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Market & Trading Facts

  • #21
  • Sep 19, 2005 3:44am Sep 19, 2005 3:44am
Quoting narafa
I think what was really meant by this one is that the forex market always have both biases at the same time. We are trading pairs, remember, when the people are bullish on the USD, they are bearish on the Yen. I think we should twist it a little bit and say that: For every currency pair, bullish and bearish bias always exist at the same time.
ok, i agree that this is a fact.


Quoting narafa
I agree, it's an advice. However I can see that advices that are not debatable can be included. If you want us to just stick with FACTS, I don't mind. I only aim to get a bunch of FACTS about the market and trading that I never question in the future anymore. I just want to get a real base in this world of illusions
i vote we stick with facts. advice is everywhere, its the facts that need to be gathered. plus a list of facts will help us a lot more, it will be a like a decision support system.

Quoting narafa
Do you mean change in prices or in sentiment or what?

If you mean change in prices, then I think that it's the same as the Supply & Demand Fact. Otherwise, please clarify.
what if i say it like this...

6 - the market is always changing

meaning that the market will never act exactly like it acted in the past. its always changing, and this is what makes it so hard to predict the future. fact?
Relax and be happy.
  • #22
  • Sep 19, 2005 3:49am Sep 19, 2005 3:49am
Quoting merlin
what if i say it like this...

6 - the market is always changing

meaning that the market will never act exactly like it acted in the past. its always changing, and this is what makes it so hard to predict the future. fact?
Absolutely.

Thanks,

Nader
  • #23
  • Sep 19, 2005 4:12am Sep 19, 2005 4:12am
ok then, so far we have the following 7 facts...

1- Supply & Demand forces cause price changes
2- Forex is a "zero-sum" market (not ALL markets are)
3- No holy grails in trading.
4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate.
5- Human nature does not change
6 - For every currency pair, bullish and bearish bias always exist at the same time.
7 - the market is always changing

hmm...what to add...
Relax and be happy.
  • #24
  • Sep 19, 2005 7:11am Sep 19, 2005 7:11am
[quote=fijitrader]
Quote
But let's not confuse highly probable ideas and facts.

1- Supply & Demand forces cause price changes

Reasonable.

2- Forex is a "zero-sum" market (not ALL markets are)

Are you saying that new money cannot enter the markets? Do all countries print money at the same rate? Is there a finite amount of money that is permitted to be traded? Also are you treating this as a market without fees? Concerning the forex market what is your definition of zero sum? Flipping a coin where there are no fees is zero sum. Playing a roulette wheel is zero sum in most cases but any market where supply of a component can be increased or decreased is not zero sum.

3- No holy grails in trading.

This has not been proven or disproven. It works fine as a concept but no scientist would rule out something that has not been disproven or proven. Being highly improbable does not make it factual.

4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate.

Neither proven or disproven. The only thing that is a fact is that it is improbable to know the future. It is not a fact that the future is unknowable. It is only a fact that none of us knows the future. If we did it is not likely we'd be on this forum. However that does not make the above statement a fact.

5- Human nature does not change

Vague generalization. The markets change and they are propelled by human nature at least in part. How can you prove that human nature does not change? If you cannot prove this how can you call it a fact?

6 - For every currency pair, bullish and bearish bias always exist at the same time.

This sounds correct. You mean that there are people trading with both biases at the same time? Or are you just stating that different traders executing trades have different biases? Either way what does this fact do for you?

7 - the market is always changing

What does this mean? Do you mean that observable price patterns emerge and are replaced with different ones? If this statement is left so general it is impossible to refute but that does not make it a fact. Prices go up and down. This never changes. Prices form patterns. This never changes. Volatility increases and decreases this never changes. So what exactly is always changing?

I don't mean to rain on anyones parade but when collecting "facts" they must be both irrefutable and proveable. Being irrefutable is not enough to make something a fact because nonsense is also irrefutable.

FT

FT, have you read the first post. I gave some details about those points, but Merlin just reduced the explanation to make it short and clear.

Here are the originals:

1- Supply & Demand forces are the main cause of price changes regardless of real or intrinsic value

2- All markets are "zero-sum" markets which means that for every trader winning there is another trader, or a group of traders, losing the same amount

3- No holy grails in trading. There is no system that is 100% efficient

4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate

5- Human nature do not change. Human feelings are always the same. Fear, Greed, Hope and all other feelings are always there inside us. They only differ in magnitude from one person to another


Regarding point #6

6 - For every currency pair, bullish and bearish bias always exist at the same time

We meant that when people are long the USD/JPY, they are short the JPY as well at the same time, so the trader is bullish on the USD and bearish on the JPY at the same time, that's the explanation of it

Regarding the zero-sum issue, we are not saying that money can't go into the market, of course it can. The catch here is that inside the market, the amount of money lost by a trader, goes to another trader, which makes it a zero sum market.

