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  • #61
  • Dec 29, 2012 1:21am Dec 29, 2012 1:21am
there are at least 3 reasons why prices move:

news,
TA,
fundamental

Each presents dimension. Using one dimension (usually price) to predict future is inferior than using two or three or even more dimensions. Using just price will not get you over 65% win and this only the best setups, which do no present too often. That is my experience.

Odds of correct predicition increase with coherent addition of dimensions.

that how i see it at least.
  • #62
  • Dec 29, 2012 4:16am Dec 29, 2012 4:16am
yeah something along the lines of the study.

Well, if you bring that argument with not all participants will ever place the same order the same way,... then any analysis of price should be futile. Then we can give up right here right now, cause never will participants behave exactly the same way as they did in the past.

I don't know why you want to bother yourself with things you can anyways never "know". You can only "guess" them, and that makes you go down the "subjective" road (versus the "objective" one). I limit myself to information that is available and that makes me stay objective. Guessing who is in control, what the open interest currently is, how many option buyers are out there is again a futile exercise. If there was a source that accurately and timely reflects this information, then you can start making studies, but trying to guess all unknown variables is maybe an interesting intellectual exercise but has only limited value for hands-on trading.
Quoting the redlion
you mean like this study here?


Attachment



the problem with studying price movement after the FED, and news event, how far it traveled or what pattern it formed is that .......not all participants will ever place the same orders the same way, the same time it happened in the past.

I mean how would I know if they were

open interests
negative feed back through take profit targets
random transactions being made by corps, institutions etc....
big money closing positions
big money opening positions
options
futures
or even masked interventions?...
  • #63
  • Dec 29, 2012 4:21am Dec 29, 2012 4:21am
Markets are not efficient. Best example for this are bubbles and the burst of bubbles. Markets overshoot in both directions in the short to medium-term. This shows that markets are not efficient (at least in the short to medium-term). Thus making money from the market is very much possible.

Quoting the redlion
sorry for the rambly stile to my postings here.....it is very hard to put my ideas together coherently and the fact that I am working at the moment is not helping either.


what I am trying to get at is that.....

candle sticks and patterns
indicators
other statistical analysis
fundamental analysis

do not seem to work reliably, or as reliably as we would like it to work due to the efficiency in the markets...the randomness in the data, however casinos make money off random transactions via their house edge.....to a trader that is the proverbial...
  • #64
  • Dec 29, 2012 4:51am Dec 29, 2012 4:51am
although I could sit here an argue the hypothesis of efficiency in the markets I think it is far more interesting and productive in the point you made in which we do agree.


markets overshoot both ways............here is were the money lies.
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  • #65
  • Edited 7:30am Dec 29, 2012 6:56am | Edited 7:30am
Quoting macroman
there are at least 3 reasons why prices move:

news,
TA,
fundamental

Each presents dimension. Using one dimension (usually price) to predict future is inferior than using two or three or even more dimensions. Using just price will not get you over 65% win and this only the best setups, which do no present too often. That is my experience.

Odds of correct predicition increase with coherent addition of dimensions.

that how i see it at least.
Yeah, but no. Price moves because there was an order filled (while an order wasn't filled.)

Say there's a pending buy order at .95 and a pending sell order at 1.05. Until a third party comes in, then price will remain at 1. (What price is really showing is that last transaction that took place.) Unless a broker wants them to facilitate each other, the broker can buy or sell either price. If the broker sells at .95, then price will move to .95, allowing orders for 1 and .9. (A bit of a nutshell for an explanation.)

News only speeds up price. It is also priced in a lot. (While you can say the statement of a news release may have traders balance their inventory, that would only be a guiding force for price, rather than what's making price move.)

Some people on this board will have you believe that an ichi cloud or a MA will be the reason why price stopped moving in a certain direction. This is stupid. There are so many custom indicators, which ones "move" price the most? I'd say absolutely none of them. They only show what prices have been visited in the past.

Again, fundamental may guide price, but it does not move price itself.

If you want to get into dimensions, look up "The 11th dimension" on youtube and hopefully you'll find some good stuff. I'd say price acts like the 5 or 6th dimension, depending on if the 3rd dimension should be considered in the markets.
Play the players, not the cards.
  • #66
  • Dec 29, 2012 7:00am Dec 29, 2012 7:00am
Quoting Custos
yeah something along the lines of the study.

