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

  • #201
  • Jul 26, 2011 3:04pm Jul 26, 2011 3:04pm
Superdezign, you sure know how to upset the apple cart.
I'm surprised to see so many people in here get emotional about what's suppose to be a healthy discussion about a very valid point.

I've started out as a technical trader like most of us do. A few months ago, after spending countless hours/months testing technical tools, moving averages, S/R levels, PA bars and patterns (I gave up indicators after my first 3 months of learning forex) that could be used as a profitable system, I came to the conclusion that they don't work. So I thought to myself, why doesn't this work? So many people use them, write books about the subject, teach others and get seriously upset when you dare to ask them why they think it works or doesn't work.

In my opinion, they don't work because the market movers, any entity/ individual with large enough orders to move the market, simply don't care. All those countless tools most traders keep them occupied with is all irrelevant.

So why do so many people use them? Because it is the path of least resistance, or so it seems. Most people start trading, because they read ad's like, earn $4000 in 2 hours. It is as easy as buy and sell. Using indicators or learning different PA bars is easy. There also happens to be a PA bar at every top and bottom. It is very easy to see something that is not there, especially after being brainwashed by every forex website/tutor you vissit.

Cool Runnings
  • #202
  • Jul 26, 2011 3:08pm Jul 26, 2011 3:08pm
Quoting Darkstar
Ahh yes, the tired old argument of an aspiring trader. Can I assume you advocate your friends and family pass up promotions and overtime at their J-O-B as well? I mean after all, they already earn a living... why waste their time and effort?



Sure, nevermind the half dozen high value winners I walked through live.. or the multiple account statements I'v posted. We all know one losing trade means that all trades must be losers...



Well I can't speak for VSA, or how many people blew up their accounts with order flow. But unlike the...
OMG, I never thought i'd make that list. That made me proud of myself and lifted my spirits.

Thanks Man.
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About the thread: If you guys know why your method works fine, if you dont still fine (if it is with you).

But if any of you think you can make somebody who opened a thread and made a point like this........ to say "ohhhh now i see the point... hmmm i was wrong".

Sorry its not gonna happen. Well i dont remember any thread like this for a long time where it did happened so save your time and energy.

Anyone can go in circles all day long invalidating your point no matter ho much thought,reason, logic and energy you put into your post.
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To OP: Dont be upset now with people calling you stupid, You could have started the thread with a resonable title and could have got going a slow paced but interesting/educative discussion going but you wanted attention and well..... you'r getting it. For somebody who's on FF for 4 years, dont tell me you dint knew that was comin your way.

Finished.
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  • #203
  • Jul 26, 2011 3:10pm Jul 26, 2011 3:10pm
Quoting superdezign
Finally someone who knows how to pose a reasonable argument in a discussion

Hats off to you sir.

I see what you are saying with human psychology, but what part of human psychology are you focusing on and how does TA help exploit that?

(See how this works people? )


I will be priviladged to do it Sir.


When you look at the chart you need to ask yourself where people will close their loosing or winnings positions. Unless there is a huge money flow caused by a bad news, central bank intervention or whatever else price should react to each of this lines by bouncing off them. That's when I open my position and go to BE taking advantage of loosing trades being closed at BE by other traders. I will be stopped at BE many times, it means nothing more than there weren't enough orders to do what I expect it to. I wait for another chance. Pure probability. (3rd line from the bottom, I cough this move. Everything went my way, breakout then powerful bounce allowing me go to BE the rest is up to the market - I don't care)
The other clear example of what I'm talking about is the bar made on the 14/7/11 (E/U) I can guarantee that HH of that bar will be panic point for many of traders. Is the price gonna jump right off it, is it going to go 10 pips below gathering all those orders and then turn around, is it going to shout right thru it? I don't know and nobody else does, what I know is If I keep playing off this levels one every few will work. With my very tight SL I will catch a few winners a month covering my losses. Pure probability.


