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

  • #321
  • Jul 28, 2011 7:55pm Jul 28, 2011 7:55pm
so far i read page after page of every man and his dog wanting to prove why what they do works.

that was the frigging point!

for everyone who has done their homework, has confidence in their trades, and believes they have a real deal edge that will continually grant them more and more profits and could explain this to another person and it make complete sense to them.... then congrats! this thread wasn't pointing fun at you or calling you out. this thread points to you as the example of what needs to be done! it's just a shame that each and every one of you who chimed-in felt you needed to flop your ego out and compare with everyone else.

this thread wasn't about arguing with everyone else about why you are a super trader and make mad money. this thread was about either a) having done your homework and having a sensible method of trading, or b) not having done your homework and just being a sheep reading babypips for hot tips or believing in fairy-tales and trading accordingly.

if you are just placing random trades with no actual idea behind why it should work then this thread says you are a dickhead and deserve what you get for not bothering to do your homework. for everyone who flips a coin, or sees a doji and 'knows' it is a reversal just because some book says so, or reads forums for hot tips to decide what trades to take.... etc... then this thread says you are a failure and get what you deserve.

it is a shame that all of the tea-leaf and Ouija board traders were ironically smart enough to keep their traps shut and not say a word in this thread.
Congratulations ScalaFX for coming out of the closet!
  • #322
  • Jul 28, 2011 8:25pm Jul 28, 2011 8:25pm
Quoting superdezign
Sigh...
holddddd up!! I'm not just talking about buyers vs. sellers, that's kid stuff... More like what goes into making a supply/demand function... You seem to think that you can pinpoint certain degrees of that equation just by drawing a line on some chart. When the actual equation for what you are trying to exploit has more variables than you have brain cells.
What equation exactly are you talking about? I am not aware of any equations in finance [or anywhere else for that matter] with so many variables. And before you say anything about some hypothetical equation, think what that exactly means: there is no equation...
Quoting superdezign
In a zero sum game you need an edge. When you gain, someone else has to suffer a loss in one way or another. You are constantly at war with some of the most brilliant minds this world has to offer, and you think a couple price patterns on your chart gives you something over them? OR for that matter, an edge over even the newest of the newest people to trading period? The first thing you learn as a trader are chart patterns... So where is the edge in anything TA or PA? Especially when a 7 year old with autism can work a TA system.
I am not going to say that trading is not a zero-sum game, but for most of us (small retail traders) here, that's totally irrelevant. If you were playing some [closed-system] game against your buddy, then yes, every loss you take may be your buddy's gain. But when your tiny orders drown in the trillions-a-day markets, you don't really have to compete with anyone. No one is going to complain when you ride on their trends (they'll probably thank you). The big dogs don't care if you make a profit or loss, you're probably much too small to show up on their radar.
So yes, strictly speaking the market may be a zero-sum game. But that does not mean you need to be a rocket-scientist-turned-quant to make your buck.
Even just within the retail crowd: there are probably at least 4-5 losing traders, unfortunately, for every profitable trader. So even in this vastly smaller universe, if you can get to be that one profitable trader, you're good.
Quoting superdezign
Markets are random. Just because pattern X occurs doesn't mean there isn't a load of orders up there that will instantly change the equation. Prices are based on future values which are almost entirely subjective. With people being incapable of determining value by any means, how can you really measure price movements of a population that is wildly irrational?
What exactly do you mean by "markets are random"? What kind of randomness is this? Everything in the world is random, to some extent - yet manageable. We have probability theory to analyze randomness, and stochastic tools to model it.
As I've said in a previous post on this thread, history repeats itself - and we all here take advantage of that. If you are able to recognize these patterns, maybe you'll also be able to trade them. Will they always work? Of course not. Can they make a positive-expectancy trading system? Definitely.
Quoting superdezign
With the inherent odds of a winning trade in the market being just about 50/50
Now why is that? Not every experiment that has exactly two possible outcomes (pls ignore b/e) is "just about 50/50"
Quoting superdezign
I just want to know if there is an edge in TA/PA, and what logic is there in that edge?

