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Price action is dumb, and you're lazy for thinking otherwise

  • #41
  • Jul 25, 2011 5:58pm Jul 25, 2011 5:58pm
Quoting willf
Well I guess if i broke my system down to the very basics I only need to know two things.

1. Where has price been.
2. Where is price now.

If I have those two bits of information I can make a decision to trade.

Why does it work? Other than the 5 years of staring at charts until my eyes bleed I guess it works because it's the only two variables you can know for sure.

By the way I don't use indicators.
Welcome to the thread sir,

Ok cool, let's try this...

Price was at 30 traded up to 50, now its at 43

Buy/sell?
  • #42
  • Jul 25, 2011 6:01pm Jul 25, 2011 6:01pm
Quoting superdezign
Welcome to the thread sir,

Ok cool, let's try this...

Price was at 30 traded up to 50, now its at 43

Buy/sell?
sell, SL 51 TP 31
  • #43
  • Jul 25, 2011 6:05pm Jul 25, 2011 6:05pm
Quoting superdezign
Welcome to the thread sir,

Ok cool, let's try this...

Price was at 30 traded up to 50, now its at 43

Buy/sell?
That's not enough data. I would need to see more of the chart to the left.

But I see where you are going so I will bite and go with a buy.
  • #44
  • Jul 25, 2011 6:06pm Jul 25, 2011 6:06pm
Quoting superdezign
Welcome to the thread sir,

Ok cool, let's try this...

Price was at 30 traded up to 50, now its at 43

Buy/sell?
not enough data / context. flip a coin and bet on red.
Congratulations ScalaFX for coming out of the closet!
  • #45
  • Jul 25, 2011 6:06pm Jul 25, 2011 6:06pm
Quoting newyear498
wait what!?! DS, I am kinda in shock you attribute pin bars specifically to stop hunting..

I would imagine there are several different situations that result in a pin bar and not simply stop hunting





I think this thread is beginning to show how everyone has a different way of doing things and everyone is going to in general, argue there trading method while disputing others methods.
Yes and no... If you have logic that is irrefutable behind your system how can anyone dispute that?

I can't necessarily dispute gravity.

Example:
You can't dispute that there needs to be more buyers than sellers for price to go up...

...All I am trying to do here, is see how many people actually base their systems around logic, understand why when they buy they are exploiting some sort of edge...

People took this the wrong way the first time.. but ill say it again, and this time hopefully you wont think I am trying to say I have the world figured out (spoiler: I don't)...

When I buy I know exactly what I am exploiting -- I know the logic behind my actions.

Saying that I buy when the EMA 15 crossed the EMA 50 is not logical unless you can tell me why you use the 15 and why you use the 50... because otherwise you just threw a couple darts at an EMA parameter dartboard and that crossover happened to work for a while... I'll tell you right now though, anything based in parameters will eventually fail, because market volatility is not stable, markets evolve and change each and every day...
  • #46
  • Jul 25, 2011 6:09pm Jul 25, 2011 6:09pm
Quoting willf
That's not enough data. I would need to see more of the chart to the left.

But I see where you are going so I will bite and go with a buy.
Thanks for the bite but I wasn't really going anywhere with that..

But let's focus less on the details of your method and focus more on what makes it tick..

Why are past prices important?
  • #47
  • Jul 25, 2011 6:12pm Jul 25, 2011 6:12pm
Quoting superdezign
Yes and no... If you have logic that is irrefutable behind your system how can anyone dispute that?

I can't necessarily dispute gravity.

Example:
You can't dispute that there needs to be more buyers than sellers for price to go up...

...All I am trying to do here, is see how many people actually base their systems around logic, understand why when they buy they are exploiting some sort of edge...

People took this the wrong way the first time.. but ill say it again, and this time hopefully you wont think I am trying to say I have the...
I did this in my "trend lines dont work" thread.. and it didn't end to well.. I'm on a lot of ignor lists.. but not surprisingly ..

no one really knew what a trend line is or why it offered an edge or not...


and I would have to say you can argue that you can dispute if there needs to be more buyers than sellers for price to go up...

its about whose willing to pay more or less.. not about the quantity of buyers to sellers.. but the fear and greed of the persons trading
  • #48
  • Jul 25, 2011 6:19pm Jul 25, 2011 6:19pm
Quoting superdezign
Thanks for the bite but I wasn't really going anywhere with that..

But let's focus less on the details of your method and focus more on what makes it tick..

