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

  • #241
  • Jul 27, 2011 2:07am Jul 27, 2011 2:07am
Quoting HiddenGap
Your premise is flawed. It does not need to predict anything to have value.

Price is reallity.

We only get two things from the exchanges- PRICE & VOLUME.

Leaving volume aside for a second, everything every trader knows about the market is reflected in price. Everything the market knows about itself in its price. Price reflects the effects of volume, of open interest, of everything. All fundamentals are contained in price. Supply and Demand are contained in price. PRICE is what IS.

To respond to a previous point. Here's a little story-swear...

Another nice post
The last paragraph about sums it up.

Superdezign.... sorry you didn't like my tomato market analogy. But your likes and dislikes are irrelevant to a decent discussion. Unless it’s one way of course. Personally I think the name superdezign is silly but I would't say so.

Cheers and good luck with the thread.

Bye
  • #242
  • Jul 27, 2011 2:38am Jul 27, 2011 2:38am
Lots of people engaging the 'you're thick, I am considerably cleverer than you' line of debate. Which is fine, but let's not forget - intelligence and trading ability are loosely if at all correlated.

While being able to tie your own shoelaces helps, everyone successful simply ends up playing to their own personal strengths. While I'm proud of the ingenuity of my system I'm well aware there are full time traders who simply draw a line from the open across the day and go long above, short below.
The mistake that some people make is because there are traders that do that, they can do the same and expect similar results, forgetting that every one of those traders has a wealth of experience, and they've worked their balls off to get to that position. There are zero successful lazy traders.

To the original OP, TA clearly isn't PA but either way, you're old and ugly enough to know by now fx doesn't have unlimited liquidity, and that there are players big enough to shift the market for days. For as long as this is the case, then they'll be ways of identifying this and riding along. Both on and off the charts.
  • #243
  • Jul 27, 2011 2:42am Jul 27, 2011 2:42am
How about this TA:
I am basing my logic on the observation that humans tend to repeat behaviors under similar conditions. Historically, selling orange juice on the first day of month MM and holding until the first day of month MM + nn is a profitable trade for NN% of the trades, examined over the past 25 years. Similarly, buying orange juice ….
The range the price covers during these periods of interest is NN$. I can perform a statistical analysis of the range data and determine the 99% confidence level for the minimum movement. If I find it an acceptable amount, and if I am willing to accept the amount of loss that can be incurred, I will enter into a trade.
Each year, I add data to the data pool and recalculate the statistics, then perform ANOVA to determine if this year’s data appears to fit the established data pool.

DrDave
To free Gazans of Hamas, use whatever it takes.
  • #244
  • Jul 27, 2011 2:51am Jul 27, 2011 2:51am
Quoting superdezign
That's what I figured, but I wanted to see for sure.

I haven't been to this forum for a long time. But the question of whether people actually understand markets kept popping into my head, and I figured this would be a fun place to stir up a little discussion and get my answer.

So far I've been pretty disappointed.

Eh, life goes on.
Interesting to hear that you are "pretty disappointed." It seems to me that you have mostly gotten the type of respones that you expected. Therefore, your expectations are being met. And if ones expectations are being met, isn't one "happy" with that outcome rather than disppointed??

DrDave
To free Gazans of Hamas, use whatever it takes.
  • #245
  • Edited 5:10am Jul 27, 2011 3:12am | Edited 5:10am
Quoting courtneywild
Nice post indeed.
A blank screen tomato market. Post #115
Excellent
The problem I have with this tomato market blank screen theory is, even with the humble tomato retailer, he/she knows that the market is subject to demand and supply and trends in tomato consumption. he/she will know if he has a glut of tomatoes and needs to shift a load what price he will be able to sell those tomatoes at based on past experience/performance and current trends, and shifts in trends. Same with currencies. So ask yourself, what does this look like on a chart. Retailers don't expect to be right every time. Just go around the back of any supermarket and check their bins!

So ask yourself again, what does this look like on a chart and how does the technical pattern relate to basic economic theory. Then chuck in some game theory, what ever floats your boat. I must agree though that a lot of indicators are far removed from the landscape of basic econonmic theory, and if price action lags behind underlining economic dynamics to a small degree (as it merely points to the initial reaction to it i.e human emotion/action and individual or/and institutional game plans), then indicators create a further lag to this reaction. Remember though, a particpant's reaction is part and parcel of the market, just as important as larger macro economic factors that inform the individuals.

From a basic economic theory standpoint the result and ongoing outcome of this market complexity can be predicted and anticipated to varying degrees, and one way of doing this is by the study of price action. But without the 'right' theoretical hook to hang it up, then the study of price action alone will have little relevance to the reality of the market.