Well, if you bring that argument with not all participants will ever place the same order the same way,... then any analysis of price should be futile. Then we can give up right here right now, cause never will participants behave exactly the same way as they did in the past.

I don't know why you want to bother yourself with things you can anyways never "know". You can only "guess" them, and that makes you go down the "subjective" road (versus the "objective" one). I limit myself to information...

While not all participants will place the same order the same way, some participants will. Very careful which words you choose, cause they can create cognitive bias and cause you to overlook something.
Play the players, not the cards.
  • #67
  • Dec 29, 2012 9:12am Dec 29, 2012 9:12am
Quoting GnarlyPips
Yeah, but no. Price moves because there was an order filled (while an order wasn't filled.)
not always. in a fast market no orders get filled, yet price is shooting up or down tremendously cause of the liquidity vacuum created by the news events, i.e. everybody wants to be a buyer and nobody wants to be a seller at that price. Price will shoot up until there are enough sellers to accomodate for the buyers. That's also why you get slipped in fast markets.


Quoting GnarlyPips
Again, fundamental may guide price, but it does not move price itself.
In the very long-term, fundamentals are the reason for price moves.

Quoting GnarlyPips
If you want to get into dimensions, look up "The 11th dimension" on youtube and hopefully you'll find some good stuff. I'd say price acts like the 5 or 6th dimension, depending on if the 3rd dimension should be considered in the markets.
Not sure if physics can really be applied to the markets. Price is just the perceived value by the market in that moment of time. No need to invent 5 to 11 dimensions.
  • #68
  • Dec 29, 2012 9:13am Dec 29, 2012 9:13am
Quoting GnarlyPips
While not all participants will place the same order the same way, some participants will. Very careful which words you choose, cause they can create cognitive bias and cause you to overlook something.
Not sure if arguing over semantics is going to help spur discussions.
  • #69
  • Dec 29, 2012 9:19am Dec 29, 2012 9:19am
Quoting the redlion
although I could sit here an argue the hypothesis of efficiency in the markets I think it is far more interesting and productive in the point you made in which we do agree.


markets overshoot both ways............here is were the money lies.
yep, now the only thing we need to accomplish is to be able to identify when the market really overshot. That is the real challenge. Maybe it would be interesting to create a simple formula that calculates the approximate value of one currency vs. another by using underlying factors as variables.

i.e. calculating the exchange rate by somehow using gdp's and exchange rate differentials as variables to come up with a price and then comparing that with the current market price, so that you can gauge, if the markets are too high or too low.

just an idea
  • #70
  • Dec 29, 2012 1:24pm Dec 29, 2012 1:24pm
Quoting Custos
not always. in a fast market no orders get filled, yet price is shooting up or down tremendously cause of the liquidity vacuum created by the news events, i.e. everybody wants to be a buyer and nobody wants to be a seller at that price. Price will shoot up until there are enough sellers to accomodate for the buyers. That's also why you get slipped in fast markets.



In the very long-term, fundamentals are the reason for price moves.


Not sure if physics can really be applied to the markets. Price is just the perceived value by the market in that...

If there's a pending buy at 1.05, and price is at 1, and another pending sell at .75, the one that gets filled first will be where price moves. It's also order not being filled, if you had read this in my post, that helps moves price.

The reason why price moves at times is because your broker has exposed itself too much either short or long due to the nature of it's business. (It has to buy/sell if no one else is willing at quote price.) They HAVE to rebalance that inventory in order to stay alive. This is one of many reasons why price moves outside the orders being filled. (This is more why orders are being placed rather than price itself moving.) Unless you want to consider that fundamental?

About the physics, if you ever consider PA to be in waves, then you have just applied a physics idea to the markets. Now, I didn't invent any dimensions, however, considering by your response, you didn't look up the dimensions, because if you did, you'd understand that I'm not trying to come up with some super complex formula. There's the X and Y planes, maybe a Z plane, then there's time, then the possible areas where price can go while showing where price has already been.
Play the players, not the cards.
  • #71
  • Dec 29, 2012 1:26pm Dec 29, 2012 1:26pm
Quoting Custos
Not sure if arguing over semantics is going to help spur discussions.

