Extracted Thread (per thread starter's request)

what does it mean to go more complex? To know where all active buyers and sellers are trading? That's what moves price.

Yep,thats a perfectly logical rewarding way to trade,but it dosnt mean its the only way.

actually estimating or having an idea of macro economics and understanding as EmeraldEyes stated the players that have some skin in the game the CB's then the Interbank, then the Institutions including investment and corps, and Large specs is a better way than going around trying to mathematically predict how they will place their orders.

not all are actively trading and retail is merely 10% of market share, the CB's will ALWAYS look out for disruptive speculation that is damaging to the aggregate economy no matter how large the specs are...keep in mind the CB's come with the backing of the Federal Governments.

that is why to me at least is crucial to combine the macro economic picture with the transaction record (the chart).

but maybe they all sit around and draw formulas with pi... who knows?

edit* and even then we are just having an educated guess....unless we can somehow front run and not go to jail

Not to argue, but do you or any others know of a different way to successfully trade?

@redlion something to add: a market is a market so the same principles of price action will have to apply with foreign exchange the same as they do with future traders in the pits.

actually I do not have empirical mathematically proven model but my personal observations are that...

The currency market is the FATHER of all markets and tends to move with less volatility. It only seems more volatile to us do to leverage but the daily log returns are usually <2% on average most times <1%.

according to how the dollar moves in relation to other currencies is how the equity markets, futures, options, commodities also move.

i think it has to do with Captial Asset Pricing Model and current discount value.

going back to the personality of exchange rates, due to their importance in the aggregate economy and their impact in GDP (GDP impacts exchange rates in self reinforcing loop) the volatility tends to be lower and mean reversion seems to be the norm. Unlike other markets where you have break outs that create gaps and do not come back to fill them, thus being more trending.

Perspective in Trading :nerd:

The first thing I would like say is that there is a duality in the process of becoming a successful trader. It is a matter of perspective. It's a matter of perspective on how you view things that will lead you a certain path in your trading. For good or for worse, somewhere in between or never making any progress at all.

The responses are excellent and it is a reflection of the poster's journey , where they are at and most important of all, what trading philosophy they uphold.

I believe that a solid trading philosophy is a first requirement and a must, that any trader needs to have. It is the canvas, the platform or the foundation on which their trading will be built upon.

Now, you can go about building this foundation the way you like. From the books you read or any information you gather. Realize that there is no right and wrong in life. It is a term that we humans created and attached to events. Man has been given to do what he wants, whether to make progress or sit around and do nothing with his life.

In saying so, there is a right way and the wrong way in building your trading philosophy's foundation. Of course in saying so, this will hit a lot of nerve. I mean you live in a world by freedom of choice, I learned that this was not the truth, but that is another story.

Let me explain this perspective thing. Let me focus with 2 simple life philosophy; 1. You live your life to the max everyday and never save for the future 2. Live a balance life and save for the future.
Realize that there are no right or wrong with these 2 philosophies, but the outcome... The outcome has very different experiences with life.

I know successful traders, they would test and test systems. That's their chosen philosophy. I can look at any system without testing it. That is the trading philosophy I've built on solid foundation over the years.

Pi... what does Pi have to do with trading? I, for one, hasn't seen anyone put Pi into a trading equation. So, as Emeraldeyes stated, it is not a magic number. The key phrase here is "What lessons can you gather from Pi?"

Nothing?... so be it.

I am proud to be of the human race. Even though we do stupid things to ourselves, to this planet and all the f*cked up things we've done. I can marvel and give credit to our ability to progress.

Progress, how is progress achieved? Progress is not taking nothing and making something of it. Accidental discoveries are still part of something. Progress is taking something you have and developing it into something more or less, better.

There is something you need to realize about progress and let me impart you with a philosophy; Everything in this universe has a purpose. The great black void in outer has purpose. Even one tiny spec of an electron has it's purpose. Nothing in this universe doesn't have a purpose. Even the schmuck who runs around the forum has a purpose

Frierich August Kekule von Stradonitz was given the noble prize in chemistry for the benzene molecule. How did he solve and discover it?... He had a dream about a snake!... Oh for F*ck sakes!!!
Archimedes (the Einstein of mathematicians) solved the puzzle while he was in the bath tub while having a bath. F*ck me... F*ck me, F*ck me, F*ck me!!!

History has a lot to teach... subtlety.
The lesson here boys and girls is that the answer is within your grasp.

"From chemistry to physics, from biology to philosophy, we take one simple thing and extract something out of it. Energy is never lost. It just transfer from one form to another... even Ideas."

What does Pi have to do with trading?
>>> Answer: Nothing. You are 100% right.

