Extracted Thread (per thread starter's request) | Page 9 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

1 trade per pair per year 6 replies

multiple systems per pair/multiple pairs per system? 3 replies

Extracted Post (per poster's request) 0 replies

Trading 24 hours per day, 5 days per week 14 replies

Attachments: Extracted Thread (per thread starter's request)
Exit Attachments

Extracted Thread (per thread starter's request)

  • #161
  • Jul 10, 2012 9:39am Jul 10, 2012 9:39am
Quoting ha-pattern
To me, this is obvious:

You assume a deviation of unknowns from randomness naturally creates repeatable patterns. Those patterns, mathematically defined and interrelated, formulate the chart.

By unknowns do you mean a stationary Gaussian random walk?
  • #162
  • Edited 9:05pm Jul 10, 2012 10:43am | Edited 9:05pm
Quoting mahdiquant
By unknowns do you mean a stationary Gaussian random walk?
The existence of what I believe Mr. Hanover referred to -- news etc. -- and the chart's patterns are both constants, the former specifics and the latter generalizations, of human behavior. Human behavior is the "unknowns".
"a deviation of unknowns from randomness" means randomness is the natural state of a chart until any kind of constants, such as human behavior, unravel that randomness.
"unknowns" does not equal "randomness". Randomness, as a term, was used for simple comparison, as the natural, unobserved/unreflected-upon state; the simple comparison was to highlight what is non-random about a chart (or include-able influences therein).

-- Semantics, for sure. Sorry I was unclear for you.
  • #163
  • Jul 10, 2012 10:33pm Jul 10, 2012 10:33pm
this sounds like an elaborate, tail chasing for sure.

Hanover nails it.......Random, unknown, information, inference on more predominant move.

no mathematical MODEL CAN EVER be predictive.
AVT INVENIAM VIAM AVT FACIAM
  • #164
  • Jul 10, 2012 10:52pm Jul 10, 2012 10:52pm
Hey guys, this is a really interesting thread.
I am not sure how many people understood the implications of CP's posts, to speak for myself, I have only parts of the puzzle, even I am not sure if these parts are the correct ones.
Anyway, I would like to state a few points which i assume i understood.
Trading is all about unphysical, more about metaphysics. Anybody familiar with quantum physics and mechanics knows that even the atoms can be broken into particles which are called quants. and there is string theory which suggests that protons and electrons are made of such particles that actually does not exist, in other words particles that appear out of nowhere and disappears the same way. when you sum up all these weird theories it can be suggested that the whole world is illusion, anything you can see, touch or hear actually does not exist. power of your mind or thought create things, put limits or removes all limits. these kind of teachings are very old, and that implies the saying that God created universe out of nothing...
I assume that all these things have some relation to trade.
Another point, crucial role of the money flow. One day charts may show the same open and close, but the money flow is different, that is more visible when you zoom out your 1M or 5M chart. I guess that when there are too many zigzags the price is more solid and it moves steady to the target of the high TF, when less zigzag, the price is not confirmed and it is not stable, it can fall or rise sharply.
Another point about time frames, if TFs are not important, assume that you have just one bar, like a thermometer, it shows only the price...you can see the high, the low and the current price. i can not figure out how that can be helpful to trading; maybe you need to just watch the direction of the momentum and make an entry accordingly?
About mental strength and control of the emotions, this i suppose is a clear point.
About the pi... this issue most likely implies that everything has cycle but in a way that one cycle never repeats the other in the same way.
About mathematical formula. i do not believe that there exists such thing. Maybe just a concept - mathematical concept which clarifies the moves in the market.
As Above, So Below
  • #165
  • Jul 11, 2012 3:04am Jul 11, 2012 3:04am
Check what this nut is putting up:

http://www.forexfactory.com/showthread.php?p=5804032#post5804032

;-)
  • #166
  • Jul 11, 2012 4:16pm Jul 11, 2012 4:16pm
,
  • #167
  • Jul 14, 2012 12:50pm Jul 14, 2012 12:50pm
Quoting ha-pattern
To me, this is obvious:

You assume a deviation of unknowns from randomness naturally creates repeatable patterns. Those patterns, mathematically defined and interrelated, formulate the chart.


