be them pure or with Levy Flight, lack the dimension of time, thus do not prescribe 'rules' for the rate of change of price.
  • #64
  • Mar 28, 2020 3:53pm Mar 28, 2020 3:53pm
Quoting RickM
{quote} Yes, you are correct the markets are not random and also correct that all price action patterns generally don't offer a edge. Patterns are just shapes our minds see to make sense of these manic movements. I believe the mistake most traders make when trying to make sense of random movement is they are trying to predict where price is moving to next INSTEAD of trading with the knowledge of where it has just being. They should be looking at price mechanics and know how fast a market moves, how far it can move and at what angle it can move....
lol wow, this is literally what I do
  • #65
  • Edited 7:49pm Mar 28, 2020 7:20pm | Edited 7:49pm
Quoting AmmaBoss
{quote} lol wow, this is literally what I do

Great, then you get the theory the market movements are controlled by an Auction Algorithm that is designed to hunt passive orders within nearby liquidity pools.
Traders often believe the Market makers move price when the reality is they only provide Liquidity. Its the Algorithm that moves price, the market makers just allow us retail traders to open positions with low spreads and trading costs.
I believe the Algorithm moves price by creating groups of candles called ALR's / Acute Liquidity Runs. These are spikes in a series of higher highs or lower lows that attack the Liquidity pool to gather in orders/ stops before retreating. So its this exhaustion of price seen as spikes retreating that can offers us the high win rates we desire as traders.
Simply each spike generally has a ceiling it can't pass due to the code- IT HAS TO RETREAT

Interesting we have more than one Algorithm to worry about, we need to be wary about the primary Algorithm first that gets price consistent across all brokers platforms but even more importantly, we need to be wary about the Algorithm controlling each brokers server. Here is an interesting case study that occurred this week on Gold. This information comes from by trading buddy's Sharks and Nutter.
Here you see a spike around 100 pips that occurred on Gold and it actually cost one of my trading buddy's a $7000 loss. This spike was caused by the Algorithm only on some servers on many broker platforms including IC Markets and Go markets but probably others as well. If we look into this action further, we can see it effected servers with lower liquidity but less so with servers with higher amounts of liquidity.

Here is the important part of this post - the brokers do manipulate your trades by placing you on a low liquidity server if you are new to trading and on a high liquidity server if you are a A Book trader. Now we know why your stops get run too often, they know that the Algorithm will run stops when there is little liquidity so they are grouping all B book traders that have read the same trading manual bullshit inside the same servers.

Another case study and something Algo traders know very will is their is data different between every single server on any broker. If I decide to run the same EA on three different IC Markets accounts ( 3 different servers ), every single account ends with a different profit outcome - often one of the accounts is not even close to having the same profit as the other two. Its just one big gamble really.

MT4 is the most popular trading platform in the world because the brokers here WANT YOU HERE

Oh, my mate got his $7000 credited back to his account when he proved this manipulation.

Credit again to sharks for Chart 1 and Nutter for Chart 2
Attached Image(s) (click to enlarge)
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Trading thin liquidity at the boundary of the charts
  • #66
  • Edited 9:12pm Mar 28, 2020 8:39pm | Edited 9:12pm
Quoting RickM
{quote} Great, then you get the theory the market movements are controlled by an Auction Algorithm that is designed to hunt passive orders within nearby liquidity pools. Traders often believe the Market makers move price when the reality is they only provide Liquidity. Its the Algorithm that moves price, the market makers just allow us retail traders to open positions with low spreads and trading costs. I believe the Algorithm moves price by creating groups of candles called ALR's / Acute Liquidity Runs. These are spikes in a series of higher highs...
There is much better strategy to trade than trade spikes. Spike traders don't have any idea about the market other than trading rtm strategy from supposed market extremes mostly based on stddev marked by bands or some candle forms. Trading spikes is attractive because it appeals to logic. So most traders are naturally inclined to spike trading, you see such glorious trades posted everywhere. Easy idea to sell telling stories of stop loss hunting or liquidity pools.

