How to resolve a confusion?

How to solve a confusion and how to apply that in the forex market?
A confusion is a circumstance in which all the particles are in random motion.
The first step to solve a confusion is to pick up a stable or motionless particle out of it.
The second step is to compare the stable particle with other particles.

You mean all...except one?

Sorry, i guess i should have said "most" instead "all" or "all the particle seem to be in motion"

Maybe you're asking the wrong question. Maybe there's no need to "solve" a confusion. Maybe a better question might be, "How can I make money with I'm confused or not?"


That's a belief. If this a belief that empowers you, keep it. If it's a belief that causes you to lose money or freeze up then you might want to get a different belief.


Another belief. My first step to solve a confusion is go to the gym and talk about sports with my trainer.


My second step is to go to bed early, and have a notebook by my bed. Sooner or later I'll wake up with a brilliant insight, which I capture in my notebook. Either that or I'll play Wii with my kids.

Ok. We're cool with that. You're obviously speaking metaphorically so let's cut to the chase. Give us a specific example of how to solve confusion in the forex markets.

I guess there are more stable particle to pick up from .
I'll try to give a specific example later.

Thanks,

Brilliant! I'm not being sarcastic here. Finally a post that isn't about squiggly lines and making millions in their demo account.

Particles in motion DO have order. Deterministic order. Cyclical order. By viewing a price chart as a 2 dimensional representation of a 4 dimensional phenomenon, it's possible to find that "one" particle in suspension, find it's path in both price AND time and make bank. Gann knew this and flat out said it. But all the Gann heads focus on "magical" squares of nine and astro and "unveiling" his writings.

Thanks for posting that. I"m going to steal that.

[Mods: While this seems to have no relationship to trading, it actually does.]

Brownian Motion:
http://en.wikipedia.org/wiki/Brownian_motion

Assuming a liquid or gas. You really didn't specify the state of the matter.

There's nothing mystical about any of this, it's just randomness w/ a particular distribution. That's the only relationship to trading, ie: the apparent randomness.

However just because any given set of particles may have a specific random momentum or direction, it still tends to a mean. That mean is oftentimes proportional to the temperature of the system. Thus while you can't say that all particles will move at a given rate, you can state the odds based on the temperature of the system (with certain assumptions made about the system).

IMO that's basically forex (and pretty much all trading) in a metaphorical nutshell. Take the temperature of the system and if the odds aren't good, don't trade. Nothing but an exercise in conditional probability.


This will depend entirely on what situation you're in. In many situations you will have no motionless particles at all. Infact if you're talking about sub-atomic motion, I'd say unless the system is at absolute zero there's going to be motion. And of course even at absolute zero the electrons are still cloudy.

In some cases you will contend with:
http://en.wikipedia.org/wiki/Uncertainty_principle

The uncertainty principle. It should be noticed that the UP has roots in Brownian Motion.

A particle that's not moving may or may not be stable. And in what way are you comparing them?

Great post Rabid.

In my research and work, what I've discovered is that things like Brownian Motion, sub-atomic particles etc... they're all described from a three dimensional point of observation. Hence apparent randomness. (I built an entire system on this concept of reversion to the mean across multiple time frames. Kicked ass until the code stopped working when I upgraded some software.)

What I believe, and this is just my own speculation, is that the point of observation is the key to whether we view something as in motion or not. For example, take those rides at the amusement park where one section is spinning in on direction on an arm while the arm is rotating in another.

Kinda like one of these:
http://blog.jandaco.net/wp-content/u...g_8351_375.jpg

When that thing is going and you're standing in line, as each bucket comes up to you, it will appear to pause before flying off in the other direction. This pause is in perception only due to your point of observation. The rotation of the arm and the bucket on the arm can all be calculated and therefore forecast. IMHO, that concept is the basis behind the Gann Squares. Measurements of price in motion and timing the "pause" points for changes in direction.

Hello Opie999,

I will take as an example the daily pivot points as a stable particle.
From my observation so far and comparison with other particles it seems that the daily pivots are used by traders as TP targets.
There are other conditions to be met before entering a trade.
Also i think the fibs are part of this setups.
I am still comparing the other particles with the daily pivots.
Maybe other experienced members could help better this confusion.

Thanks,

How would you define those four dimensions? Time and price are obvious dimensions present.. where would one find the other two?

I figured direction (1 or -1) and movement (change in price).

Just thinking out loud.

Nod. If you think in terms of 1 and -1 and an amount of movement (x pips) then you can figure out stuff like average amount of movement and work from there (like average temperature of the system above).

Adjust stoploss to cover for stdev moves against you, and if there's a known fixed mean then play for regression to the mean. I wrote about that last year sometime.

The markets tho aren't really random at all. So it's not so simple. You have to take in account the "long tail" trend runs by only taking regressions that align with the skew.

Playground Analogy

To better understand the Effective Volume concept and its analytical
power, let’s imagine schoolchildren aged six through 15 playing on a
playground in winter. These kids are instructed to throw snowballs at two
Chinese gongs that are placed in the center of the playground. The first
gong is called “Long” and the second is called “Short.” The goal of the kids
is to make as much noise as possible. The two gongs make distinct sounds, and the stronger the throw, the louder the sound.
Now, the goal of the teachers is to find out which gong produces the
louder sound. To complicate the game, the school principal has two bags of magic powder that he throws every quarter of an hour on the playground.
These two types of powder are called “positive earning surprise” and “negativeb earning surprise.”
When the “positive earning surprise” powder is thrown, the “Long” gong gets bigger and the “Short” gong gets smaller. The opposite happens when the “negative earning surprise” powder is thrown.
Obviously, the children aiming at the bigger gong will hit it more often.
Therefore, it pays to study the size modification of the gong, and to study
how many balls are hitting the gong. This is called the standard technical
analysis.
Some professors prefer to study what the principal is doing, to see if
he takes from one bag more often than the other, to see if he brought more
of this or that powder, and so on. This is called fundamental analysis.
Obviously, if no child throws a snowball, no sound will be heard. Therefore,
it is fair to say that the sounds originate from the children’s activity,
just as price moves are a consequence of buying and selling activity. On the
playground, a six-year-old makes fewer snowballs, strikes with less power,
and misses more often than a 15-year-old. It pays to look at the older kids’ behavior to guess the strength of the coming sound. Because we cannot watch all the children (there could be 2,000 or 20,000), what we end up doing is looking at all of the coming snowballs and listening to the collection of small and loud sounds made by each snowball. What we need is recording equipment that can both separate the coming balls by strength (size and velocity) and analyze only the sounds of the stronger snowballs.

Taken from; Value in Time - Better Trading Through Effective Volume

For me, the stable datum is the smallest predictable market behaviour.
Then, how it relates and interacts on the 4-dimensional grid: time, price, movement (momentum) and direction.

Those would actually be two components of the same dimension. Consider movement on a map (2 dimensions). One dimension would be North and South, regardless of how far or fast one moved. The other would be East and West, again without regard to speed or distance.

Time is a dimension and price (up or down) but other measures I'm aware of are just components of or derived from these two, so I'm still wondering where a third or fourth dimension would come from.