What does Pi have to do with trading?
>>> Answer: Everything. You are 100% right

True, but Gann was a little more generous with his findings

I believe that math can be used as a tool, to help define an edge. And it comes in many flavors...stochastic processes and fractal geometry for example are very real and are applicable to trading IMO. Think about it, mathematics is used in just about every other profession, in some capacity...to help organize and present information in a more meaningful way, and sometimes it can unlock secrets if your lucky or a genius why should trading be any different?

Anyway, this is sortof how I interpret Crucialpoint's post...and I really enjoyed the video, the spiraling sequence of pi numbers was a really cool effect

This statement got me going:
In most of the world, curves and lines are different:
Curves are nature, randomness; they are allowed only through convention, usually as circles. Lines build things, are balanced, lay flat, go to one place; they are everywhere in the constructed world.

On a chart, though, curves can be more accepted:
Momentum often arcs, and ellipses can represent it and other arcs.Price action's randomness acts on curves or lines similarly, because it is a stable object.
Normal distribution, stochastics, moving average, Elliott Theory, etc., of individual data, average data in cycles and arcs, for charts of price action and a series of trades.

A problem may be, is using pi worth it, since it's easier to consider arcs according to their relative symmetry and choose pivotal straight lines through them, than deal with volume.
Because pi is a single number and buried within a wealth of possible randomness, it's easier to turn to the obvious straight line to make decisions.

i think i may have came across the wrong way,i was pointing out that theres a number of ways to take advantage of markets.and it seems that most are viewing the information in front of them incorrectly,otherwise there wouldnt be so many people loosing.

im just very open minded and wouldnt dismiss anything ,

i have a constant pounding feeling in my head .which i feel has a simple answer ,thats why im intriqued by threads like this.

i believe theres always a simple answer to anything and everything,
i was recently redecorating my house,i looked on a colour chart and went to the paint store were they mixed me my chosen colour,
i took it home and tried the colour on the wall,liked it and went back and ordered 4 gallons.when i returned home ,the colour was diferent from my tester.
the store said its not possible for the computer operated mixing system to get it wrong.so the machine was recallorbrated and still the colour was not the same.the guy in the store said its just one of those freak things in life.
and i should pick a new colour.i wasnt happy to do that ,and suggested looking at the problem from the other way,could the tester have been wrong .ha ha,yes the tester i recieved was infact the wrong colour.
the reason for this;when you have a tester its 0.5 litre in size.so the super mixing machine has to round the various colours required to this sample size and on this occasion mathmatically they didnot work so the machine had to round the numbers .producing the wrong colour.
what the hell has this got to do with trading,well i left the store with the correct colour and that pounding in my head begun again,all i could think about was fx and simple solutions.

ok im boring myself now

For the individual who trades in such a way that Pi will apply to their trading method to make it better or simplify it Pi means everything.

For the individual who trades in such a way that Pi will NOT apply to their trading method Pi means nothing.

And for the trader who is still searching for the holy grail Pi will initially mean everything sending them on as CP calls it a "Witch Hunt" until they get fed up and can't apply it then move on to another trading system or super powerful indicator.

Nice job CP you always bring some thought provoking info the the table

mickey has got it !!!

That dam mouse

The Construct :nerd:

Pay close attention to this post for I will do 2 things:

 

1. Introduce you a trading concept which only few people know.
2. Hopefully expand your awareness and perspective about trading.

Be warned... This concept may be hard to chew and digest. It requires certain knowledge of science to truly appreciate what I'm about to explain. Nevertheless, I will explain it as interesting and as simple as I can. Simple, but I'll take this to overdrive!

===============
The Matrix

We live in multi-dimensions. I will only be focusing on 2 (actually just one; the trading dimension) dimension; 1. The tangible-physical and 2. The intangible-nonphysical.

1. The Tangible-Physical: Everything has a construct. It is built upon a canvas, a platform, something or anything. Our physical world are built upon atoms. Anything tangible-physical is built upon atoms. Buildings, human body, trees, cars, tv, water, etc... these are built upon atoms (tangible-physical).

2. The Intangible-Nonphysical: Everything has a construct, even thoughts and ideas. It is built upon a canvas, a platform, something or anything. Our physical world are also built upon an intangible-nonphysical matrix. Thoughts, ideas, knowledge, language, music, psychology, maths, etc... these are built upon an intangible-nonphysical platform. Fortunately in our case... trading Forex

===============

Lets cut to the chase... Math is intangible. 1 + 1 = 2 is nonphysical and are not made of atoms. For all we know 1 2 3 4 5 6 7 8 9 0 is what we use in our dimension. In other dimensions, $ @ # * ^ may be the only symbols they use for their calculations.

Up and Down, numbers, mass psychology... trading is governed by an intangible matrix.

At the core of an intangible force lies a great force that can be transcribe into our physical world. This is how we apply maths (intangible) to build bridges, towers, airplanes, machines (tangible), etc... If you don't know the intangible construct, what applications are you using to your trading?