I've spent a long time trying to get only enough patterns, and tried to get the most reasonable of their interactions into a logical format.
Not that what I have is mathematical, merely loosely repeatable: Following the train of thought from my answer is worthwhile enough.
Would you please care to elaborate more?
How do you know that unknowns are deviated from randomness?
  • #168
  • Jul 14, 2012 2:10pm Jul 14, 2012 2:10pm
Quoting mahdiquant
Would you please care to elaborate more?
How do you know that unknowns are deviated from randomness?
Semantics, again:

"unknowns" = human behavior, as noted in last post.
Human behavior, to a degree higher than randomness, is definable.

Randomness is by definition unprojectable.
This can be by accident or reality: If one fails to understand something, one has approached it at least somewhat randomly; or, it can be purposefully (mathematically, I guess) random.

If lots of people do one thing and that one thing is charted on an xy axis,
then human behavior may be defined by chart.
Randomness is also chartable.

A chart that is not read well, can be, or "seem", random to the interpreter.
If human behavior is the primary way to interpret a certain chart, and one sometimes interprets a chart correctly, then one could shorten such a practice in description by saying "unknowns are deviated from randomness". That is, overlaying this idea of randomness atop a human behavior chart, allows one to state they deviate, since they have different properties.


Of course, depending on such a minor way to describe randomness, makes my statement invalid for many. It's easier to say that a purely random chart is just that, and a chart on something, say, human behavior, is an entirely different thing. In this major sense, randomness doesn't even play into the overall idea.

A chart of any ilk creates patterns.
It is said that a random chart's patterns do not predict (tho I personally have my doubts on this, especially since it is rare to have a truly random chart.)
Human behavior would have chart patterns that repeat in a definable way.

Taking human behavior the way I do, in a generalized way instead of something specific such as news, lends one to consider human behavior as more random. So stating that "unknowns are deviated from randomness", where 'unknowns' is human behavior, recognizes at least the slight difference between the generalized consideration of human behavior and pure randomness as one may consider a chart to be.


I hope that supports the clause enough to hold up with the rest of my statements.
Best of luck trading.
  • #169
  • Jul 15, 2012 4:53am Jul 15, 2012 4:53am
The market is not complicated to some. Its just prices. If you can spot the moment of confusion..then you may become a millionaire if not a billionaire.
  • #170
  • Jul 17, 2012 11:37am Jul 17, 2012 11:37am
for those interested in the initial posts,theres a much more detailed paper relating to the enclosed doc if anybody wants it,more for the maths types

Is the mathematical Constant "pi" hidden in the Black-Scholes Equation?

May 21, 2011
In an interview (allegedly, a Goldman Sachs interview for the position of a trainee trader) the interviewer asked the interviewee if the mathematical constant http://www.risklatte.com/Articles/Qu...ages3/53_a.gif (pi) is hidden in the famous Black-Scholes equation for pricing call options.
The answer is "yes". This was shown in a seminal result by Brenner and Subrahmanyam in 1988 which has now come to be known as the Brenner-Subrahmanyam approximation.
There exists a nice (and very simple) formula for at the money (ATM) or at the money forward (ATMF) call optionswhich traders (mostly in the FX options market) use from time to time to get a handle on the on the price of a call option on an underlying. This approximation works on a non-dividend paying stock(or a currency pair where the strike is equal to the forward) and when the interest rate is very low (almost zero).
Alternatively, this approximation for ATM option exists when for a non-dividend paying equity we define at the money level as when the spot is equal to the discounted strike, i.e. http://www.risklatte.com/Articles/Qu...ages3/53_b.gif And for an FX pair, we define ATMF as the strike equal to the forward, i.e. http://www.risklatte.com/Articles/Qu...ages3/53_c.gif
For an ATM option on a non-dividend paying stock, with zero or near zero interest rate,


This is the famous Brenner-Subrahmanyam (1988) approximation to the Black-Scholes formula and is often used by traders to get ATM (or ATMF) call prices or implied volatilities under the assumption of zero interest rates.

http://www.risklatte.com/images/default/print.gif

  • #171
  • Jul 19, 2012 2:07pm Jul 19, 2012 2:07pm
What does this have to do with trading?

http://www.youtube.com/watch?v=cFU5_pVkoZM
  • #172
  • Jul 19, 2012 11:49pm Jul 19, 2012 11:49pm

http://www.youtube.com/watch?v=cFU5_pVkoZM


Powerful stuff!!!

