Do you believe this market is random? | Page 14 | Forex Factory

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  • #261
  • May 20, 2014 6:16am May 20, 2014 6:16am
Quoting Pidgeon
If the market looks random to you, your TF is too small. Does this look random to anyone??{image}
It's possible to fit most of this under a random walk hypothesis.

Your TF is too small.
Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 55 KB
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  • #262
  • May 20, 2014 6:44am May 20, 2014 6:44am
There is an underlying structure to every currency pair. There are several dimensions to structure. Here is the AUD/USD Day chart. It would be difficult to trade the AUD against the structure, or to trade it without understanding the structure, in which case it would seem you were trading a random set of events. Avoid it if it seems random; trade it when it doesn't. In the case of the AUD (and the EUR/AUD. the GBP/AUD, etc.) the structure is pretty clear, where all the orange channels are trade worthy:
Attached Image (click to enlarge)
Click to Enlarge Name: au.gif Size: 349 KB
  • #263
  • May 20, 2014 6:50am May 20, 2014 6:50am
This is a randomly generated chart with a upward drift... I see lots of structure too.

In case you were wondering, all four charts are from the exact same underlying probability distributions (just a different realisation)
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  • #264
  • May 20, 2014 6:58am May 20, 2014 6:58am
Quoting GEfx
There is an underlying structure to every currency pair. There are several dimensions to structure. Here is the AUD/USD Day chart. It would be difficult to trade the AUD against the structure, or to trade it without understanding the structure, in which case it would seem you were trading a random set of events. Avoid it if it seems random; trade it when it doesn't. In the case of the AUD (and the EUR/AUD. the GBP/AUD, etc.) the structure is pretty clear, where all the orange channels are trade worthy: {image}
Don't take this the wrong way but you may as well have pulled up a chart, deleted every other fib and shown the points where the 50% level caused a 200 pip reversal.
It would be just as convincing.

What is the structure exactly ? A trend line after a news push ? Where would you have entered personally?
like totally failure brah
  • #265
  • May 20, 2014 7:00am May 20, 2014 7:00am
The last two posts make the point I have been making. The last post shows a series of charts, where the structure is known to be a random series of events. The post before that shows a chart where the structure includes the knowledge that the chart is under the strong influence of the Bank of Australia, where they are devaluing their currency. Trade one at your own peril; trade the other until the turns.
  • #266
  • May 20, 2014 7:01am May 20, 2014 7:01am
the reason mrket moves is that sellers and buyers puts money into it..

for example if buyer will put 100lots to long and seller 50lots to sell, market will go dawn, and long will loose exactly that amount of lots which seller will win (hard to explain that in english) lol

grab a paper and a pen and draw picture of market moves (random) u will se how much resistances suports fibbonachy and more of technicals u will see xDD

u can see technicals even in dogs shit laying on the ground... up move down move lol

so who earns money and who can see all lots (buy and sell) in market at this second? yes market makers....

market makers sells info to HFT firms (big ones) whoos trades with robots, simple one... if buy lots < sell lots == open order buy and vice versus...

haha, how do u like that teory? lol
  • #267
  • May 20, 2014 7:03am May 20, 2014 7:03am
Quoting simonb
{quote} Don't take this the wrong way but you may as well have pulled up a chart, deleted every other fib and shown the points where the 50% level caused a 200 pip reversal. It would be just as convincing. What is the structure exactly ? A trend line after a news push ? Where would you have entered personally?
I posted this information in my trading journal, which you are more than welcome to visit. The post there include some of the AUD trades I made during the last year or so.
  • #268
  • Edited 7:21am May 20, 2014 7:03am | Edited 7:21am
Quoting GEfx
The last two posts make the point I have been making. The last post shows a series of charts, where the structure is known to be a random series of events. The post before that shows a chart where the structure includes the knowledge that the chart is under the strong influence of the Bank of Australia, where they are devaluing their currency. Trade one at your own peril; trade the other until the turns.
Yes I agree with this, but the job of the trader is to navigate the randomness amidst the apparent order. You can expect price to go to somewhere after a certain economic news/event and you might be right, in the sense that price eventually gets to where you expected it to go; still, you can lose money because the randomness between the two points can kill your position, if you either have a poor understanding of market, execute poorly or have poor trading psychology.