When money is injected in or out of the market, either a new trader is entering or an old trader is leaving, but this leaves the zero-sum as it is.

Money won = Money lost (Zero-Sum)

Regarding #7, The Market is always in change, Merlin meant that what used to work yesterday might not be working today, and what used to work today, might not work tomorrow. The concept of change in itself is a fact. History does not repeat itself as exactly as many believe. Yes, history repeats, but don't expect to see what exactly happened yesterday to happen again tomorrow.

Maybe Merlin can explain his point better than me

Thanks,

Nader
  • #25
  • Sep 19, 2005 10:22am Sep 19, 2005 10:22am
Just thought of one.....

"Trends/Sentiments go up, go down, and go sideways."
  • #26
  • Sep 19, 2005 11:19am Sep 19, 2005 11:19am
[quote=fijitrader]
Quote
3- No holy grails in trading.

This has not been proven or disproven. It works fine as a concept but no scientist would rule out something that has not been disproven or proven. Being highly improbable does not make it factual.


4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate.

Neither proven or disproven. The only thing that is a fact is that it is improbable to know the future. It is not a fact that the future is unknowable. It is only a fact that none of us knows the future. If we did it is not likely we'd be on this forum. However that does not make the above statement a fact.


FT

I think both points 3 and 4 treat the same point. And I do think that the "no holy grail" in trading is a fact. Because holy grail would be having a perfect system. This perfect system though, would affect the market so much that it would have to change. So I think that theoretically the market is not suitable for a "holy grail" system. This is opposite to the "Supply and demand" law.
Also it seems that following your reasoning nothing is a fact. No scientifical knowledge has been proven. At most it has been shown to be a) refutable b) any experiment posed to refute it failed c) it is the simplest explanation to an observed phenomenon (Ocamm's razor). In those cases we have enough supporting evidence and say that something is a fact. You don't have to prove it. You just need the three above things to exist.
So I think that your claims are not true. It is true that for many economical things there is no "proof". But there is evidence. And this is exactly the same thing that exists for most scientific theories.
  • #27
  • Sep 19, 2005 1:02pm Sep 19, 2005 1:02pm
I'm not too sure about some of the 'facts'. Some just sound like suggestions. The only fact I know is that everyday there is opportunity to profit. So one doesn't have to feel like they've missed out on anything. There is always another chance to profit.
  • #28
  • Sep 19, 2005 5:59pm Sep 19, 2005 5:59pm
With some exceptions, negative statements (no, can't, never) and uncertainty statements (maybe, might, can, probably) are rarely facts.

The only one that is fact is #6
  • #29
  • Sep 19, 2005 6:23pm Sep 19, 2005 6:23pm
Quoting Pipsta
....everyday there is opportunity to profit. So one doesn't have to feel like they've missed out on anything. There is always another chance to profit.
Everyday is also an opportunity to lose. If you haven't, it might just had been your luck.
  • #30
  • Sep 19, 2005 9:36pm Sep 19, 2005 9:36pm
Quoting ivenger
Everyday is also an opportunity to lose. If you haven't, it might just had been your luck.
...if you insist. I'm a see the glass half full type of guy, but don't let me interrupt your fun. I've been studying the market for 3 years. I've been on the wrong side of the pip before.
  • #31
  • Sep 20, 2005 3:22am Sep 20, 2005 3:22am
Quoting fijitrader
So called facts tend to be rather elusive when inspected closely.
yeah no shit, after reading this thread that is starting to become apparent to me
Relax and be happy.
  • #32
  • Edited 3:35am Sep 20, 2005 3:28am | Edited 3:35am
Quoting fijitrader
3- No holy grails in trading.