===============

In our time (2012), the concept and understanding about trading and presented to the public are not in line with our current knowledge about the universe. Well, why would they let you in... when we are dealing with tremendous amount of money.

Imagine a world where mankind never discovered atoms. Our technological breakthroughs would have stagnate. No carbon fibers, no alloys, no paracetamols and antibiotics, etc... The application of our knowledge gained about the atom have catapulted our advances in science.

In trading, it is like we have never discovered the atom at all. We are still trading on mass psychology, supply and demand, support and resistance. technical and fundamental analysis. Yes, these are intangible knowledge and concepts, but its structure has not been defined (not have been defined to the public).

So yes, you can do with S/R, supply and demand, mass psychology, bla bla bla... I'm not denying it. It is just not as efficient as they would have you believed.

"To believe that there is nothing beyond S/R, Supply and Demand, Mass Psychology, etc...
is naive and utter stupidity."

"3.141592653589793... is one of the construct of the intangible,
transcribe into a physical form."

" expand your awareness and perspective about trading...
It requires certain knowledge of science to truly appreciate
...
1. The Tangible-Physical: Everything has a construct. It is built upon...atoms
...
2. The Intangible-Nonphysical: Everything has a construct, even thoughts and ideas. It is built upon a canvas
...
Math is intangible {and thus are such things as pi}, .
...
At the core of an intangible force lies a great force that can be transcribe into our physical world. This is how we apply maths (intangible) to build bridges, towers, airplanes, machines (tangible), etc... If you don't know the intangible construct, what applications are you using...?
...
In our time (2012),...
In trading, it is like we have never discovered the atom at all. We are still trading on mass psychology, supply and demand, support and resistance. technical and fundamental analysis. Yes, these are intangible knowledge and concepts, but its structure has not been defined (not have been defined to the public).

So yes, you can do with S/R, supply and demand, mass psychology, bla bla bla... I'm not denying it. It is just not as efficient as they would have you believed.

"To believe that there is nothing beyond S/R, Supply and Demand, Mass Psychology, etc...
is naive and utter stupidity."

"3.141592653589793... is one of the construct of the intangible,
transcribe into a physical form."

"



----


Good point, great explanation.
I have a perspective as to why such a thing has not happened yet.


I was reading an article (http://paulgraham.com/wealth.html) about money the other day that said to me that
money is a side effect of specialization because it is the medium of exchange;
how to get existing money is to be in line to get it, simply take it, or risk some to get more;
and, craft produces and trash reduces money, which business facilitates.

The entire point of us being here is to find a way to make more money.
You're proposing, to me, that a really good leverage for doing that, is to create a solid foundation of theory upon which to do that in trading.

What the article says about creating a science of trading:

first point --
"Scientists, till recently at least, effectively donated the wealth they created."
Theory, however possible to apply, is simply a bunch of words on paper. In its own field, a theorist maximizes this commodity to apply itself to the most number of applications, that is, crafted objects.

second point --
There has to be a clear incentive path for theory to turn into a specific craft and thus into wealth. Those who provide education,income, testing, paper and audience must give monetary incentive to those with the highest craft of making theories so that a new theory may take life to feed into existing craft.
"For most of the world's history, if you did somehow accumulate a fortune, the ruler or his henchmen would find a way to steal it. But in medieval Europe something new happened. A new class of merchants and manufacturers began to collect in towns. [10] Together they were able to withstand the local feudal lord. So for the first time in our history, the bullies stopped stealing the nerds' lunch money. This was naturally a great incentive, and possibly indeed the main cause of the second big change, industrialization.
...countries that tried to return to the old model, like the Soviet Union{:} Take away the incentive of wealth, and technical innovation grinds to a halt.
...The theory that led to the stealth plane was developed by a Soviet mathematician. But because the Soviet Union didn't have a computer industry,"
-- the author earlier explains that "with the rise of industrialization there are fewer and fewer craftsmen. One of the biggest remaining groups is computer programmers. A programmer can sit down in front of a computer and create wealth. A good piece of software is, in itself, a valuable thing. There is no manufacturing to confuse the issue." --
"it remained for them a theory; they didn't have hardware capable of executing the calculations fast enough to design an actual airplane."

Science -- and, for that matter, the merchant business -- is new, a craft to boost other crafts.
Speculation is old, a craft to adjust the amount of money, the medium of exchange; the wealth goes to the company for the symbol traded, where investors hold it, or exchanges between traders, as a rate of the symbol. Moreover, speculation is about risk, randomness that can be broken down only so far, extreme loss and profit.
Speculation is boosted through being a merchant business in many ways. Can science also boost it? I don't know. In some small ways, it already has. Technical analysis of a chart could be considered a science of randomness, if its criteria were ever that strict. Borrowing ideas from existing science, such as pi or math's probability theory.
Only, is math a science? Maybe, as said here (http://en.wikipedia.org/wiki/Mathematics#Mathematics_as_science). It is logical, the article says, and thus science uses and promotes math. More logic in trading is beneficial, of course, if it contributes to more understanding of the chart or other platform to create a trade.