However, it does not mean it will not work. A method could be aligned to the market purely by chance. But could the TA method be improved with a better understanding of underlying market dynamics? Possibly and more than likely.
  • #246
  • Jul 27, 2011 4:40am Jul 27, 2011 4:40am
An intriguing thread.A fool/seller of whatever, throws a stone in the lake and thousands wise traders try to scuba after it.What are we talking about?We challange the existance of something that we see every minute before our eyes most of the times backtesting thats true! TA is living and doing well!Price action and indicators taken into account.Yes, you can read the charts PA,after some years of reading,yes you can see what indicators will tell you!You always have an edge using them.The problem comes with the trader himself.Excuse my triviality but greed and lack of patience combined with vanity is the cause of failure.I agree that you dont want to spend all your life stuck to your computer and being zombified by squiggling charts, facing an uncertain outcome.That is why most traders look for a smart mechanical system or EA to spare them the effort and... life.Its understandable!.That is what we are talking about!People become discouraged by the slow pace of their progress and gradually step on it to an inevitable crash!

I mostly use channels in my trade and belive me these only make a powerful edge!I draw a lot of possible trend lines wich I gradually dismantle with the actual development of the price.I check one or two strength indicators just for not being riding in the bushes,sometimes MACD to catch divergence and thats it!Do I win all the time?No, but most of the times.Take your losses with pride and money management,dont loose focus and you will gain some money.Patience is the key!
  • #247
  • Jul 27, 2011 5:01am Jul 27, 2011 5:01am
Quoting superdezign
It's one thing for me to say

TA doesn't work, where is the logic in it?

...
Quoting superdezign
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

...

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:...
Your notes above helped me recall how I started learning TA from scratch:
Allow your mind to randomly pick SR levels, and then break down why you think you drew them from others', and eventually your, TA reasons. Repeat this lots of times until what seems random can be explained and then projected from. The final step, that of statistical significance, which it seems you and several others are after, is for me more of a simple weighting of one small TA'ed area vs. another; like moneymaker, I don't go beyond this for math-like precision (unlike m., I don't make $).

So, a fast, untradeable (I avoid SR levels more often, it seems to cherry-pick tiny TA areas rather than combine larger areas with an explanation) chart that is only one (perhaps not logical, only w/a little knowledge) explanation of why you "randomly" picked your SR levels:
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  • #248
  • Jul 27, 2011 5:06am Jul 27, 2011 5:06am
I like lagging idicators! i don't care about entering a sell at the PEAK of the move. I wait to sell until I have a CONFIRMATION that the direction has changed from up to down. What better way to get that than from a LAGGING indicator. so when my lagging indicator tells me the pip train is definitely south-bound, I am eager to hop on.

I also don't try to ride the pip train for the entire leg. I take some fat pips from the middle with few worries that we might be at the end and turning back up.

Lagging indicators? BRING 'EM ON!!
To free Gazans of Hamas, use whatever it takes.
  • #249
  • Jul 27, 2011 6:26am Jul 27, 2011 6:26am
I unsubscribed from this thread because it was becoming tedious but it did get me thinking about my own system and why it works so maybe I was a bit premature (not the first time I have been told that)

I follow trends and buy after a pull back. Nothing new, not fancy. In fact quite boring. But that's what works for me and I make good money.

So I guess to dissect my trading system I have to establish why certain things happen in order for me to spot a trade.

1. Why is there a trend?
2. What causes a pull back/retracement?
3. What force pushes price back in the direction of the trend (where I place order).

Phew, I can already see this is going to be huge and probably impossible to explain logically and that's just with point 1.

Firstly you have to define what a trend is and that can be subjective so that's the first stumbling block. What I see as a trend someone else may not. Many would say that it's defined by a trendline. Some would say it's LL + LH or HH + HL but some trends don't conform to either of these definitions. Others may use a MA which opens up a whole new can of worms.

Hmmm. Going to have to go away and think about this but my personal feeling is that trading is subjective and personal and not logical. If it was that logical and every action could be packed into a neat little box then there would be more successful EA's and automated systems.
  • #250
  • Jul 27, 2011 6:55am Jul 27, 2011 6:55am
@OP dont you think u can read out every information needed only from charts alone ?

well...

here is a lil story on E/U H4 ... i love reading the books of Charts... u too ?


its just a lil briefly not going into detail as there is much more to talk about (bar by bar) .. but that wouldnt fit in here...


just follow the text with the Numbers presented...

btw all u VSA versed traders.. special note on the bar i marked as NO Supply!
you guys would probably call that a no Demand bar.. but thats tottaly wrong
as the location mathers too aswell as background.. as u notice its at an area
of former selling or supply.. the fact that this bar closes on its high on low volume at a level or previous supply/selling .. means No Supply Left !



