Price action is dumb, and you're lazy for thinking otherwise | Page 6 | Forex Factory

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

  • #101
  • Jul 25, 2011 9:54pm Jul 25, 2011 9:54pm
Quoting superdezign
Yeah no kidding!


3.) Last thing, there is no way to prove that there are potential limit orders at whatever price you choose. If that fact is where you are going to derive all the demand you need from the market to turn a trade into a profit, then you should understand exactly why you place those limit orders where you do. And as always, how logical are these price levels, can you explain in detail why these these price levels (whatever prices you assign for your limit order) are the best places for an entry? What is going to drive the...
U funny !!!!
  • #102
  • Jul 25, 2011 9:56pm Jul 25, 2011 9:56pm
Quoting taomql4
U funny !!!!
Oh yeah I funny...... great point
  • #103
  • Jul 25, 2011 10:02pm Jul 25, 2011 10:02pm
Quoting superdezign
Oh yeah I funny...... great point

Don't mind me , superdezign . - Am enjoying your thread , learning some stuff..
  • #104
  • Jul 25, 2011 10:03pm Jul 25, 2011 10:03pm
Quoting moneymaker2
The way I see to make money trading is to do the best you can at predicting what price is going to do. For me, I have found that predicting shorter term price moves is a lot easier than longer term (days or weeks). When I first got into trading years ago, there were no forums like this (thank goodness, or I would have been told I can't do what I'm doing by people that can't do what they're doing!), so I learned on my own, trial and error. I found some people that traded better than I did and picked their brain. When I got as good as they were, I...
Not satisfied..

I want 6 pips..

In a world of probabilities you have to understand certain things..

1.) We can easily be fooled by random events
2.) Anomalies happen, where events that are statistically near impossible occur

For example, when I first started playing poker I thought I was amazing. I took a few hundred bucks up to a couple grand in less than a month.

I was way above my EV curve though, which is essentially how much money I should have won. I chalked it all up to "well Im winning arent I"...

Then I got serious, learned how to play, studied the game, learned all the odds, when to bluff, how to analyze opponents, exploit weakness, and the importance of position, ect...

Then the next month after that wasn't so great

I almost dusted my entire bank roll. And I was way below my EV curve (again the money I should have made statistically)...

However, does that mean that playing correctly is bad?

No, I had two very weird anomalies happen to me back to back. If I did not have all my hands documented and that EV curve to show me how I was playing I would have never known, but these sorts of things happen more than they should.

Some of us are just more lucky than others, and are able to figure it all out before our bankroll pays the price.

Test it out for yourself... Close your eyes and draw random lines on a chart and watch how many key SR levels you are able to pick out... Or heck, take the opposite signal to your system and see how well it does.. You might show larger returns than your original system. Anything is possible!

picture explained: bottom right chart... I closed my eyes and drew lines... check out those SR levels! pretty good for a blind man eh?
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  • #105
  • Jul 25, 2011 10:13pm Jul 25, 2011 10:13pm
Quoting superdezign
Not satisfied..
I closed my eyes and drew lines... check out those SR levels! pretty good for a blind man eh?...
u continue to profess 'absolutes'/'truths' which exactly are not applicable to/aren't being used by some/most traders. (or at least not done by some/most)

have u even thought of the possibility that not all can draw a horizontal line in a near-100% horizontal fashion when drawing it blindly? actually, whether blind drawing or not, not everyone can draw a line straight/perfectly straight.

u said 'think outside the box', but actually u are thinking in it & dont wanna wander outside.
  • #106
  • Jul 25, 2011 10:59pm Jul 25, 2011 10:59pm
Quoting superdezign
In a world of probabilities you have to understand certain things..

1.) We can easily be fooled by random events
2.) Anomalies happen, where events that are statistically near impossible occur
In my opinion, I think that is what hobbles many of the traders, at least on this forum....the need to make things fall into neat, mathematically orderly packages. Rather than learning to be able to predict the direction of the price (I mentioned earlier I think that is the foundation of it all), they make excel spreadsheets to tell them how many lots to trade based on a specific R:R ratio and what Stop Loss to set based on a % of their lot size or account size.