You say that X price is a support area, what logic supports that?
I'm not sure what it means that "there is an edge in TA/PA" - but winning systems do have an edge, and each system has a certain logic behind that edge. Some, by the way, are purely empirical: a certain pattern, for some reason, consistently repeats itself and is tradable. You don't necessarily have to understand why to make money off of it.

While you can argue to a certain extent about support areas, for the most part you see them very clearly on your chart. There are many explanations, but what's better than believing what you see?
  • #323
  • Jul 28, 2011 9:49pm Jul 28, 2011 9:49pm
If the thread starter doesn't mind Id like to know what he uses to analyze the market. Not looking for your secrets just do you use Fundamentals, mathematics, etc.
  • #324
  • Jul 29, 2011 6:38pm Jul 29, 2011 6:38pm
Quoting Orbital
I usually don't post stats but heres something for you, this was last weeks result. I should have probably mentioned for small minded people that i calulate my performance on a weekly basis due to my contractual obligations and the way i deal with risk but lets not divulge to much about my trading here anymore and keep this discussion purely technical for arguments sake. I will be willing to elaborate this further via PM's but not in a public platform like here.
Attachment

Arguably you are making a valid point that an actual equation...

I think I finally was able to drive a few good points out of the woodwork.

I think PA basically relies on markets being orderly, and that random walk theory is invalid. And that may be worth continuing a debate on.

Now, if you look at orderflow (or even PA/TA/ect for that matter), and try and determine where price will end up when certain sized orders enter the market, then this may be possible if no other orders changed the direction of price.

But... If you have a way to anticipate price patterns before they occur, then that would be your edge. That would be the logic behind your system... You would have a way to get in the market before the PA traders took their positions, that would give you that extra rush of demand in the market to ride off of.

That's a solid example of someone understanding their edge and what they exploit.

I'm not looking for anyone to explain why they set the RSI to whatever parameter or that they trade off support and resistance levels. I just wanted to know if people knew what they are exploiting, if there is any real edge in PA/TA, and if people understood what they were doing.

Do I think people may be able to trade off a system they dont understand?

Sure, I can shoot a gun and hit a target, but I don't understand anything more than how to pull a trigger and reload. And could I keep hitting a target over and over again with just that basic knowledge alone? Yes, I believe so, however, if that target is ever moved to a greater distance, winds change, or my gun jams, or maybe my target starts to move... I would love to be comfortable having the knowledge that would allow me to make the necessary changes, in fact I would love to know everything there is to know about gunmanship to adapt accordingly. When push comes to shove, its better to know than to not know.

Do I think people will get rich/be able to exploit a system they don't understand for the rest of their lives?

Maybe. In a world where we are all subject to survivorship bias, we may never really know.

However, my personal belief is as follow...

The market is at least somewhat random (to what degree is really unknown). And you could develop a system, that works over whatever backtest/live test/ect that you perform. You could even amass a decent amount of money off this system.

However, with the inherent odds of the market, and the randomness that exists in this world we can easily be fooled into thinking this system works, when it has been but a decent bit of luck.

Which is the reason I stress that people should understand the logic behind what they trade. So they KNOW that, yes my system works, and yes I understand what I am exploiting.. It is NOT luck!

With millions and millions of traders out there, there are bound to be people who go on extraordinary runs, but burn out after a year or two. (hence the survivorship bias)

I guarantee the chances that you make it as a trader over the long run are increased dramatically if you understand what you are exploiting.

I hope the traders in this forum will not look at this as an attack on whatever work they have done, or the systems/methods they have spent countless hours developing.

I know from personal experience that trading is a journey, and an extremely long one at that. I never stopped learning and improving upon my strategy from day one, and I have to say that I wish I had adopted this mindset a long time ago. It would have saved me a lot of time, money, sweat, and blood!

Coming off as a little blunt right out of the gates, I can understand the hostility from the people in the thread, but it was all in good fun, and to just get a debate going.

I wish you all happy trading, and hopefully you have learned something from this thread.