So here we Go:

1. Selling Climax

what happens in a selling climax ?

a panicky unloading of supply mostly by weak holders , this upportunity of
price getting away of value (undervalued) is a perfect situation
for strong holders to buy cheap.. aswell as suck in some weak bears..

its a way to remove hovering supply to create a line of least resistance to the upside..



2. Automatic Reaction

as most of the supply has been wahsed out in the climactic action
demand has now an easy time to rallie or react ..
its natural behaviour after a climactic action the harder the climactic action was the easier the reaction is..



3. Secondary test


on a secondary test we can observe the quality of remaining supply when its moving towards the climactic area ,if this is happening on lower volume and or declining volume we can easly determine that the quality of supply is weak.. and therefore the climactic action did is job ...

btw. we only know that we have whitnessed a climactic action if we have a secondary test wich is successful , also retracements should be not deeper then the climactic actions low...

or else further testing is needed...


4. Spring

a spring , is a shakeout wich is the same purpose as a climactic action..
but a spring happen in ranging and uptrending markets.. not after a fast decline like the seling climax..

so a spring is a fast shakeout .. to get rid of weak supply ..



5. absorbtion

absorbtion happens near resistance in order to absorb remaining supply at that level..



6. clustering of closes

this and the fact that we are at resistance.. where we could expect supply hitting the market.. is a sign of strenght

and happens mostly while the market absorbs weak supply..

the fact that a high volume bar on small spread wich closes in the middle or on its high .. is a clear sign that supply gets absorbed within that bar..

and the fact that we have clear signs of strenght in the background .. and we are facing now weak supply wich gets absorbed.. we now can speak of a bullish market and look for a perfect setup to let us participate.. till the market changes its behaviour...

only problem atm is that we are close to resistance on daily etc.. remember only trade the edges..
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  • #251
  • Jul 27, 2011 7:19am Jul 27, 2011 7:19am
Quoting willf
I unsubscribed from this thread because it was becoming tedious but it did get me thinking about my own system and why it works so maybe I was a bit premature (not the first time I have been told that)

I follow trends and buy after a pull back. Nothing new, not fancy. In fact quite boring. But that's what works for me and I make good money.

So I guess to dissect my trading system I have to establish why certain things happen in order for me to spot a trade.

1. Why is there a trend?
2. What causes a pull back/retracement?
3. What force pushes...
Good post! Although I feel that any TA should be logical to minimize the effect of uncertainty and emotions.

Cool Runnings...
  • #252
  • Jul 27, 2011 7:43am Jul 27, 2011 7:43am
This isn't anything less than a joke.

A retarded newbie with 34 posts is pissing around with a guy who CREATED an entirely new way of trading AND has written a book about it!?

Each time I visit the forum (just for giggles btw) I see threads where people complain about FA, TA and everything in between.. I get really scared, as if someone is actually picking up what others (guess who?) have practically GIVEN away and is about to share it.
Then I remind myself.. It will end in 100+ pages of absolute nonsense, and thank you for that. Liquidity is finite.

Whether you (or others) believe Order Flow Trading is bullshit or not, many of us couldn't care less.
One doesn't need to look further than me. I have 400+ posts. 300 of them contain nothing but bullshit about TA as I was trying to learn. Not a shit happened in a very long time. I didn't learn a damn thing about the market.

Then came Darkstar and Order Flow Trading, and the reason I don't post anymore is just because you have nothing to share.. So I'll leave now like a gentleman by saying to you that you can place your stops wherever you want to based on the premise of TA, FA or whatever else you're trading.
Order Flow traders still know what's going around in your mind.

You need more than luck.
  • #253
  • Jul 27, 2011 8:18am Jul 27, 2011 8:18am
Quoting Carnegie
This isn't anything less than a joke.

A retarded newbie with 34 posts is pissing around with a guy who CREATED an entirely new way of trading AND has written a book about it!?

Each time I visit the forum (just for giggles btw) I see threads where people complain about FA, TA and everything in between.. I get really scared, as if someone is actually picking up what others (guess who?) have practically GIVEN away and is about to share it.
Then I remind myself.. It will end in 100+ pages of absolute nonsense, and thank you for that. Liquidity...
What do you think is the reason for the success of pa traders like J16, EOhater, redsword11,...?

Luck or are they liars?
  • #254
  • Jul 27, 2011 8:45am Jul 27, 2011 8:45am
Quoting willf
I unsubscribed from this thread because it was becoming tedious but it did get me thinking about my own system and why it works so maybe I was a bit premature (not the first time I have been told that)

I follow trends and buy after a pull back. Nothing new, not fancy. In fact quite boring. But that's what works for me and I make good money.

So I guess to dissect my trading system I have to establish why certain things happen in order for me to spot a trade.