In all the four charts I have copied, the expected value after 100 points are the SAME. However, the path there is treacherous and filled with randomness and will take a trader to navigate it. If you buy at the start and hold till the end regardless of how much it might go against you in between; you are an investor.

And this is when you already know the final outcome; in real markets you don't. You may have a pretty good idea but it's still a guess and having a bias can often be worse than not having one (if you are not careful/skilled)
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  • #269
  • May 20, 2014 9:07am May 20, 2014 9:07am
Quoting GEfx
There is an underlying structure to every currency pair. There are several dimensions to structure. Here is the AUD/USD Day chart. It would be difficult to trade the AUD against the structure, or to trade it without understanding the structure, in which case it would seem you were trading a random set of events. Avoid it if it seems random; trade it when it doesn't. In the case of the AUD (and the EUR/AUD. the GBP/AUD, etc.) the structure is pretty clear, where all the orange channels are trade worthy: {image}
What underlying structures are there in this chart which could have been traded?
Attached Image (click to enlarge)
Click to Enlarge Name: chart.png Size: 15 KB
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  • #270
  • May 20, 2014 9:37am May 20, 2014 9:37am
Quoting PipMeUp
{quote} What underlying structures are there in this chart which could have been traded? {image}
I have no idea. Can you tell us more about it?
  • #271
  • May 20, 2014 9:39am May 20, 2014 9:39am
devilishce question , but let it be these way ... yesss yess yess when perice is on the side ... no ,,, no ,noo if price next door .

some wize guy troll said , akid with aruler can make some points , can you here it ? ... can you here it nowww ... xeppp
  • #272
  • May 20, 2014 9:53am May 20, 2014 9:53am
Quoting GEfx
{quote} I have no idea. Can you tell us more about it?
That's an interesting question. What do you need in addition to the chart? Not the asset otherwise you may trade the fundamentals instead of the inherent structure of the market. Can you see such a structure in this chart?
No greed. No fear. Just maths.
  • #273
  • May 20, 2014 10:01am May 20, 2014 10:01am
Sometimes yes, sometimes no.

A trained sniper taking his shots still experiences unexpected random,
wind force, wind direction, air density, visibility, weather, disturbance from insects, etc...

He definitely wants to snipe in situations he is accustomed to, if he has a choice.
  • #274
  • May 20, 2014 10:07am May 20, 2014 10:07am
Quoting GEfx
There is an underlying structure to every currency pair. There are several dimensions to structure. Here is the AUD/USD Day chart. It would be difficult to trade the AUD against the structure, or to trade it without understanding the structure, in which case it would seem you were trading a random set of events. Avoid it if it seems random; trade it when it doesn't. In the case of the AUD (and the EUR/AUD. the GBP/AUD, etc.) the structure is pretty clear, where all the orange channels are trade worthy: {image}
Not sure what you are trying to say here with underlying structure.. price moves in channels but that is the basic nature of all pairs, not just aud/usd as seen in the image you provided. Also historic channels are #1 in false backtesting; in backtesting it comes close to the holy grail but live you will simply be too late. I lost quite some money because of indicators like #sf channels(looks like the one you are using)
  • #275
  • May 20, 2014 10:19am May 20, 2014 10:19am
Quoting GEfx
There is an underlying structure to every currency pair. There are several dimensions to structure. Here is the AUD/USD Day chart. It would be difficult to trade the AUD against the structure, or to trade it without understanding the structure, in which case it would seem you were trading a random set of events. Avoid it if it seems random; trade it when it doesn't. In the case of the AUD (and the EUR/AUD. the GBP/AUD, etc.) the structure is pretty clear, where all the orange channels are trade worthy: {image}
The market as whole and every currency pair moves in futility.
  • #276
  • May 20, 2014 10:28am May 20, 2014 10:28am
Quoting PipMeUp
{quote} That's an interesting question. What do you need in addition to the chart? Not the asset otherwise you may trade the fundamentals instead of the inherent structure of the market. Can you see such a structure in this chart?
Hi PipMeUp,
I specialize in currency trading. So the currency pair is required for me to do a complete structure analysis. The fundamentals are critical in completing one dimension of structure. That does not mean that you trade fundamentals, but you need to understand the underlying fundamentals of both the currencies in the pair, to compare. Another dimension is the key players in this pair, who are the influencers, who can take control of the flow, when they are likely to take control, when they have taken control in the past, what they use to decide when to take control, etc. Another dimension is drivers of the pair, which vary from country to country, and vary from year to year. So, there is quite a bit of homework to do, and to keep up with, as you think about the components of structure. Once done, you can start to marry up your TA to the other dimensions of structure, which provides a better picture of the tendencies of the pair. With structure in mind, TA does not exits as a stand alone decision element, and must to put into context of the other dimensions of structure, across meaningful timeframes (e.g., the timeframes that bankers trade) and with some statistical confirmers to back you up (for example, when the pair is trending, what is the average retracement, the average pullback to square up and the average pullback to reverse, etc.).

