Price Attraction Points

So if I understand correctly, we are waiting for price to back to quad and after that trend continuation? Am I right?

I don't think that you'll ever be able to say that for certain. Basically, that would be saying that the market has to return to that area to re-load, drawing upon the liquidity which is presumed to still be there, in order to continue on. This is, of course, normal operating procedure under perhaps most conditions but, not always for sure. Market orders can come flooding in leaving previous trading levels in the dust without pulling back to them at all... or at least not soon enough to avoid some very punishing drawdown.

Just my 2 cents!

Hope everyone has a great weekend!

Interesting thread. The situations I'm most familiar with where price can be attracted to certain points are in the context of market profile and volume profile.

The market profile people have something called the 80% rule which says that once price enters a value area to a certain extent it is likely to finish traversing the value area. Also, Naked or Virgin POC's (point of control) seem to have a higher than random chance of being revisited by price, as do gaps.

On a volume profile, the HVN's (high volume nodes) are seen as price attractors. It makes sense that the areas where the most volume is traded and where the most traders found value would be areas that get revisited again and again.

I'm sure you realize that there is no such thing as an area where "price 'must/will' return definitively rather then 'is likely to'" . The best you can possibly do is find a 'likely to' situation where there is a positive expectancy (likelihood) of making a profit. I don't doubt that these areas can be found. To seek 100% certainty, though, is to deny the element of randomness that is a feature of the markets. The market is made up by thousands of humans, and there is just no way to know for sure what those thousands of people will do next.

On a semi-related note, one indicator you might be interested in is the TopFinder described here: http://midasmarketanalysis.com/a-2/. While it doesn't tell you exactly which point price will reach , it does estimate the minimum distance the current move should continue, based on its volume and velocity.

I would agree with the post above and recommend Market Profile theory (someone earlier included a MP chart) for regression trading. The theory is largely based upon identifying where the market is wanting to transact trade. Your Quad BO areas would appear as areas of relatively high "transactional volume".

Broadly speaking, I've read about two kinds of exits:

1. The school of thought that entry is largely unimportant, and hence that an edge must necessarily come from trade management. This usually involves a strategy of "cut losses short, let profits run", and possibly pyramiding. As I see it, this is based on the belief that the length of each (anticipated) move is indefinite, but that the trader has apparently satisfied himself that enough high RR wins occur to more than compensate for the frequent losses resulting from sideways movement. This is akin to the 'trend following' school that's been made popular by the likes of Michael Covel, and more formerly by the turtle traders trained by Richard Dennis and Bill Eckhardt.

2. The opposing school of thought seems to involve what I'd call 'tactical' exits, that involve taking profits (or limiting losses) at areas perceived as delivering a higher-than-normal probability of reversal. This may involve the 'price attractors' that you talk about, although the areas that I've read about (and occasionally use myself) incorporate confluences of different S/R types, obvious supply/demand areas, volume spread analysis, and possibly what is loosely termed 'orderflow'. In other words, exit at points where a preponderance of opposing orders are most likely placed, that will serve to overturn the momentum of the current move. I explained this in more detail here.

Given that there's supposedly no structural bias in the FX market, and that the market takes no cognizance of whether one insignificant retail trader is entering or exiting, these areas of potential reversal might be equally applied to both entries and exits. Moreover, if we take the view that both entries and exits do nothing more than adjust our net position (long, short or flat), then this becomes even more plausible. This is in response to your comment "If there are, and if we could recognise those, this approach would turn trading on its head. Why? Because you would trade based on a Reason for Exit, rather then a Reason for Entry." Much the same reasons for entry could be used for exit.

3. There may be other kinds of exit, e.g. a statistical scaling out as average daily ranges are reached; time-based exits; and so forth.

Anyway, I'd definitely be interested to know more about your 'price attractors'. Please continue..........

Hey Dave, found the holy grail, need your opinion to see if you can find a fault.. 200 trades..1 small loss in 6 mo's. password to live account made public, account doubled every month.. have you heard of it?..not doctored.

Support and resistance is not used in any way.

IMO --

1' example at 06302010 13-1700 (CMS broke r time).


Also found minor ex's that confirmed.

pattern fail --
I guess it's how you define the pattern. Your chart example shows four very different price clusters at two types of places -- A pivot ending the last range and in the middle of the next range and then three pivot turns (skipping one) that are in a range.
A little observation says a three-point box or a box with two of the pivot nearly attached to each other would be minor versions, and such a variation in a seemingly okay box may fail. A big fail may be where one of the four points is overly vertical or horizontal. A seeming fail that actually works is a two-bunch box bo that is much more vertically- or horizontally-defined, such as at 14-1500 05122009 (forex.com broke r time).
To stay away from any types of big-pattern failure, I opt for small, partial shapes more easily identifiable and drawing-attachable.

multi-high(low) box and other variations of a box bo --
I usually lump such an area as a box bo with other pairs of bunches balancing on either side of a drawn line. I dropped the idea a long time ago, because midlines such as this, however well-defined with a pair of bunches, jumps price afterward in apparently erratic ways. Growing logarithmic jumps off the sides of a drawn line increases its reliability.
Your more advanced form, keeping the box in one area and well-defined, does seem to keep price regular enough to trade on.

Finding an ellipse version of your box bo would be nice.

Not sure if the quad bo example is valid (though I am not any expert). Comparing the examples though, they do look different to me. The fist one by ppants looks like what I would expect a vaild quad bo to look like. The one posted by ha-pattern maybe not. I c a bo from the third box, not the fourth box. The return into the fourth box to me looks more like a return to consolidation before the more continues in the direction of the bo (first white arrow.

Wmd's quad bo in post 7, picture one bo'ed between boxes one and two, so I followed this example.
I was interested in relating the successful concept of wmd's to other ways of drawing s/r's and other lines; thus, I chose a less-pure example.

This is from another thread of wmd's... quad bo on one time is dojo on another. May not be pertanent, though interesting none the less.. Myself, I have no idea what could attract price back to a level beyound a LARGE amount of pending orders, like wmd describes as an obvious untested level on a higher time frames (1hr +).

right. so heres update on the quad. price did come back. distance from high back to quad was 140 pips. but need guts to take that short or have a way of avoiding drawdowns.

ha-p: im with dazz on your eg. quad by definition would be four steps no?

lol. dojo where they do karate.

just thinking bout this and having a eureka moment!!!!

the quad is a doji pattern which means it indecisions in the market place. so any doji will be price attractor. price will go to where market was unsure what it should do.


now waiting to get ripped to shreds by the seniors

The reason why is of a lesser significance then what it may look like on screen.

The chart is le Euro versus le Pound.

When the price broke below the 86 handle (from the structure that resembles a failed double bottom (traditional interpretation) or W (harmonic interpretation)), An order was placed to sell at the retest. The level was consequently retested so good trade.

Around the same time, we had a similar structure form on le Euro versus le Loonie which to date has not been retested.

So if you have a structure that resembles a failed db/W should/would/could the level attract price?

There's some thing freakish about the internal plumbing in the mind of a pattern hunter. I'm not making any assertions, only demonstrating the mechanics.

hey Will,
just pitching in .... totally missed my entry from the bottom, lol

edit: oops! sorry wanted to post echf chart, similar to ecad, will correct chart now

price attraction pt

Good,
seems it is now coming from beta to gold version :-)