Why are past prices important?
Because by definition I am a trend trader. I trade 4H & Daily charts but the same principles could be applied to the 1M or Weekly.
  • #49
  • Jul 25, 2011 6:19pm Jul 25, 2011 6:19pm
Quoting Darkstar
Were you talking about something like a H&S pattern, trend line, or S&R level, your argument would be 100% accurate. Failure of large numbers of participants to subscribe to a particular outcome will engender a failure of the suggested outcome to materialize because there is no underlying microstructure basis for the suggested outcome of those patterns to occur on its own.

[color=black][font=Verdana]Unfortunately (for your arguments anyway), pin bars (specifically)...
Makes sense about bars / candles; they do have an inherent sense about them.
I disagree with your argument against patterns and drawing devices. People trade with unconscious subpatterns of human nature, such as momentum ('logarithms'), channels ('midlines') and relative angles. Such as these group candles to extend the microstructure to a natural conclusion. So, patterns and drawing devices, which are based on these subpatterns, can work.


To the thread starter, superdezign:

I'd rather search for subpatterns as noted, draw devices between them, and create a temporary logic for the next trade.
Only familiarity with each item on this list is necessary,
not some overweaning logic for everything or for some short, difficult-to-predict area the chart matches one of several rule sets' preconditions for use.

I will admit that using this, instead of a rule set, is highly discretionary. I try and compensate with an in-trade psych study of how I go about reasoning my trade.
  • #50
  • Jul 25, 2011 6:19pm Jul 25, 2011 6:19pm
Quoting newyear498
I did this in my "trend lines dont work" thread.. and it didn't end to well.. I'm on a lot of ignor lists.. but not surprisingly ..

no one really knew what a trend line is or why it offered an edge or not...


and I would have to say you can argue that you can dispute if there needs to be more buyers than sellers for price to go up...

its about whose willing to pay more or less.. not about the quantity of buyers to sellers.. but the fear and greed of the persons trading
Yes, but the current market price brings out a select quantity from all willing and able market participants which defines the supply and demand, the excess quantity from either side (whoever has more purchasing power) has to be filled at different price levels. That is ultimately what moves price. The new price level then brings forth a new quantity from either side..

And I remember the trendline thread from a while ago... those are the kind of threads that I like...

I actually have a pretty decent theory on what trendlines mean, and why they are unable to be exploited.. PM me if you want to have a discussion, or heck start a new thread and Ill post.
  • #51
  • Jul 25, 2011 6:21pm Jul 25, 2011 6:21pm
Quoting willf
Because by definition I am a trend trader. I trade 4H & Daily charts but the same principles could be applied to the 1M or Weekly.
The long and short of it is... You wait for a move and buy on the pullback?
  • #52
  • Jul 25, 2011 6:23pm Jul 25, 2011 6:23pm
Quoting superdezign
The long and short of it is... You wait for a move and buy on the pullback?
You would be correct sir
  • #53
  • Jul 25, 2011 6:28pm Jul 25, 2011 6:28pm
Quoting superdezign
...Always ask "why!"
Quoting superdezign
...Using price action as a method of entry/exit is ridiculous.You can't use a single variable to predict itself....
why? & why not?
Quoting superdezign
.. They mean literally nothing....
maybe u meant "it means nothing for ME"....
"arbitrary for ME"

based on your provocative thread title, & (some of) your posts, u seem to have categorized trading in to 2 things: what works for you, & those that dont work for you (which u describe as 'ridiculous', 'means nothing', 'arbitrary' ,etc)

Quoting superdezign
...
This is simply an experiment.. I was curious as to if anyone actually knows how their system/methodology/whatever actually works.
My ego is already big enough...I merely want to have a discussion with some like minded people (other traders).. pit wit against wit...
not about ego? are u sure? ok.
just curious, or wanna discuss? which really is it?
So, why not have a thread title like "Do u really know how your method/system works? just yes or no"?
Quoting superdezign
Ok.. my turn to use the quote button...
No.. Price is a single variable.. and that is all price action uses...
Are u 100% sure? why are u sure?
Quoting superdezign
....Everything, be it technical analysis is made up of lagging information. Which makes it invalid information...
so how do we profit if WE think everything is lagging & therefore invalid info?
how do we trade then?
u seem to be fond of logic, but this post seems to be illogical.


im not here to play ping-pong with u or "pit wit against wit"...
i just wanna:
- say that your generalizations/perspectives don't apply to all of us.
- ask questions (with some "why's") because u encouraged us to do so.
  • #54
  • Jul 25, 2011 6:32pm Jul 25, 2011 6:32pm
not to speak out of turn...
Quoting superdezign
I actually have a pretty decent theory on what trendlines mean, and why they are unable to be exploited..
I wouldn't usually use a trendline's formal definition; its way too restrictive to be used most of the time.
  • #55
  • Jul 25, 2011 6:33pm Jul 25, 2011 6:33pm
Quoting ha-pattern
not to speak out of turn...