You're saying that because it isn't true that all participants place the same order the same way every time, that TA is useless. That's asinine. Brokers have to facilitate trades at times, so they'll be at the other side of an order. For every order like that, the broker has to place the same order the same way every time. No?
Play the players, not the cards.
  • #72
  • Dec 29, 2012 3:34pm Dec 29, 2012 3:34pm
Quoting Custos
yep, now the only thing we need to accomplish is to be able to identify when the market really overshot. That is the real challenge. Maybe it would be interesting to create a simple formula that calculates the approximate value of one currency vs. another by using underlying factors as variables.

i.e. calculating the exchange rate by somehow using gdp's and exchange rate differentials as variables to come up with a price and then comparing that with the current market price, so that you can gauge, if the markets are too high or too low.

just...
Actually some study has been done on this issue........ the mathematics of it still boggle my mind but I am sure I will be proficient if I work at it.....perhaps I will post here and try to explain it for those that are not math savvy.

or other members that are more mathematically proficient can take a crack at it.

Attached File(s)
File Type: pdf intrinsic value.pdf   399 KB | 671 downloads



this concept you have put forth traditionally has been measured via the Purchasing Power Parity.....and in technical analysis

the Simple Moving Average has attempted to serve that purpose, then others decided to take standard deviations *2 of price data for the Bollinger Band Concept, others have tried WMA's, EMA's and so forth even pivot points attempt to serve this purpose via the Central Pivot, and other pivots capture Range.
AVT INVENIAM VIAM AVT FACIAM
  • #73
  • Dec 29, 2012 3:35pm Dec 29, 2012 3:35pm
Well to get technical about it, in forex price doesn't move. The bid does.
  • #74
  • Dec 29, 2012 3:37pm Dec 29, 2012 3:37pm
Quoting GnarlyPips
If there's a pending buy at 1.05, and price is at 1, and another pending sell at .75, the one that gets filled first will be where price moves. It's also order not being filled, if you had read this in my post, that helps moves price.

The reason why price moves at times is because your broker has exposed itself too much either short or long due to the nature of it's business. (It has to buy/sell if no one else is willing at quote price.) They HAVE to rebalance that inventory in order to stay alive. This is one of many reasons why price...
I actually have touched on this issues via publications that I found on the study of the Market Micro Structure......perhaps we can go back and read the papers and discuss our understanding on how the market clears orders.
AVT INVENIAM VIAM AVT FACIAM
  • #75
  • Dec 29, 2012 3:53pm Dec 29, 2012 3:53pm
"In any exchange, sellers prefer to part with their assets for the highest price possible while investors interested in buying the same asset desire the lowest purchase price possible. At some point, a mutually agreeable price is reached between buyers and sellers. It is at this point that economists say the market has "cleared" and transactions take place. Thus, the clearing price of an asset is the price at which it was most recently traded."-----investopedia

Read more: http://www.investopedia.com/terms/c/...#ixzz2GTn9hKnc


It is of my opinion that we are making the market clearing price a bit simplistic.......here is the little knowledge I can contribute to that.


your broker needs a liquidity or many liquidity providers that will quote him prices

you order is one of many orders that are being processed by algorithms and some times assisted by the dealing desk.

Most market makers and in turn dealers and brokers will quote you the same price because of ARBITRAGE risk......if your order is sitting at the bid when your broker can either unload the risk on aggregate or is able to take your trade at that level that he is quoting he will fill you.....if the market is moving too fast perhaps the ARBITRAGE, and liquidity risk is too great for your broker to honor his current bid, (same applies for the ask) and you get re quotes or slips, even platform freezes.

it is not that the price is being moved by an invisible force here....the force is supply and demand in the real market while your broker has other risks he needs to protect himself against...........he is not in the business to lose money.

if his liquidity providers are moving the quotes fast on him....taking your order means he holds the risk of the fill......if he is too exposed on one side and is unable to mitigate his risk......that is when you get your price shading and the sort of infamous tricks we know. It is not that the market cannot absorb our orders as they are tiny in comparison to the real market trading sizes, it is my opinion that is your broker that cannot absorb the combined orders at the current price within his risk tolerance.
AVT INVENIAM VIAM AVT FACIAM
  • #76
  • Dec 29, 2012 4:30pm Dec 29, 2012 4:30pm
Quoting GnarlyPips
Some people on this board will have you believe that an ichi cloud or a MA will be the reason why price stopped moving in a certain direction. This is stupid. There are so many custom indicators, which ones "move" price the most? I'd say absolutely none of them. They only show what prices have been visited in the past.