I just don't know if I can make 40 trades in a row without a loss that I fall into the category of being easily fooled. And that wasn't an anomaly, that is normal business. Maybe I am a fool...but I am a fool that makes good money!

We can debate all night long with me telling you how I trade works and you telling me I don't understand it, and therefore it can't work or whatever point you are trying to make (it's kinda foggy to me now), but the bottom line is that I have found what works for me. I have found what helps me predict short term price moves. Matter of fact, it helped me predict a 10 pip trade while reading your posts!!

To me, trading isn't about ego or about mathematically derived trades or statistical anything....it is about making money. I don't care how 'stupid" my trade was or how "foolish" my lots size is or anything like that. I am concerned that when I close the trade if I made money or not.

Like a baseball pitcher that has an awkward looking windup. He may look stupid when he pitches, but if he has the best Earned Run Average of the league, do you think he's going to change?

It is good that you ask "why" a lot...just don't spend your trading career analyzing the trades rather than making them!

That was really only about 1 pip worth...I still owe you 5 more....
  • #107
  • Jul 26, 2011 12:49am Jul 26, 2011 12:49am
where's superdezign ? You had me at " Price action is dumb " - lol
Well, I guess that's it then......
  • #108
  • Jul 26, 2011 1:08am Jul 26, 2011 1:08am
Quoting superdezign
Well

Now that I have your attention hear this:

What's "dumb" is making any sort of assumptions in such a variable environment as the market and people themselves. But now I'm a hypocrite right? I didn't read the rest of your post, not sure I needed to.
Time hides Nothing
  • #109
  • Jul 26, 2011 2:17am Jul 26, 2011 2:17am
Quoting superdezign

So go ahead, all those who have been offended by my "out there" claim, please prove me wrong...
BTW I'm not at all offended just very bored...

To elaborate all I'm saying is that a pin bar (price action) to some might be selling/buying pressure, to another it may be central bank intervention, to another it may be the aftermath of a stop hunt, to another it may be profit taking, etc etc the list is endless.

Price action IS the market, it is the aftermath of the variables you speak of and might not have predictive powers to some but to others it may I don't really care. To me it's a stupid statement you make for the reasons above and in a way I guess I agree with what you're saying (from the perspective I believe you're coming from) but it's foolish to assume that everyone thinks in the same logics as you in regards to the PA that you speak of.

I'm not trying to defend your claim because personally PA plays a very small role in my trading but a role all the same. All I'm saying is that one mans junk is another mans treasure and unless you can mind read every important trader in the world you have no basis drawing such conclusions.

Now what say you
Time hides Nothing
  • #110
  • Jul 26, 2011 2:53am Jul 26, 2011 2:53am
TA should exploit either self-fulfilling effects of TA, or exploit other properties inherent to the market and its participants.

Example:

-Forex market is a multi-level market, consisting of the customer market and the interdealer market.

-Dealers build up currency inventories on the customer market, and pass on excess inventories on the interdealer market (called hot potato trading, see Lyons.)

-Because dealer hedging doesn't occur instantly, there is a delayed price discovery, and therefore it takes time for prices to reach a "new equilibrium" (i.e. where supply and demand are equal, so that dealers' aggregate inventories are delta neutral again.)

-This shows statistically in the significant autocorrelation on short timeframes, especially during high volatility periods.

-A bollinger band trading system could exploit the delayed price discovery property of the multi-level Forex market. By now it should be clear why and how.
The nail that sticks out gets hammered back in
  • #111
  • Jul 26, 2011 4:10am Jul 26, 2011 4:10am
Quoting superdezign
Well

Now that I have your attention hear this: Using price action as a method of entry/exit is ridiculous, You can't use a single variable to predict itself. Technical analysis falls under the same category of invalidated trading.

Every trader I have talked to who is a technical trader has been unable to answer this one simple question:

Why does you system work?
10000% agree with you Dave :-D
GO....GO......GO..........

