Do you believe this market is random? | Page 17 | Forex Factory

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Do you believe this market is random?

  • #321
  • May 21, 2014 10:46pm May 21, 2014 10:46pm
Quoting SeanyTsunami
I don't believe its totally random, price moves for a reason. Banks and funds buying and selling currencies at certain price levels, causes price movements and patterns that repeat themselves over time as a result of the order flow.
Yes I am agree too.
  • #322
  • May 21, 2014 11:27pm May 21, 2014 11:27pm
To answer this question you need a basic understanding what you are trading. What is the market? the best answer was written years ago by DarkStar and his posts are still relevant today even though he posted this almost 8 years ago. So go read here and get a good education:

http://www.forexfactory.com/showthread.php?t=7484
  • #323
  • May 21, 2014 11:32pm May 21, 2014 11:32pm
2nd point: since Forex is about business, govt., individuals and corp. exchanging funds price action can move in any direction at anytime without any notice or reason. If Toyota wishes to cash its check from cars sold in the USA and exchange from USD to YEN. There is no posting that they are exchanging funds. This goes on everyday with every currency all over the world. Traders make up only a tiny fraction of the whole pie called Forex.

3rd point: no matter how much a currency may drop or is being sold at the bank, or financial institution, they must always resupply themselves with money to sell to the public again. So if the Band of England has lots of GBP buys, at some point they have to sell off their euro, usd, and what other currencies they have collected so they have more to sell. This balancing act is part of a banks business.
  • #324
  • May 21, 2014 11:42pm May 21, 2014 11:42pm
4th point: having said all that the most obvious effect on currency is govt. policy. Last year Japan made a major govt. decision to depreciate the YEN as official govt. policy. Sometimes other market forces affect what they are doing but the long term affect is the YEN is going down in the long run. These govt. decisions affect the long term direction of a currency. Unless you check long range charts you will miss this. Here is an example of the JPY govt. policy and you can see that the market becomes predictable knowing what is driving a currency. Now you can predict, not the day by day action of business and govt transactions of Forex exchange but the long term direction of a currency pair.
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  • #325
  • May 21, 2014 11:47pm May 21, 2014 11:47pm
Quoting diceman555
I would like to have a poll on this topic but not sure how to do that. DO YOU BELIEVE THIS MARKET IS RANDOM , ????

in my humble opinion ,

"market is random".
  • #326
  • May 21, 2014 11:48pm May 21, 2014 11:48pm
Here is the Bush and Obama presidencies and their affect of govt. policy on the eur/usd. Bush depreciated the dollar until it collapsed and Obama presidency has seen it range. Knowing this helps you in your trading and planning your trades.

So in conclusion: short term anything can happen and seem totally random, long term govt. policy determines long term affect of where a currency will go.
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  • #327
  • May 21, 2014 11:54pm May 21, 2014 11:54pm
So covering the last 10 years of eur/usd history you will find 9 major changes of direction for the eur/usd. You understand this part of Forex then you can successfully trade consistently through the years.
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  • #328
  • May 22, 2014 1:25am May 22, 2014 1:25am
Quoting nanningbob
So covering the last 10 years of eur/usd history you will find 9 major changes of direction for the eur/usd. You understand this part of Forex then you can successfully trade consistently through the years. {image}
Hi NBob,

Thank you for your gold nugget postings.....they are a very clear explanation of market predictability.....

it gives me the "oic" moment ..... now that I understand...
Failure leads to Success if one learns from mistakes and never give up
  • #329
  • May 22, 2014 1:50am May 22, 2014 1:50am
Quoting nanningbob
So covering the last 10 years of eur/usd history you will find 9 major changes of direction for the eur/usd. You understand this part of Forex then you can successfully trade consistently through the years. {image}
Can u elaborate further what exactly happened at those trend line changes, and not the big trend the Obama-Bush change, but the smaller ones?

Like there were elections in the EU aswell.

And i remember from economy class that there are economic cycles, which are relevant in the market too.

My question is: What triggers it, and when it gets triggered? (Reversal of the monthly trend)

Please respond, thank you
"There's a sucker born every minute" - P.T. Barnum
  • #330
  • May 22, 2014 2:39am May 22, 2014 2:39am
Quoting mikkom
{quote} Does the hypothesis hold really? For example here is one from Osler (I really like this one) http://people.brandeis.edu/~cosler/d...s%20Orders.pdf Here is a book that every random walk advocate should also read https://is.muni.cz/el/1456/jaro2009/...MacKinlay_.pdf
From the second link page 17
Quote
Within this paradigm, which has been broadly categorized as the "random
walk" theory of stock prices, few studies have been able to reject the random
walk model statistically. However, several recent papers have uncovered
empirical evidence which suggests that stock returns contain predictable
components .
This is exactely my point of view.
1- Random walk holds, especially when using a good distribution not the Normal one
2- There are reliable components, e.g. the trend is more stable in real market than it is in a (1st order) random walk chart (charts are built from the tick return empirical PdF of E/U, NOT a Normal distribution)
3- Those reliable components are randomly appearing, with random amplitude and random duration, immerged in random movement of price (returns contain predictable components = there are also other non predictable components).
4- The non predictable components are either random or chaotic or both.
5- Despite they are deterministric I don't know the process generating the chaotic components so I can only consider them statistally. That is assimilating them as stochastic.