TA moves prices. If you have lots of volume playing 15 min cross system XXX, price will move to scare out players. Also you will notice that price sometimes moves in last minute of 15 min pack big distance to trigger buy/sell for that system, and then reverses next minute.

If there is enough players using ichimoku, market will notice and will move accordingly to take money from them.

Also why is noone live bettting 5m on shortterm systems with 10-20 pips stop. Because gets noticed by market and stopped out.
  • #77
  • Dec 29, 2012 8:15pm Dec 29, 2012 8:15pm
Quoting macroman
TA moves prices. If you have lots of volume playing 15 min cross system XXX, price will move to scare out players. Also you will notice that price sometimes moves in last minute of 15 min pack big distance to trigger buy/sell for that system, and then reverses next minute.

If there is enough players using ichimoku, market will notice and will move accordingly to take money from them.

Also why is noone live bettting 5m on shortterm systems with 10-20 pips stop. Because gets noticed by market and stopped out.

Do you have anything to back this up? The only way the "market" will know if someone is using TA is the broker. If they see a bunch of orders from retail traders at a certain level, they can't move price to take those guys out. They can manipulate what the charts show, but they can't move the price just to stop out retail traders because that wouldn't actually make them money. (Positions already entered don't have to be stopped out at a certain price to collect spread, spread will be collected whenever the position is closed. Taking the money directly from the retail traders being stopped out just isn't worth the money price would need to move enough to stop out said traders.)

While you say "scare out the ichi players" or whatever, what set of rules for the ichi? There are custom ichi's, so which ichi is it? Is it DaddyBear's custom ichi or the "standard" ichi?
Play the players, not the cards.
  • #78
  • Dec 29, 2012 8:26pm Dec 29, 2012 8:26pm
Quoting GnarlyPips
Do you have anything to back this up? The only way the "market" will know if someone is using TA is the broker. If they see a bunch of orders from retail traders at a certain level, they can't move price to take those guys out. They can manipulate what the charts show, but they can't move the price just to stop out retail traders because that wouldn't actually make them money. (Positions already entered don't have to be stopped out at a certain price to collect spread, spread will be collected whenever the position is closed. Taking the money...
picture = 1000 words. Ichi, sorry I do not know which one but what i know is when enough people participate, market will react.
Attached Image (click to enlarge)
Click to Enlarge Name: eur sample.JPG Size: 106 KB
  • #79
  • Edited Dec 30, 2012 9:01am Dec 29, 2012 9:06pm | Edited Dec 30, 2012 9:01am
Quoting macroman
picture = 1000 words. Ichi, sorry I do not know which one but what i know is when enough people participate, market will react.
Now, why would brokers or whoever is stopping out "retail" traders do such a thing?
Play the players, not the cards.
  • #80
  • Dec 30, 2012 1:57am Dec 30, 2012 1:57am
I too find a problem with the boogie man argument that the big bad brokers move price around to take out stops or trap the ichi traders.....

I mean if your broker is taking out the ichi traders and you see this ......this would be easy arbitrage by taking a position, on a grossly misquoted price.
But more importantly you can sue the broker, or find another one before he takes your money with fictitious quotes.


if you are saying that the entire Global financial market cares what ichi, or any other traders do, more importantly the entire global banking, corp and institutions move price to take out this small portion of the participants i would find that far fetched.

retail encompasses 10% market share or so.....and it is the inter dealer transactions, inter broker trading that makes it to the market.....we are a derivative market that get access through our broker.

when clusters are taken out then that currency pair would be out of step with the inter correlation of asset classes.......that would be an inefficiency to exploit.

as Gnarly said....please provide solid evidence for what you say......otherwise is just what you perceive...and we all know that human intuition is flawed.
AVT INVENIAM VIAM AVT FACIAM
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