Regards,

KG
  • #112
  • Jul 26, 2011 4:14am Jul 26, 2011 4:14am
Quoting superdezign
Well

Now that I have your attention hear this: Using price action as a method of entry/exit is ridiculous, You can't use a single variable to predict itself. Technical analysis falls under the same category of invalidated trading.



Counter point?... Go!

True ,to that statement! a single bar doesent change a markets direction or turn a weak market into a strong one .. but what it does is adding another piece to a story ,wich the chart is telling you ..

if a single price action adds to a story wich u have followed along ,this single price action might give u the confidence to enter a trade .. or not ..

its all about how price went there, location , background , supply and demand, cause and effect , effort vs. result ... and the abillity to judge the market by its own action
  • #113
  • Jul 26, 2011 4:16am Jul 26, 2011 4:16am
Quoting PrymeTyme
True ,to that statement!
Unless there's endogeneity...
The nail that sticks out gets hammered back in
  • #114
  • Jul 26, 2011 4:47am Jul 26, 2011 4:47am
So, superdesign, you are fundamental trader, can you explain us why on earth would FA investor/trader who likes logic, trade on forex?

Forex is most percect market on the world, currencies worth pretty much as they should in any given moment. That leaves very litlle room for profit if you like FA. Stock market has less perfect valuation, so logic says FA traders should trade there.

I trade on the stock market with most of my money, but I also gambe on forex with small amount of money, because of the fact that humans who are irrational move all the markets, and huge leverage that multiplies irrational moves of the price on forex, plus its interesting compared to boring long term fundamental investing, and I like the challenge of proving that porhaps tehnical analysis works.

What are your resons to trade on forex?
  • #115
  • Jul 26, 2011 5:27am Jul 26, 2011 5:27am
My brain hurts...

I take my tomatoes to market (my money).
Offer them for sale (place a trade).
Someone will pay me less than what it cost to grow them and I lose.
Someone will pay me more than it cost to grow them and I win.
I have no idea who will be prepared to pay what.
My goal is simple ... make money.

If people want Toms then I make money
If no people want my Toms then I lose
Supply and demand.

It would seem to be impossible for me to KNOW everything about this market.
Even those that are supposed to...(remember Bearings Bank) can still make a mess of it.

So unless I become some sort of all knowing super brain type guru thingy from outer space... what tiny bit do I study?
If indis worked how come we are all still on here on the quest as there are bucket loads avaiable.

So with all this in mind...
Perhaps the following method is the best way to trade.

Open a line chart
Background black
Line colour black
the chart is blank
and without any analysis,
place an order to either buy or sell ...

If it goes into profit, bank it and go home and return to market tomorrow
If it goes into loss, get out quickly and try later.

As and example, I went to market this morning and placed my Toms for sale, 4 trades. No analysis. 3 sell 1 buys (irrelevant)

Now you could say that was foolish and filled with danger, but, I have gone to market many times armed like Arnie with indis and analysis and still no one wanted my toms! Anyway... this happened.

FTSE got stopped out – £80
ESX is + £136
SP is + £192
NAS is +£44
Home from market with +£292.

I think I have finally found the holy grail...

Blank trading... LOL.

Unless you prove otherwise.
  • #116
  • Jul 26, 2011 5:31am Jul 26, 2011 5:31am
Quoting superdezign
Hmmmm

Can't tell you that buddy, but what I can say is this... Ignore nothing, but at the same time put your complete faith into nothing...

Everything is important, even price action as dumb as it is has some weight to it. I look at everything, but I assign different weights to everything, and I always do my best to break it all down to a very basic level of logic, to understand why this/that impacts the market, if it has any impact at all.

Always ask "why!"

it doesent mather !why! and u will never know why .. its simply cause u dont know why or when a car manufacturer company in japan will buy steel in india.. u cant know that .. and u dont know why or when a hedge fund buys euro either .. u will never know that .. except u are the owner of the hedge fund and the car manufacturer..

if u spend asking u the question why it did this or that .. u will force u into an analysis paralyisis .. not good! .. stop overcomplicating things.. and look at the charts its all written there .. the whole story is in front of your eyes.. not behind the screen !

i dont care why price does what it does , i just act upon it..

dont ask WHY , ask HOW

what question will give you the better answer or more information
where u can judge further actions on your trading .. either entrys or exits.. or trade management

i mean both questions are legit and it may be helpful to know why.. but u cant trade based upon the answers you get on the Why questions

Why does the market react to this News item ?