This has not been proven or disproven. It works fine as a concept but no scientist would rule out something that has not been disproven or proven. Being highly improbable does not make it factual.
yes good point fiji. this is called a null hypothesis if im not mistaken (where you say it is true until proven false, i could have my vocab mixed up). i think for the sake of this exercise though we need to accept null hypotheses if they are reasonable to believe. that would, of course, mean we would stray from the hard core facts. but the hard facts are so few that we could possibly be left with no facts! this is starting to be harder than expected. but hey, nothing worthwhile is easy!
Relax and be happy.
  • #33
  • Sep 20, 2005 3:29am Sep 20, 2005 3:29am
Quoting Pipsta
The only fact I know is that everyday there is opportunity to profit.
this is actually a pretty good one! i say we add it!
Relax and be happy.
  • #34
  • Sep 20, 2005 3:33am Sep 20, 2005 3:33am
Quoting fijitrader
The idea that the markets change or don't change is too nebulous to be useful when one attempts to state it as a fact. To quantify whether markets change all the time or never change requires a much more specific definition to be useful.
well, the markets either do change or they dont. and they certainly dont stay the same, so they must change. thats my junk science explanation anyway.
Relax and be happy.
  • #35
  • Sep 20, 2005 3:43am Sep 20, 2005 3:43am
Quoting fijitrader
4- No one and no system can tell the future. The future is the future and what to come is unknown. We only speculate.

Neither proven or disproven. The only thing that is a fact is that it is improbable to know the future. It is not a fact that the future is unknowable.
LOL! come on fiji, if "It is not a fact that the future is unknowable" then nothing is a fact! no one knows the future for certain. sure, that would be hard to prove, but logic tells us that humans can not predict the future. we can make some good guesses, but you really cant say what the future holds FOR CERTAIN.
Relax and be happy.
  • #36
  • Sep 20, 2005 3:47am Sep 20, 2005 3:47am
My biggest note on the wall says:

Don't look for certainty, when selecting a trade.
Trade your edge. Don't pretend you know what will happen next.
Think in probabilities.
No hope placed on the individual trade ! Hope is not probabilistic.
  • #37
  • Sep 20, 2005 5:30am Sep 20, 2005 5:30am
Fact or Not ? I dont know, but I reckon it is more accurate than inaccurate:

Most novice traders end up losing their capital.
Most novice traders accounts are under capitalised.
Most novice traders over use leverage.

There are many more but rather than sounding like a winding cat I will leave it at the above 3, because if you cant get the above sorted you wont be going to much further and all other "facts" wont effect you.
  • #38
  • Sep 20, 2005 5:40pm Sep 20, 2005 5:40pm
Quoting fijitrader
One reason I bring up this point is that I consistently have what some people call deja vu. When it happens to me I am always in a situation where I've already dreamed it in extensive detail and often months or years before it ever took place. It happens more frequently as each year goes by.
isnt dejavu scientifically explainable? i thought it was when one of your eyes sees something before the other eye does. like when you look up really fast, one of your eyes may see something before the other, and make you think that you have "been there before".

while i hear what your saying, i still have to say i think that the future is unknown. sure, some people will predict the future some of the time, but there is still a probalistic element to it. you may be able to speculate correctly on the furture, say 50% of the time, but "knowing" the future is different that speculating about it.
Relax and be happy.
  • #39
  • Sep 20, 2005 5:42pm Sep 20, 2005 5:42pm
Quoting fijitrader
Again this is about point of view. What is the point of the comment? What is the important fact that may be useful for trading or developing systems? The markets never change in the following ways:

1. Buying and selling occurs every trading day.
2. Prices rise and fall as orders are executed in varying volumes.
3. Fees are charged for executing trades.
4. Some people lose money.
5. Some people make money.
6. Some traders forecast market behavior in order to initiate orders.
7. Some traders place random trades.
8. Some traders use leverage.
9. Some traders trade cash without leverage.
10. Some traders hedge.
11. Some traders speculate.

I could go on but these aspects as well as many others never seem to change. Since these are also facts it kind of makes sense that facts about the market would be things that don't change.

So while I don't disagree that the markets change my point is that you are probably getting at something that is not best defined by the generalization that markets change. I had suggested an alternative to that statement but you did not comment on it.

FT
point taken. the market does in fact stay the same in many aspects. what if we change it to read "market price behavior will be different in the future than it was in the past"?
Relax and be happy.
  • #40
  • Sep 21, 2005 11:27pm Sep 21, 2005 11:27pm
Quoting merlin
this is actually a pretty good one! i say we add it!
Well, my first impression of the rules were trading rules to follow. Not 'facts' that really have little use for the novice trader, but suggestions for establishing as a successful trader.

Instead of the 10 commandments...we would have the 10 suggestions...I don't think 10 will be enough, though.

That rule is in context of greed and fear being a prime element to the motivation. Trying to eliminate it from the decision making process.
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