So:
1 - look at the chart
2 - ask yourself where are the orders and find the place where people would panic by closing their losses/going BE
3 - take adventage od that

It's that simple.


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  • #204
  • Jul 26, 2011 3:18pm Jul 26, 2011 3:18pm
Quoting nasir.khan
OMG, I never thought i'd make that list. That made me proud of myself and lifted my spirits. Thanks Man.
Why not? If you're one of the people making money trading order flow live, as Darkstar claims, it should come as no surprise that you'd make the list.

You are making money trading the system live, right?
  • #205
  • Jul 26, 2011 3:19pm Jul 26, 2011 3:19pm
Quoting superdezign
Cute story, wish my mom was that cool...

But people are cutting this too deep here.

I'm not some hippy trying to figure out the meaning of life here, and people keep tossing me these analogies like I am...

All I want to know is if people have one basic thing they are trying to exploit, and if they understand the principal they are trying to exploit. Because otherwise how can you honestly look yourself in the mirror and think you have an edge? You're essesntially gambling if you can't.

Buying based on a pattern, not only doesn't...
Gambeling is second name of investing.

I invest most of my money in stocks, in my portfolio I have company with average 15% ROE last 5 years, similar revenues growth, nice dividend, well known brand etc. but their P/B ratio was never biger then 0,35, in the last 4 years since I have it.

Why? Because fundamentals dont rise price, buyers do, and they are irrational.
  • #206
  • Jul 26, 2011 3:27pm Jul 26, 2011 3:27pm
So I've told you a couple of reasons why I don't use most of the technical tools available. One of the things that does work for me and also makes sense is following the trend. Yes I know, follow the trend. The trend is your friend, blah blah. I'm not going to share how I base my system on it, but what suits me best is,

1) Recognize the trend(s)
2) Trade in the direction of the trend.
3) Exit as soon as the short term trend breaks.
4) Re-enter when trend is established and inline with major trend.

I also follow fundamentals, which for me is crucial. You can't trade financial markets by being ignorant to the events shaping the moves in the market. Obviously it is not the events, but the people reacting to them.

To summarize my logic:

Determine state of world markets.

 

  1. Overall condition
  2. Major economies

Determine key market drivers
Create a scenario "map" (To anticipate certain outcomes and preparing for it)
Determine instrument(s) to trade.
Determine trend(s)
Trade with strict Risk management

I know I didn't stick to the thread topic, but hopefully this posts can start some interesting debates.

Cool Runnings

  • #207
  • Jul 26, 2011 3:54pm Jul 26, 2011 3:54pm
1. Arguing with others or trying to prove someone else wrong isn't going to make me money.

2. Trying to get to know whether other people understand the price action patterns they trade will not make me money either.

Therefore I do not engage in such activities and I do not understand why some do.
  • #208
  • Jul 26, 2011 4:05pm Jul 26, 2011 4:05pm
Quoting artov
1. Arguing with others or trying to prove someone else wrong isn't going to make me money.

2. Trying to get to know whether other people understand the price action patterns they trade will not make me money either.

Therefore I do not engage in such activities and I do not understand why some do.


Ar, artov...

1. Always a chance of a good laugh

2. Always a chance of a superfine, golden nugget of information from seniors
All systems of divination, like music itself,work through patterns.
  • #209
  • Jul 26, 2011 4:06pm Jul 26, 2011 4:06pm
The other day I made a long post why PA should work or has worked!!
Predicting price from price is itself not very natural. But one thing we should not miss is our edge is not necessarily predicting future price movement; it might be a combination of understanding odds and R/R ratio.

Like you can be right only 30% of times and still profitable.

PS:The only answer that could explain why "anything" in trading might work is "Self-fullfilling prophecy".


http://www.forexfactory.com/showthre...42#post4804142



Quoting zentrader99
Why price levels should work? [indent] Any tools (S/R,Pivot,Fibs,Trendline) are not any magic lines/wands where the price should stop or reverse.Of course there are not any!!