Structure is not the chart or the pictures you draw on the chart. Structure is the whole picture in your head that makes your trade make sense. Not "make sense" to you, but to the market and the key drivers of the structure.
  • #277
  • May 20, 2014 11:55am May 20, 2014 11:55am
Quoting GEfx
{quote} Hi PipMeUp, I specialize in currency trading. So the currency pair is required for me to do a complete structure analysis. The fundamentals are critical in completing one dimension of structure. That does not mean that you trade fundamentals, but you need to understand the underlying fundamentals of both the currencies in the pair, to compare. Another dimension is the key players in this pair, who are the influencers, who can take control of the flow, when they are likely to take control, when they have taken control in the past, what they...
strange that you said you were going to post the AU daily chart then?
tradewith60
  • #278
  • May 20, 2014 12:15pm May 20, 2014 12:15pm
Quoting 60minuteman
{quote} strange that you said you were going to post the AU daily chart then?
I posted the daily chart above, but why is that strange?
  • #279
  • May 20, 2014 1:15pm May 20, 2014 1:15pm
Quoting GEfx
{quote} Hi PipMeUp, I specialize in currency trading. So the currency pair is required for me to do a complete structure analysis. The fundamentals are critical in completing one dimension of structure. That does not mean that you trade fundamentals, but you need to understand the underlying fundamentals of both the currencies in the pair, to compare. Another dimension is the key players in this pair, who are the influencers, who can take control of the flow, when they are likely to take control, when they have taken control in the past, what they...
Ah I understand. Sorry I thought you were indeed refering to pure TA: price can only go up 'coz it broke a trendline kind of stuff. The experiment is irrelevant to you.

Fundamentals play a major role in your decision process. Fundamentals are something I never focused too much on because I can't quantify them. I always considered that if they are sudden and short lived like NFP they tend to go opposite as big boys were already in position (price goes down because the buyers have already bought). After the 1st move the direction is given and will print on the chart. If they are strong and long term, their effect will print on the chart as well, and you needn't catch the move from the beginning. I'm all willing to change my point of view if ever you start a thread about this I'll be subscribed and listenning up.

Despite this fundamental drift the main part of the movement is random. I gave the DJIA weekly as an example in another thread. There is for sure a long term trend yet the movement is made of more than 95% of "not the trend" (average move ~7points per day while the average range is more than 100). I don't know if this is purely stochastic or a complex deterministic process. But as I don't know this process, if it exists, I can only consider its statistical effects. And under any measure I could find the stochastic hypothesis holds thus far.

That's why I can't understand when people say market is nothing random. If it isn't random they should be able to tell me where E/U will be 1st of June 9:17:43am GMT. Or the sequence of red and green in the next 100 candles. As long as there is uncertainty, to all intents and purposes, that's random.

Note that random doesn't mean unpredictable.
No greed. No fear. Just maths.
  • #280
  • May 20, 2014 1:19pm May 20, 2014 1:19pm
i think that the Forex market isn't random market there is many rules and the central banks i think has a hand in it .
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