I wouldn't usually use a trendline's formal definition; its way too restrictive to be used most of the time.
trend lines were originally referred to as "supply and demand lines"

  • #56
  • Jul 25, 2011 6:35pm Jul 25, 2011 6:35pm
Quoting ha-pattern
Makes sense about bars / candles; they do have an inherent sense about them.
I disagree with your argument against patterns and drawing devices. People trade with unconscious subpatterns of human nature, such as momentum ('logarithms'), channels ('midlines') and relative angles. Such as these group candles to extend the microstructure to a natural conclusion. So, patterns and drawing devices, which are based on these subpatterns, can work.


To the thread starter, superdezign:

Search for subpatterns as noted, draw devices between them, and...
First off, thanks for contributing to the thread!

As for your post on "unconscious subpatterns of human nature", I have a few things to say about that...
1.) Yes human nature is a large part of the market, however, one thing I learned is that the human mind wants to see patterns and will often lie to itself to force itself to see patterns where they aren't.
2.) Read the book "Fooled by Randomness" (I have no affiliation with the author or publishing company, it is just an insanely good book), it will explain why channels and angles mean nothing...

And I think everyone is confusing logic with straight up knowledge...

Logic -- a science that deals with the principles and criteria of validity of inference and demonstration : the science of the formal principles of reasoning

...I am not saying you need to know EVERYTHING, just know why your method produces buy and sell signals when it does. And explain it in a way that can not be refuted.

Example statement: All else the same, a buyer would rather pay $50 for a stock than $100

Better Example statement: Barney is a cat. Cat's meow. Barney can meow...

Yes, Barney could have some sort of weird genetic disorder, where he was not born entirely healthy, and therefore can not meow for whatever reason...

So there are two ways you can approach this. Realize that no theory is ever 100% correct and just go with the logic statement you have... (warning: I am about to quote that book I just recommended)

“Why is a theory never right? Because we can never know if all the swans are white” - Nassim Nicholas Taleb Fooled by Randomness

Or adjust the statement when at all possible...

Example statement: Barney is a cat. Cats that are born healthy can meow. Barney is a healthy cat. Barney can meow...

So let's say you want to break out some logic and refute what I said about channels...

You could say something like..

Buyers like to buy at bla bla bla prices, after bla bla bla, when a channel does X it should be trading at the bla bla bla prices. Since buyers like those prices, and an excess of buyers push market prices higher, I like to buy at these prices as well..

As corny as that statement may sound, that is basic logic. Loosen up the speech a little bit and replace the bla bla's with actual reasoning and you have yourself some logic...
  • #57
  • Jul 25, 2011 6:36pm Jul 25, 2011 6:36pm
Quoting newyear498
trend lines were originally referred to as "supply and demand lines"

WHY
  • #58
  • Jul 25, 2011 6:50pm Jul 25, 2011 6:50pm
Quoting superdezign
WHY
Guess you'd have to ask the developer..


Sent you a PM as well if you are still interested to continue that discussion I'm interested
  • #59
  • Jul 25, 2011 6:50pm Jul 25, 2011 6:50pm
Quoting superdezign
.
Yeah, "unconscious subpatterns of human nature" is a really bloated phrase I couldn't prove in a million years. Perhaps different symbols can offer a little differentiation toward such an effort.
All I meant was, the chart repeats certain subpatterns over and over again, from the certainty of microstructure (Darkstar said that) bars have.

on logic:
Well, each drawing device needs logic to be used, such as price rolls within a channel and often stops at a midpoint between the channel's sides.
I just find it too unreal to not base a study as close as feasibly possible to the truth bars offer,
and too restrictive to use only one set of logic to trade with.

The only time I'd feel comfortable with 'buyers...sellers' language would be either when I actually saw an order book with the traders' number of lots (no ghost trades or whatever) or if, as in a regulated market, volume could be directly inferred from said order book.
Otherwise, it's an unnecessary game that's in the way, or a psychological crutch. (Sorry, honesty.)
  • #60
  • Jul 25, 2011 6:51pm Jul 25, 2011 6:51pm
Quoting ha-pattern
Yeah, "unconscious subpatterns of human nature" is a really bloated phrase I couldn't prove in a million years. Perhaps different symbols can offer a little differentiation toward such an effort.
All I meant was, the chart repeats certain subpatterns over and over again, from the certainty of microstructure (Darkstar said that) bars have.

Well, each drawing device needs logic to be used, such as price rolls within a channel and often stops at a midpoint between the channel's sides.

I just find it too unreal to not base a study as close...
I have no idea how momentum & logarithms are connected.. google is dry any references? I'd PM you but your line is busy :/
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