1. Why is there a trend?
2. What causes a pull back/retracement?
3. What force pushes...
Why does it matter to you how anyone else defines a trend? It’s YOUR system; YOU get to set the rules and definitions. And if your definition of trend happens to be HH, HL = up, LH, LL = down, then that is what EVERYBODY using your system must use. Maybe your definition is totally absurd to others. THAT DOESN”T MATTER as long as you have a logical explanation for your definition. But you should also be open to the possibility that someone else can point out a FLAW in your logic that totally invalidates your system. (E.g., as I posted earlier, in 1492, it was a common FACT that the earth is flat. )

From what you posted, you have more than one way to define a trend. That is fine, too. Just spell out the conditions. Then put in the logic tests. IF trend description 1up conditions are met OR trend conditions 2up are met THEN set trend to UP.

I think this is step1 in this thread discussion: define the indicator that you are talking about. Step2, explain logically WHY you think that your conditions are valid for defining a trend.
I think this is all that the thread starter is asking for.

DrDave
To free Gazans of Hamas, use whatever it takes.
  • #255
  • Jul 27, 2011 10:44am Jul 27, 2011 10:44am
Sustaining my words with ...channels.Take a look at AUS/USD 1h and 5min. today.Draw the channels-Its not difficult-All day long the pips breathed in the ceiling after a long and exausting march after the Great Leap Forward at 1:00h today.For hours have strengh indicators were on top.The channels formed on 5 min and 1h the same pattern.Next move ?To the floor, with attention at midway.TP=30 pips some minutes ago.This is simple TA and PA and...some experince in the pairs behaviour.

Why PA works?TL,S/R,channels of all sorts SHI,LR,SD,Equidistant and even fibo channel,are reflexions of market behaviour including Accumulation and Distribution or Supply and Demand.Is something more basic than that?

To the wondering initiator of this thread once again:In your left hand=Supply,In your right=Demand.Now,raise carefully your right hand and hold the left.Change positions and repeat the exercise..supply...demand...supply..demand...aso.
  • #256
  • Jul 27, 2011 10:56am Jul 27, 2011 10:56am
Quoting MCFly
What do you think is the reason for the success of pa traders like J16, EOhater, redsword11,...?

Luck or are they liars?
Nope you didn't understand what I was talking about..

I said TA didn't work FOR ME. That said, I am most certain (obviously..) it works for many others, but just because it doesn't work for me doesn't mean I can just rule it off like others are doing with Order Flow Trading.

Take care
  • #257
  • Jul 27, 2011 11:25am Jul 27, 2011 11:25am
Quoting Carnegie
Nope you didn't understand what I was talking about..

I said TA didn't work FOR ME. That said, I am most certain (obviously..) it works for many others, but just because it doesn't work for me doesn't mean I can just rule it off like others are doing with Order Flow Trading.

Take care
Okay that was my fault. Good that you found something that works for you.

cheers
  • #258
  • Jul 27, 2011 11:42am Jul 27, 2011 11:42am
Hmmm.....

If one were learn Calculus, Algebra & Trigonometry to punch a buy / sell order, I just cannot imagine how complex the markets are.

I am going to join a course of Fourier Series and Fourier Transforms tomorrow.

This is another way of asking " I do not have a trading System. Give me yours with explainations. I cannot even comprehend if you do not explain".

I am sorry if I have hurt anyone. I just could not get through page 2.

There could be lot of ego explotions. But I am just conveying what I thought after I scrolled through couple of pages.

Thanks
Ansi
  • #259
  • Jul 27, 2011 12:58pm Jul 27, 2011 12:58pm
Hmm. Is it me or are there rather a large number of post from new users with just one post in this thread.

http://thebusinessglue.com/wp-conten...ds/dr-evil.jpg
  • #260
  • Edited 1:35pm Jul 27, 2011 1:14pm | Edited 1:35pm
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?

I can tell you exactly why the way I trade is the way I trade. I can tell you why it works, the principals it is based off of, and why it will remain robust. Every move I make...
You asked for a reaction and you got it in bucketloads, so stop moaning about it.

TA and PA do work perfectly well, like you I have taken 5 years plus proving to myself that my method works well enough to trade naked charts with absolute confidence.

It is almost entirely mechanical and I know exactly why I do what I do and the framework I have devised enables me to understand almost every price movement on every timeframe.

I teach my system to others so have to answer a barrage of questions about what I do every day, I wouldn't / couldn't do that if I didn't understand what I do inside out.

I actually feel sorry for you that you couldn't make it work for yourself.

Trends and support and resistance work, imo we are always just trading tests and re-tests of levels broken.

If a SR level is broken how do we know if it will hold or not if it doesn't get tested (fair value)? It is so simple really.

Good luck.
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