Edit - trading spike strategy threads and lots more if anyone care to search.

https://www.forexfactory.com/showthread.php?t=343533

https://www.forexfactory.com/showthread.php?t=985306

https://www.forexfactory.com/showthread.php?t=944320
Know what you trade
  • #67
  • Mar 28, 2020 9:22pm Mar 28, 2020 9:22pm
Quoting BWilliam
{quote} There is much better strategy to trade than trade spikes. Spike traders don't have any idea about the market other than trading rtm strategy from supposed market extremes mostly based on stddev marked by bands or some candle forms. Trading spikes is attractive because it appeals to logic. So most traders are naturally inclined to spike trading, you see such glorious trades posted everywhere. Easy idea to sell telling stories of stop loss hunting or liquidity pools.
Hi Bwilliam,

I offer input here in the hope traders see the manipulation occurring to their accounts is by Algorithm's, not Market makers.
If you wish to trade spikes, it should only be done when you have a boundless knowledge of price mechanics.
The trader needs to understand the CODE first, the measurement of amplitude which sits at the crest on each side of its frequency.
Then throw in some liquidity pools and you should know what to do.

Cheers Mate - stay safe
Trading thin liquidity at the boundary of the charts
  • #68
  • Mar 28, 2020 9:29pm Mar 28, 2020 9:29pm
Quoting RickM
{quote} Hi Bwilliam, I offer input here in the hope traders see the manipulation occurring to their accounts is by Algorithm's, not Market makers. If you wish to trade spikes, it should only be done when you have a boundless knowledge of price mechanics. The trader needs to understand the CODE first, the measurement of amplitude which sits at the crest on each side of its frequency. Then throw in some liquidity pools and you should know what to do. Cheers Mate - stay safe
I agree that price is moved by algorithm BUT I don't agree it's manipulation. It's simply valuation of the underlying asset managing the financial resource of the financial institutions. This valuation can be math calculated. And these algorithm use math as their basis of valuation. Today the big financial institutions trade with algos run by army of phD graduates, manual traders are a thing of the past. Whoever understands the math of algos have a big advantage, that's how real alpha or edge is found. Math is used to interprete the math of the financial institutions math algos. The retail traders is badly lagging in this forefront area.
Know what you trade
  • #69
  • Mar 28, 2020 9:52pm Mar 28, 2020 9:52pm
Quoting BWilliam
{quote} I agree that price is moved by algorithm BUT I don't agree it's manipulation. It's simply valuation of the underlying asset managing the financial resource of the financial institutions. This valuation can be math calculated. And these algorithm use math as their basis of valuation. Today the big financial institutions trade with algos run by army of phD graduates, manual traders are a thing of the past. Whoever understands the math of algos have a big advantage, that's how real alpha or edge is found. Math is used to interprete the math...
Don’t give these Algo traders too much credit, they may be smart but they don’t understand the market with boundless knowledge. I spoke to a three time Algo trading world champion and I wasn’t impressed.
They think too much but fail too open their eyes. I have worked with a few professional institutional EA traders as well and again believe they reply on large order positions to weigh down liquidity pools in at attempt to manipulate the Algorithm. I am also a Algo trader as well I but would call myself a better manual trader. Smart people do not make better traders because they have one fault, they believe they are always right.

Cheers Rick
Trading thin liquidity at the boundary of the charts
  • #70
  • Mar 28, 2020 10:06pm Mar 28, 2020 10:06pm
Quoting RickM
{quote} Don’t give these Algo traders too much credit, they may be smart but they don’t understand the market with boundless knowledge. I spoke to a three time Algo trading world champion and I wasn’t impressed. They think too much but fail too open their eyes. I have worked with a few professional institutional EA traders as well and again believe they reply on large order positions to weigh down liquidity pools in at attempt to manipulate the Algorithm. I am also a Algo trader as well I but would call myself a better manual trader. Smart people...
Algorithm asset valuation and algorithm directional trading means 2 separate things. The algorithm I refer to is the valuation algorithm that's used by all financial institutions to manage their financial products. This valuation algorithm is what makes the market.