First, you look at the Starlings; accept and just watch the randomness of their flight. It is unpredictable if the flock will fly left or right, up or down. Of course the reason why and when they move are based on infinite possibilities. As one may put it simply; the sum of all intentions.

Which you must also realize that the sum of all intentions can not be known. Ironically, the sum of all intentions can be simplified.

We need to realize that beyond the randomness flight lies an intangible construct on how they go about their flight.

A single Starling represent a single trader and the whole flock of Starlings is like the whole Forex market. Although the flock may contain an Alpha Starling (or many Alphas), the Alphas can not control the flock's direction. Hence, there are the big boys with big accounts, but they still can not control and corner the Forex market due to its sheer magnitude. (so anyone really proclaiming to follow the big boys really don't have much clue of what they are talking about).

What may seem illogical, random and chaotic intangible can actually be transcribed into the tangible. Hence, they transcribed it into 3 simple rules:

 

  1. Each bird to fly at the same speed
  2. Stay close to your neighbors
  3. If you see a predator nearby - get out of the way

1. Each bird to fly at the same speed: You can't force the market. You can't make the market go where you think it will go. You don't dictate your intentions to the market. When you enter the market, you go at which speed the market is moving and not your ego.


2. Stay close to your neighbors: Contrarians are a rare breed because they get eaten. Nature created the system to have safety in numbers; socially, survival and reproduction. When its going up, you are safer going up than going in the opposite direction.

3. If you see a predator nearby - get out of the way: Stay with the herd/flock as they offer greater safety. But when trouble strike, get out of the way or scatter (or hide). When a predator chases you, you don't run away in a straight line, you scatter or you zig zag (because it is hard to predict your next movement). This is your Exit in the market. Stay with the herd/flock for your safety. When the herd/flock are heading off a cliff or to a slaughter house or chased by a predator, then it is time to exit or to stop following the herd/flock.



After all the research: "A starling has to only keep track of it's 7 nearest neighbors."
After all my research, I found that I only really have to keep track of certain key things... the rest are all fluffs.
I actually have a lot to more to say regarding this video... but let's get others to do some of the thinking.

  • #173
  • Jul 20, 2012 5:46am Jul 20, 2012 5:46am
Im starting to see the inter-relationship between:

1.- Convergence/Divergence of price movements (NOT indi divergence crap).

2.- Detecting shifts, real breaks/bounces, false breaks/bounces.

How come price reversed against me when it all points up?
Simply because ...... did not point up, it showed (a) the opposite, (b) no underlying money influx, (c) it shifted from one place to another.

No matter the indicator, the pattern, or price action.

If money simply isnt there...it ISNT there. So where is it?
  • #174
  • Jul 20, 2012 6:05am Jul 20, 2012 6:05am
Quoting CrucialPoint

  1. Each bird to fly at the same speed
  2. Stay close to your neighbors
  3. If you see a predator nearby - get out of the way

the movement is inherent in the crowd, if just a few change slightly direction and they are all connected by the first two rules, the dissonance has to resolves itself which we perceive as random movement
a predator will influence this too, but what if there is none, fear of an imagined predator has the same effect, because they don't look for the predator per se, they watch what their neighbors are doing, which genetically may be the best strategy for survival, but not individually
...
Invincibility lies in the defence, the possibility of victory in the attack
  • #175
  • Jul 20, 2012 9:47am Jul 20, 2012 9:47am
At 2.28 the number 6 appears - freaky! Flocks of birds like this can be mesmerising to watch. I often watch wild pidgeons doing the same thing, just on a smaller scale. Who would have thought the answer to how birds and insects swarm would be so relatively simple.

Any system, natural or manmade, can be modelled so that most (but not all) of its variation can be explained. Including more explanatory variables to improve a model's forecasting ability usually leads to efficiency losses not gains. Isn't this counter intuitive? In the old days we used to have to use theory to justify the case for the addition of a new variable into a model we were working on. Now with increased computing power, its like garbage in and garbage out with no real thought behind what is being done. Just keep on whacking in more variables with little or no regard to any logic. Better? We seem to be obsessed with complexity now.