Then, why are they supposed to work?
Prices we see in chart does not represent what is their value is.
It shows the psychology of crowd and people all over the world trading. They typically tend to look at each other for finding clues for their trades.
Since price level,swing high/lows...
  • #210
  • Jul 26, 2011 4:07pm Jul 26, 2011 4:07pm
Quoting superdezign
Buying based on a pattern, not only doesn't make sense being how arbitrary short term price movements are, but when you buy off a pattern like that it becomes a race to who can open the buy order first. So even if patterns did work, you would have to almost be the first one in everytime to make money.
Look at my attachment of the most recent trading days.

Take the July 22 NY low, 1.4323 @ 10AM (roughly). Now take the next trading day, July 25 London low, 1.4328 @ 3AM (roughly). These are the most obvious points that stick out with relevance (both major sessions' lows). I can almost guarantee you a few things were happening during the NY July 25 session that had a large % of poor traders making poor trades that left them... frustrated, to say the least.

I like to call this one the 'fools rush in (and out)' pattern

1. For people who wanted to get short, they connected the two lows to form a trend line (although I guess you need three points for a 'legit' trendline? whatever), which would be used to go short on the break.

2. For people who were already long, they placed their stops below the London low / trendline break.

Both traders would've gotten absolutely worked. The traders who went short got reversed & stopped almost immediately (fools rush in), and the traders who were long got stopped out on what would've been a good trade (and out!). Both groups of traders taking the opposite positions of each other... and yet neither made money. Sound familiar? When I started looking at trading this way, the 99% of traders lose money adage just made absolute perfect sense. When so many traders have been taught shoddy trading methods based on pretty patterns with no understanding on who's moving the market and why, the idea that one group of traders (retail, inexperienced) could simultaneously get stopped out while some are short and some are long was just like... eye opening?

There's not really much of a visual pattern at all, in terms of it looking like a nicely formed and pretty object, but I have seen this type of behavior occur over and over and over again.

It's not foolproof (no pun intended), it's extremely discretionary, but in my opinion as it's analyzing the charts, it's also absolutely technical analysis and it's absolutely based in logic.

I guess in summation, I think the traditional methods of TA that are taught are largely crap and more designed for failure in a market of sharks than success. HOWEVER, I do not think that analyzing charts is a futile exercise... in the correct context, which I've tried my best to explain above.
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  • #211
  • Jul 26, 2011 4:13pm Jul 26, 2011 4:13pm
Quoting Lucky Duke
Why not? If you're one of the people making money trading order flow live, as Darkstar claims, it should come as no surprise that you'd make the list.

You are making money trading the system live, right?
Yeah i am!

But my point was that i dont send my P/L statement to darkstar at the end of the each day. So he recognized me by just the stuff i post once in a while on forums was a cheerful fact.

I dont know if you'r pissed on him for losing your account on his call last year or just by the fact that he is writing a book and not giving it off for free and ridiculously not keeping the announcement of the release as a secret to himself.

But please dont drag me into this.
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  • #212
  • Jul 26, 2011 4:14pm Jul 26, 2011 4:14pm
Quoting zentrader99
The other day I made a long post why PA should work or has worked!!
Predicting price from price is itself not very natural. But one thing we should not miss is our edge is not necessarily predicting future price movement; it might be a combination of understanding odds and R/R ratio.

Like you can be right only 30% of times and still profitable.

PS:The only answer that could explain why "anything" in trading might work is "Self-fullfilling prophecy".


http://www.forexfactory.com/showthre...42#post4804142
I would argue that "Self-fullfilling prophecy" does not work only because its mostly the guys who don't move the market in that type of situation...
  • #213
  • Jul 26, 2011 4:19pm Jul 26, 2011 4:19pm
Quoting newyear498
I would argue that "Self-fullfilling prophecy" does not work only because its mostly the guys who don't move the market in that type of situation...
I bet then there would not be any concept of Support/resistance!!