The future of trading belongs to the big data scientist, that's the reality. Retail traders segment has a big gap in this technology. Their mindset is still stuck in traditional primitive trading strategies. Read this forum to get the feel of how outdated the status.
Know what you trade
  • #71
  • Mar 29, 2020 3:53am Mar 29, 2020 3:53am
It's not possible to move any pair anywhere. Noone can do that. We trade a pair. Made up of 2 currencies. Each currency is traded in multiple pairs. Only way to measure price of 1 pair is to take all pairs, weigh them and deteremine the flow from 1 currency to another. It's a closed system in which all currencies together are 100% and always stay 100%. Now, what brokers do on there platforms is a different story. But in short: they want to take your money from you in an unfair manner.
  • #72
  • Mar 29, 2020 2:30pm Mar 29, 2020 2:30pm
Quoting rover99x
{quote} The market is random but with Levy Flight, Levy Flight is something we see all around and in nature. But of course it doesn't really matter what you believe, trade your method with what you see on the screen! One little note on randomness, it is not, up down, up down, up down, it's up up, down, up up up up up up, down down down, up up up up up up up up up, down down down down, up up! You get trends in random events..... Try it, toss a coin 100 times and you'll get a series of heads or tails, sometimes as many as 11 heads or tails in a row!...
I have seen red black on roulette go over 20 times a single colour, in a live casino.
  • #73
  • Mar 29, 2020 2:39pm Mar 29, 2020 2:39pm
Interesting read. Now here's a thought. If it were random, price could go to zero. I'm not a mathematician but I have a book called "fooled by randomness". A good read, I may get it out again.
  • #74
  • Mar 29, 2020 2:49pm Mar 29, 2020 2:49pm
Quoting Spikehunter
{quote} I have seen red black on roulette go over 20 times a single colour, in a live casino.
Yes, I can well believe that. I have, quite sadly I know, tossed a coin over 400 times and had one heads trail of 16 and quite few 10, 11 and 12 heads and tails in a row!

I did it just to prove to myself that a pure 50/50 chance can and does have trends
  • #75
  • Mar 29, 2020 3:02pm Mar 29, 2020 3:02pm
Quoting Spikehunter
Interesting read. Now here's a thought. If it were random, price could go to zero. I'm not a mathematician but I have a book called "fooled by randomness". A good read, I may get it out again.
Yes Spikehunter, I too have read it, where luck is quite often confused with skill. I must read it again as well because it was some time ago.......
  • #76
  • Mar 29, 2020 3:24pm Mar 29, 2020 3:24pm
I want to start to trade, could you give me some advice ?
  • #77
  • Mar 29, 2020 4:40pm Mar 29, 2020 4:40pm
Quoting Legalist
I want to start to trade, could you give me some advice ?
don´t

Greetings
TWEE, revoke my membership.
  • #78
  • Mar 29, 2020 5:18pm Mar 29, 2020 5:18pm
Interesting topic, i would go one step further and map price waves from the true data and random generated data. Why not add zigzag and calculate things like the frequency and length of price waves? See to what extent there is a difference between the two.
  • #79
  • Mar 29, 2020 9:27pm Mar 29, 2020 9:27pm
Quoting Spikehunter
Interesting read. Now here's a thought. If it were random, price could go to zero. I'm not a mathematician but I have a book called "fooled by randomness". A good read, I may get it out again.
I realize alot of people truly dont understand what a random walk is. A random walk has a starting point, etc 1.5 in the charts I posted. Heads we go up, tail we go down for every tick. It will never also go to zero. The random walk moves mildly around an equilibrium or starting price. Looking at the euro, it is at the same price it was 21 years ago. Stay smart.
When you see it, BET big.
  • #80
  • Mar 30, 2020 1:59am Mar 30, 2020 1:59am
Quoting Rennaissance
{quote} I realize alot of people truly dont understand what a random walk is. A random walk has a starting point, etc 1.5 in the charts I posted. Heads we go up, tail we go down for every tick. It will never also go to zero. The random walk moves mildly around an equilibrium or starting price. Looking at the euro, it is at the same price it was 21 years ago. Stay smart.
In theory Spikehunter is right. If you apply no more rules other than a fixed step size for a random walk, the outcome is unbound. The possible price range after N steps with let's say X being the single step size is: starting price +/- X*N.
A random walk has no memory and therefore does not 'move around an equilibrium'. Only the expected value of a random walk is the same as the starting point but this is a different story.
The fact that real currency markets dó tend to be forced back to an equilibrium on the long run means that a random walk without any further constraints is not enough to describe it.
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