Forex trading is similar. People are searching for precision where none exists. No model or trading system will ever catch all the moves the market makes. Does this make it a bad model or system?
Audentes Fortuna Juvat
  • #176
  • Jul 20, 2012 10:09am Jul 20, 2012 10:09am
You contradict yourself.
Quoting Nijee
Who would have thought the answer to how birds and insects swarm would be so relatively simple.

Any system, natural or manmade, can be modelled so that most (but not all) of its variation can be explained....
vs.

Quoting Nijee
Forex trading is similar. People are searching for precision where none exists. No model or trading system will ever catch all the moves the market makes. Does this make it a bad model or system?
I was already able to create a small method from Mr. Pipalicious' contribution, as an extension of what I've already done here with intuitive modelling of the market.
It likely has a lot of work due it, and I may be an amateur long on demo and no profit to show for longer,
but the (,as I took it,) solid fact of 'seven neighbors' and any other such usefulnesses can spread as memes across any difficult-to-solve areas such as forex charts.
  • #177
  • Jul 20, 2012 10:21am Jul 20, 2012 10:21am
Quoting ha-pattern
You contradict yourself.


vs.



I was already able to create a small method from Mr. Pipalicious' contribution, as an extension of what I've already done here with intuitive modelling of the market.
It likely has a lot of work due it, and I may be an amateur long on demo and no profit to show for longer,
but the (,as I took it,) solid fact of 'seven neighbors' and any other such usefulnesses can spread as memes across any difficult-to-solve areas such as forex charts.
Sorry, cant see the contradiction in what I wrote, pls elaborate.
Audentes Fortuna Juvat
  • #178
  • Jul 20, 2012 10:34am Jul 20, 2012 10:34am
Quoting Nijee
Sorry, cant see the contradiction in what I wrote, pls elaborate.
Maybe I misread it.
What I saw as a contradiction was "Any system, natural or manmade, can be modelled so that most (but not all) of its variation can be explained"
vs.
"No model or trading system will ever catch all the moves the market makes."

Okay, wait, I get what you're saying.
The consistency is in 'most' vs. 'all'.
There is no inconsistency in your words.

Your post did highlight for me a path I found of defining intuitiveness in the market that the video opened up for me:
That of increasing to, I suppose, almost all of the market's variation being explained.
  • #179
  • Jul 23, 2012 7:06am Jul 23, 2012 7:06am
Quoting Nijee
Now with increased computing power, its like garbage in and garbage out with no real thought behind what is being done. Just keep on whacking in more variables with little or no regard to any logic. Better? We seem to be obsessed with complexity now.

Forex trading is similar. People are searching for precision where none exists. No model or trading system will ever catch all the moves the market makes. Does this make it a bad model or system?
If any new person aspiring to trade was given a realtime price quote and nothing else (no indis, no funky platforms with thousands of useless gadgets) i think their approach and path would be completely different, and just like nature, they would create the essentials they need to track price along with its key derivatives/variables.

But a trading platform provides thousands of tools/indis most people tend to add more and more in order to capture that huge hindsight trade they scrolled and saw...curve fitting without a purpose/reason behind the tools use.

No thoughts are given to the purpose of what they add on charts, essentially adding more and more random variables as opposed to adding key ingredients that truly help them see the bigger picture of 'what is'.

As for precision i agree, there is no such thing (at least from my personal reasearch so far). But the next best thing is learning how to enter with the least amount of risk posible. The video i shared does hint towards a more 'precision based' path, but of course, everyone will take something different from such video, although CrucialPoint did emphasize a big aspect of it (which i myself am still working on).

Just like Agni Celeste said: "The most complex things are the simplest."
  • #180
  • Jul 23, 2012 5:32pm Jul 23, 2012 5:32pm
Quoting CrucialPoint
There is nothing wrong trading with technical and fundamental as long as your analysis revolves around price and not the other way around
What I'm about to say kind of just goes with what your saying but deeper.. in that price could be broken up and micro analyzed inside

The price of currency and stocks really makes no difference... price alone does not tell you anything

for example if price went up or if price went down... all that matters is the value that people will perceive

so I do not understand why or how someone can or would revolve their trading around watching price.. because if it goes up 100 points it could at that points have perceived value greater or lesser.. there is no indication you can pull the trigger and take the trade in either direction by the price

perception of value is usually rumor, disasters, earnings, new technology
0 traders viewing now