Superdezign out
  • #325
  • Jul 29, 2011 8:33pm Jul 29, 2011 8:33pm
Quoting moneymaker2
By watching the charts, I know when price does certain things in relation to the Bollinger Bands or RSI or even the EMAs, it will routinely follow a historical-type (and thus predictable with a fairly high degree of accuracy) "pattern". It is those "patterns" that I use to make money.

I do not use just one indicator, but several to give me a picture of what will most likely happen. So the defintions of each of the specific indicators are not what I use to determine a trade, but the overall picture that the indicators show will most likely...
Quoting moneymaker2
I use BB as the "fencing" around the price....when price gets way out of the fence, it gets back in pretty quickly (like the EUR/JPY just did!). EMAs, like you said, act as the next logical support and resistance levels. Though it may only be for a few minutes, that may be just enough to pull in those profits.

RSI, at the extremes, help you to see at a glance if the pair or stock is overvalued or undervalued, and like the BB fence, price doesn't like to stay at the extremes very long.
Now during the thread, these explainations didn't meet your standard of "understanding" a system or method, but now:

Quoting superdezign
But... If you have a way to anticipate price patterns before they occur, then that would be your edge. That would be the logic behind your system... You would have a way to get in the market before the PA traders took their positions, that would give you that extra rush of demand in the market to ride off of.

That's a solid example of someone understanding their edge and what they exploit.
Man, you're harder to read than a Point and Figure Chart!!

Anyway, hope your trading continues to go well. Remember, it's a Neverending Story.......
  • #326
  • Jul 29, 2011 8:41pm Jul 29, 2011 8:41pm
Quoting moneymaker2
Man, you're harder to read than a Point and Figure Chart!!
they are hard to read to you? that's.... telling.
Congratulations ScalaFX for coming out of the closet!
  • #327
  • Jul 29, 2011 8:54pm Jul 29, 2011 8:54pm
Quoting andy9775
If the thread starter doesn't mind Id like to know what he uses to analyze the market. Not looking for your secrets just do you use Fundamentals, mathematics, etc.
Nothing there is an actual name for in regards to the trading community.

But I dont want to discuss it, just because that is not the focus of this thread.
  • #328
  • Jul 29, 2011 8:56pm Jul 29, 2011 8:56pm
I use price action and let me tell you, if you know where to look, it's there. Like riding a bike.
The road to pipland is arduous and fraught with challenge.
  • #329
  • Jul 29, 2011 9:14pm Jul 29, 2011 9:14pm
Quoting superdezign
If you have a way to anticipate price patterns before they occur, then that would be your edge. That would be the logic behind your system... You would have a way to get in the market before the PA traders took their positions, that would give you that extra rush of demand in the market to ride off of.

That's a solid example of someone understanding their edge and what they exploit.
A good point.

There'd be several grades of ability, such as price to move

  1. from one price to another within a certain time period,
  2. in relation to some indicator / drawing device / etc.,
  3. in waves in such a relation, or
  4. in a unique shape -- which is how I read what you're saying -- in such a relation.


The first four levels are commonplace, but the last one'd be a really tough skill to have.

  • #330
  • Jul 29, 2011 9:26pm Jul 29, 2011 9:26pm
Quoting ha-pattern
A good point.

There'd be several grades of ability, such as price to move

  1. from one price to another within a certain time period,
  2. in relation to some indicator / drawing device / etc.,
  3. in waves in such a relation, or
  4. in a unique shape -- which is how I read what you're saying -- in such a relation.


The first four levels are commonplace, but the last one'd be a really tough skill to have.

The ability to anticipate price patterns before they form, however you would go about that, is not what is important, but the understanding that you are exploiting the faith PA traders put into these patterns, and that you are riding on their demand..

Get it?
  • #331
  • Jul 29, 2011 9:38pm Jul 29, 2011 9:38pm
Quoting superdezign
The ability to anticipate price patterns before they form, however you would go about that, is not what is important, but the understanding that you are exploiting the faith PA traders put into these patterns, and that you are riding on their demand..