So, trading cannot be a science, because it is one of the oldest crafts in the world, that of adjusting the flow of money, which is the medium of exchange between those who produce value/wealth.
Why science does not freely publish theory immediately useful in trading very often, I don't know.
Risk may have something to do with it, in that science as a craft itself must work to be the polar opposite to exist, while trading takes what risk there is, polishes it up a little bit, and profits on a lot of repetition.

Maybe since the big financial crisis of recent has happened to the original, industrial countries, risk science will filter down from the hedge funds, banks and billionaires and into the minds of the ordinary person and merchant. That would make for a more profitable and safer world for everybody.
Of course, it may also cause great upheaval and redistribution of wealth. An economy based on creating the type of wealth an individual needs, such as food and clothing, would have to be emphasized, and may leave adjusting the medium of exchange between crafts to governments, businesses and sciences, those whose craft most catalyze others'. I guess that would be those in power.
So while the individual may become more efficient with risk science as derived from the trading industry and thus make a little extra money on the side -- for which the money industry may compensate and adjust, in exchange for dissemination of such knowledge, because in trading and its way of running the money industry's money flow, someone must lose -- , the person will still need to stay with what he or she most needs to live.

With this need, dissemination of the craft of trading may also naturally reduce it to an ordinary and yet important craft or peg in industry such as a cook or an office worker, that lots more people participate in. Such already is happening in Japan or, to a lesser extent with some filtering down, England, since it is,arguably, the western hub of finance.

You can take maths and apply it to the apparent randomness of the markets and make it fit. it's a matter of figuring out how to trade it.

So, are you saying that a mathematical function had been discovered that accurately relates the mass reactions of human minds (over time) to stimulus? In our case, any stimulus that creates price change. If this was true we could observe the reaction (price change) over time and then calculate further potential without ever knowing what the actual stimulus was.

After all it is the human mind that bridges the gap between tangible and non-tangible.

You actually got it the other way around, but you are somewhat on the right track.

Not a mathematical function, but a mathematical "constant". And the problem or the common belief and understanding of this concept is that this mathematical constant revolves around the human psychology (this is wrong). It is actually the human psychology that revolves around this mathematical constant.

So for an analogy: Sun (mathematical constant) and Earth (human psychology). It is wrong to say that the sun revolves around the earth. But the truth is that the earth actually revolves around the sun.

So, what are the implications when you get these 2 mixed up? Well, it is your typical trader who trades according to Technical and Fundamental, believing that price should revolve around their analysis. Price doesn't give a sh*t of what you think... There is nothing wrong trading with technical and fundamental as long as your analysis revolves around price and not the other way around.

Another analogy: Imagine a ball (price). Imagine you are about to throw the ball. You know how high and how hard, you are going to throw the ball. This is like doing/knowing Fundamental and Technical analysis. The ball doesn't give a sh*t what you think...The ball doesn't revolve on how high, how hard you throw it (FA & TA). The ball (price) will go where ever it has to go according to a mathematical constant (gravity), wind resistance, mass etc...

So If we suppose that Market is the human, price is the ball and the target of the ball is the order flow of the market or big players, then the math constant you are talking about is the newtons first law. Am I right?

"The intangible construct has many constant.
Any construct has a constant.
And any construct may contain many constant.
Example; such as Newtion's law and Pi.
If you combine all these constants, you would end up with a somewhat like a periodic table of the intangible construct.
You will be able to categorize certain natures of the construct."
:nerd:

Like "Mendeleev Periodic Table"? And then we can combine different constructs to build new constructs which can be used to build a trading method?

Nice point. I agree, and add:

1) a) A trade carries price in a certain direction so far and so long.
1) b) A large enough collection of traders trades a substantial-enough order to direct price motion.
1) c) If a collection of traders loses, that lowers their market impact next time they trade, all other things equal; and, visa-versa if they win.
2) Price moves in a pattern from lots of trades according to exact measures everyone implicitly agrees to, which may be divided as:
'Yeah, I'm human" and collectively respond to stuff the same (or preserve therein 1 (http://www.forexfactory.com/showthread.php?p=3101270#post3101270) (source: 2 (http://www.forexfactory.com/showthread.php?p=5633636#post5633636))); and, news adjusts the (prospective) value of money.
3) (partial list of study types) Technicals respond more to the patterns, fundamentals/news both to individual trades and the patterns, and order flow more to individual trades.