How does the market react to this News item ?

Why does the market bounces of this support area ?

How does the market bounces of this support area ?

Why does the market retraces ?

How does the market retrace ?

Why does the market break thru resistance ?

How does the market break thru resistance ?

etc...
  • #117
  • Jul 26, 2011 6:16am Jul 26, 2011 6:16am
Quoting courtneywild
If indis worked how come we are all still on here on the quest as there are bucket loads avaiable. .
Practically any of the popular indicators available do work perfectly well. I've been a member her for a while, and in all of that time, I have yet to read a single post from anyone who has even tried to objectively evaluate indicators in any kind of sensible fashion. Thats not a critisism of forex factory, its the same on practically any trading forum.

I see a whole bunch of people running around chasing their tails trying to make sense of random events without putting them into any contextual framework.

As noloqy so eloquently put it, "TA should exploit either self-fulfilling effects of TA, or exploit other properties inherent to the market and its participants."

That statements about as close to the holy grail as you'll find here. There reason they are still "on the quest" is that they havnt even taken the first step yet. Most people are spinning around in random circles going precisely nowhere.

Sadly noloqy's statement could be tatooed on most peoples foreheads as a constant reminder, and it still wouldnt make the slightest difference.
  • #118
  • Jul 26, 2011 6:35am Jul 26, 2011 6:35am
Quoting aud
Spot on hot scone.

The mistake was for people to believe all swans are white just because they had not seen a black one. (Actually plenty of people had seen them, they just didn't live in a country where there was a stock exchange!) Since the discovery of Australia we now think all swans are either black or white, just because we have not seen a pink one. lol

But if all the swans in the world were to be randomly paraded in front of you, (lol again) and you had to bet on white, black or pink, with good risk management .. .. well

The point...
Isn't this saying that we can't just look at a model that is developed from observations as being rigid and unchangeable? But even if the model is wrong, does it have any meaningful impact? After all, in 1492, it was a "fact" that the world was flat. And photons are waves... oh, I mean particles,.. no, no, I mean waves..., no I was right when I said particle. wave... particle. LOL

DrDave
To free Gazans of Hamas, use whatever it takes.
  • #119
  • Jul 26, 2011 6:53am Jul 26, 2011 6:53am
Quoting Razzle
Sadly noloqy's statement could be tatooed on most peoples foreheads as a constant reminder, and it still wouldnt make the slightest difference.
I appreciate the post, especially as it is coming from you


I actually did some statistical research on certain indicators, including Welles Wilder's Relative Strength Index, and found that when RSI dropped below 70 (which is considered to be a sell signal,) the subsequent bar is expected to close higher* (on average 2.4 pips, disregarding bid-ask spread, tested on hourly EURUSD data.)

Oddly enough, in this case the indicator provides a signal in the opposite direction of the empirical finding(!). Draw conclusions as you like, but there may be people exploiting the newbies that follow the common trading rules


*Result is significant at 99% confidence level.
The nail that sticks out gets hammered back in
  • #120
  • Jul 26, 2011 7:07am Jul 26, 2011 7:07am
Quoting superdezign
I talked to a guy the other day, he went on and on about how awesome his system was. He mentioned that he used the RSI...

Which had me stop him right there.
"Wait, you use indicators?"

It is one thing to use indicators, and it is an entirely different thing to know nothing about them.

"Can you even tell me, what RSI is?"
"It uhh measures the relative strength"
"Of what?"
"I.. I don't know"

He couldn't even tell me begin to tell me how it worked...

Gross... (and this guy is interning at a hedge fund)
Do you know how gravity works? Yet, you use it everyday to predict movement don't you?
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