Get it?
Price action is price acting contextually, as it does in every market (for all the vast array of reasons that drive human activity). Patterns, taken out of that context, just for the sake of being patterns, is what I suspect you are on about and where I would agree. This is the hard and challenging part in learning trading....acquiring that instinct. And it is not transmissable hence why I would never be able to teach what I know as I would not know where to start.
The road to pipland is arduous and fraught with challenge.
  • #332
  • Edited 10:06pm Jul 29, 2011 9:55pm | Edited 10:06pm
Quoting superdezign
The ability to anticipate price patterns before they form, however you would go about that, is not what is important, but the understanding that you are exploiting the faith PA traders put into these patterns, and that you are riding on their demand..

Get it?
No.
How'm I supposed to understand what an unknown thousands' trading habits are?
Your extra note socially contextualizes a chart study. In that case, trader confidence due to this contextualization'd be the only way to think of your extra note making a difference to profit.

I suppose I contextualize, also, though, with that emotion junk I'm fiddling with now.
  • #333
  • Jul 29, 2011 10:17pm Jul 29, 2011 10:17pm
Quoting ha-pattern
No.
How'm I supposed to understand what an unknown thousands' trading habits are?
Your extra note socially contextualizes a chart study. In that case, trader confidence due to this contextualization'd be the only way to think of your extra note making a difference to profit.

I suppose I contextualize, also, though, with that emotion junk I'm fiddling with now.
Always be mindful that the forex sector exists to facilitate commerce and is mediated over by the banks.

Just how big a part speculators play in the scheme of things is up for argument but logic suggests that were speculators to overwhelm the core logic for the forex market, regulations would have appeared to limit the damage.

Start from that basis, and one is less likely to find it an intimidating minefield of irrational unknowns.
The road to pipland is arduous and fraught with challenge.
  • #334
  • Edited 11:24pm Jul 29, 2011 11:06pm | Edited 11:24pm
Quoting superdezign
The ability to anticipate price patterns before they form, however you would go about that, is not what is important, but the understanding that you are exploiting the faith PA traders put into these patterns, and that you are riding on their demand..

Get it?
not neccessary to anticipate them before they form, just recognize them as they form then watch for confluences on projected points.. example see my most recent trade.. here i've plotted a dumb 'hypothetical' channel and took a dumb trade there few hours later along a dumb level that has been on the chart for many days.. in fact, while watching dumb pa alongside dumb volume on 1'/5'/15' and the dumb symmetricity of recent consolidation on higher TFs i was soo confident to add another entry 5 pips below the init one (same sl); yeh i can hear you say i was just lucky and blessed by the news outcome but no matter what, these dumb entries seem to work and make dumb pips even if there's news around, even totally "unexpected" (lol) events are signalled by some typically dumb patterns especially on lower TFs and more often than not they come around some confluence breakpoint.

/end rant :-P //no rant just an example ;-)

in my opinion, those patterns and PA (candles are nothing more than tickchart/second TFs patterns - mostly wedges) simply are a graphical representation of the orderflow, they would be there even if no trader was starring at them or trading them.. i'm convinced the whole self-fulfilling-prophecy belief is being overemphasized. pattern breakpoints are equilibrium points alongside certain price levels, fractalness of the whole thing may add weight to the higher-degree entities but sometimes we can observe a butterfly effect with a slightly higher likeliness on borderlines of a HDE..... I'm trying it with tight stops and all i can do is care to don't enter in the middle of the road because THAT gives me a slight chance of capturing a sizable target compared to the stop .. supply and demand zones defined as per {whipsaw cluster && runaway candle} - please ask Mr Seiden or SD traders here on ff for reasoning - give me a pretty good roadmap. I'm a noob trading pennies atm but i know which way to go; i have found my framework (not a system nor a method) and besides experience to be gathered, that's all i need i think.

But as many mentioned here, there are many ways to skin a cat and if indicators || revert to mean || planetary cycles || gut feeling || any-other-buylow-sellhigh thingy works for you, you have scored your goal.