You should see a pit to know how S/R is created. Be it stock or pork bellies.
  • #214
  • Jul 26, 2011 4:21pm Jul 26, 2011 4:21pm
Sure if you want to spend your precious time and energy in arguing with others for a laugh, go ahead.

Quoting kaspopsicle
1. Always a chance of a good laugh
I do not see what benefit a person has from such a golden nugget if that person has already decided that technical analysis or price action falls under the category of "invalidated trading".

Quoting kaspopsicle
2. Always a chance of a superfine, golden nugget of information from seniors
  • #215
  • Edited 4:32pm Jul 26, 2011 4:21pm | Edited 4:32pm
Quoting smittens4212
Look at my attachment of the most recent trading days.

Take the July 22 NY low, 1.4323 @ 10AM (roughly). Now take the next trading day, July 25 London low, 1.4328 @ 3AM (roughly). These are the most obvious points that stick out with relevance (both major sessions' lows). I can almost guarantee you a few things were happening during the NY July 25 session that had a large % of poor traders making poor trades that left them... frustrated, to say the least.

I like to call this one the 'fools rush in (and out)' pattern

1. For people...
That trendline is toilet, as that whole area was demand, wholesale prices. Only fools sell in demand areas. As for the thread starter, pure BS with regards to what they think about PA. They are dissing it because they never figured it out for themselves and PA is clearly alien to them!
  • #216
  • Jul 26, 2011 4:28pm Jul 26, 2011 4:28pm
Quoting zentrader99
I bet then there would not be any concept of Support/resistance!!

You should see a pit to know how S/R is created. Be it stock or pork bellies.
Who is left in the pit these days? Old skool and time has moved on with electronic trading, trading at the touch of mouse button. It is very different from the open outcry of yesteryear!
  • #217
  • Jul 26, 2011 4:30pm Jul 26, 2011 4:30pm
Quoting bbakker
That trendline is toilet, as that whole area was demand, wholesale prices. Only fools sell in demand area. As for the thread starter, pure BS with regards to what they think about PA. He is dissing it because he never figured it out for himself and PA is clearly alien to them!
That would be exactly why I said the people who went short were "fools"... As were the people who put their stops directly below the London low. It's asking to get stopped out either way, and both behaviors are exactly the type of action I expect to see out of losing traders.

My point was that analyzing the charts doesn't necessarily have to be done in a "there's a double top" manner.
  • #218
  • Jul 26, 2011 4:41pm Jul 26, 2011 4:41pm
I think by the end of the day, everyone will continue to believe what they were believing in the first place. The TA proponents will still be TA proponents and those that don't believe it will continue not to believe in it. I dont think anyone can give some conclusive logic or proof that their ideology works and convince someone from the opposing belief system to change their thoughts.
  • #219
  • Jul 26, 2011 4:43pm Jul 26, 2011 4:43pm
Quoting artov
Sure if you want to spend your precious time and energy in arguing with others for a laugh, go ahead.



I do not see what benefit a person has from such a golden nugget if that person has already decided that technical analysis or price action falls under the category of "invalidated trading".
I think you may have misunderstood me ...i do not support the OP...nonetheless these threads can become quite interesting once you check out the trading status of seniors. I do not consider the OP or myself to be a senior.
All systems of divination, like music itself,work through patterns.
  • #220
  • Jul 26, 2011 4:48pm Jul 26, 2011 4:48pm
Quoting pipexplorer1
I think by the end of the day, everyone will continue to believe what they were believing in the first place. The TA proponents will still be TA proponents and those that don't believe it will continue not to believe in it. I dont think anyone can give some conclusive logic or proof that their ideology works and convince someone from the opposing belief system to change their thoughts.
No doubt, but some of us need some way to pass the off times at work... grain of salt, and all that
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