@superdezign: have a good amusement with your thread
@posters: have a good amusement with superdezign, 333 posts in 4 days lol
MarginTrader All Time Return: na
  • #335
  • Edited 11:14pm Jul 29, 2011 11:10pm | Edited 11:14pm
Quoting superdezign
The ability to anticipate price patterns before they form, however you would go about that, is not what is important, but the understanding that you are exploiting the faith PA traders put into these patterns, and that you are riding on their demand..

Get it?
I was going to let this thread alone, but I just can't....

The ability to anticipate price patterns before they form, however you would go about that, is precisely what is important!! What exactly you are exploiting is of little consequence if you can not anticipate the price moves, or at least recognize when they are occurring.
  • #336
  • Jul 29, 2011 11:38pm Jul 29, 2011 11:38pm
Quoting moneymaker2
I was going to let this thread alone, but I just can't....

The ability to anticipate price patterns before they form, however you would go about that, is precisely what is important!! What exactly you are exploiting is of little consequence if you can not anticipate the price moves, or at least recognize when they are occurring.
Bingo!
The road to pipland is arduous and fraught with challenge.
  • #337
  • Jul 30, 2011 1:55am Jul 30, 2011 1:55am
Why is there so much "I'm right you're wrong" in this business?

What purpose does it serve to spend so much time and effort trying to prove that what works for you is "better" than what works for someone else?

Really - what value does it provide to your results?
Anything can happen.
  • #338
  • Jul 30, 2011 2:32am Jul 30, 2011 2:32am
Quoting moneymaker2
I was going to let this thread alone, but I just can't....

The ability to anticipate price patterns before they form, however you would go about that, is precisely what is important!! What exactly you are exploiting is of little consequence if you can not anticipate the price moves, or at least recognize when they are occurring.
Trading is one big game of "IF, THEN, ELSE DO" (all of my programmers out there are probably familiar with this).
  • #339
  • Jul 30, 2011 9:41am Jul 30, 2011 9:41am
Quoting MaryJane
But as many mentioned here, there are many ways to skin a cat and if indicators || revert to mean || planetary cycles || gut feeling || any-other-buylow-sellhigh thingy works for you, you have scored your goal.
Well, that's the thing isn't it. Lots of methods are exchangeable, that is, average, in reading what the market is really going to do next. Then,

 

  1. one can differentiate a particular method through programming it,
  2. making it a little closer to understanding the next move yet be discretionary, from teachably simple to changing and complex,
  3. low-balling it -- that is, doing lots of repetitions of a very tiny, yet more sure, understanding of the market's next move -- or its opposite, using the 'cut your losses short, let your winners run' attitude to the max, with a lot of unsureness cut,
  4. combining the ability to know when to use or not use an overall-average method with finding that area to tune in to when one thus understands the market much better than in other areas,
  5. separate from others with data, that is, order flow, underneath what most people consider as the usual data, that is, bars, and thus be always more in tune in exchange with being more discretionary,

and so on.

Then, of course, one has to match one's personality to the method.

  • #340
  • Jul 30, 2011 2:39pm Jul 30, 2011 2:39pm
Craig put it best when he said, blah blah blah.

The simple point being is, you know how to make money or you don't.

I have to applaud the OP for pulling back the veil on so many misconceptions about what works. He drew out the elitists, like the order flow BS artists pretending they have a corner on market mechanics. He drove a spike into the fears of those with self doubt. Those that can't face fear objectively. Those that can't even form an intelligent thought about what they do. Those that don't do and just spout off on a forum.

Watching this thread unfold was like watching a parade of failure amplify itself.


Bill Burroughs put it best when he said, Death needs life for what it kills to grow in. The market needs stupid people to finish off every day for it's existence too. It doesn't give a shit about PA. Anyone who didn't buy gold in 09 after the greatest collapse of the western markets in nearly 80 years is not a trader. Anyone who didn't see the markets force GWB's hand on TARP wasn't paying attention. And now, we sit at the next punishment phase for political folly.

What's your MACD telling you?


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