Thx for the links, I'll read them more thoroughly
No greed. No fear. Just maths.
  • #331
  • May 22, 2014 2:40am May 22, 2014 2:40am
One thing that is not random, for sure, is the big boys running stops.
Look at any chart, including weeklys, most big moves happen after a stop run...thatīs where the big boys, with their robots pick liquidity to fuel the move, fill their pockets...who is the fuel?...retailer cash, and hopes...
Big Boys adore retailers...
  • #332
  • May 22, 2014 2:50am May 22, 2014 2:50am
Quoting cuchuflito
One thing that is not random, for sure, is the big boys running stops. Look at any chart, including weeklys, most big moves happen after a stop run...thatīs where the big boys, with their robots pick liquidity to fuel the move, fill their pockets...who is the fuel?...retailer cash, and hopes... Big Boys adore retailers...
They need no bots to do it. I can't imagine they sell aggressively in order to... buy. They just stop buying and the market naturally does it's job: no more buyers = price goes down. Big boys wants to buy at a good price = the support. Retailers who "know the market is not random" set their SL 2 pips below the support. Exactly where the big boys have a limit buy order. When a buyer and a seller meet at the same price, again market just does its job and fills the orders.
No greed. No fear. Just maths.
  • #333
  • May 22, 2014 4:07am May 22, 2014 4:07am
Quoting PipMeUp
{quote} They need no bots to do it. I can't imagine they sell aggressively in order to... buy. They just stop buying and the market naturally does it's job: no more buyers = price goes down. Big boys wants to buy at a good price = the support. Retailers who "know the market is not random" set their SL 2 pips below the support. Exactly where the big boys have a limit buy order. When a buyer and a seller meet at the same price, again market just does its job and fills the orders.
Listen to PipMeUp he knows what he is talking about

However let me explain better this sentence:

Quote
Big boys wants to buy at a good price = the support.

Suport is only a technical term.What really goes on is that big boys acumulate orders of one type so that their orders to fill in.So for example if the market is trending down means that for example 100 retail traders sell 1 lot = 10 mil $ but XYZ1 bank wants to buy 15 mil so he waits until more retailers sell, and as soon as the 15 is hit he buys them all, regardless of S/R zones, doesnt mattern where it is.

And if you wonder who are the initial 10 mil $ sold to its simple, other XYZ2 banks who are buying on longer term, hedge funds who hedge, pension funds who mostly trade on W1 timeframes or other traders who foresee the big breakout which is caused by XYZ1 bank.

Its that simple, so its not really stophunting, rather buying/selling in the right moment when extra liquidity comes in.
"There's a sucker born every minute" - P.T. Barnum
  • #334
  • May 22, 2014 4:37am May 22, 2014 4:37am
i do not believe it is random, as every move can be explain with technical analyse, and also a famous method, elliot wave.
  • #335
  • May 22, 2014 4:53am May 22, 2014 4:53am
Let me illustrate my previous post in a nice drawing that i made.This picture will explain the entire market and how it works.

But please excuse my lack of artistic skills

Attached Image (click to enlarge)
Click to Enlarge Name: RETAIL LOSER.png Size: 130 KB
"There's a sucker born every minute" - P.T. Barnum
  • #336
  • May 22, 2014 5:50am May 22, 2014 5:50am
No offence to anybody, but you can clearly see how seasoned traders accept randomness.
Let's start from the basic simple fact that using sentences like "the market is NEVER random" says a lot about a trader's mind flexibility.

Then, when comparison to a single perfect trade or driving a car on the road, is used to dismiss the possibility of randomness... it becomes amusing.
Luckily, we still get some very well informed rational posts.
  • #337
  • May 22, 2014 6:06am May 22, 2014 6:06am
Quoting Proximus
{quote} Listen to PipMeUp he knows what he is talking about However let me explain better this sentence: {quote} Suport is only a technical term.What really goes on is that big boys acumulate orders of one type so that their orders to fill in.So for example if the market is trending down means that for example 100 retail traders sell 1 lot = 10 mil $ but XYZ1 bank wants to buy 15 mil so he waits until more retailers sell, and as soon as the 15 is hit he buys them all, regardless of S/R zones, doesnt mattern where it is. And if you wonder who...
Youré right, itīs just business as usual.
57% of Forex is held by roughly 10 banks, you can verify on Wikipedia, it varies day to day...Deutsche Bank usually at the top, roughly 10%..
80 billion traded dayly.
The chart atached is from EURGBP this morning...like any other morning...By no means random, exactly calculated...donīt forget they can read retail orders!!
How they move the market?...it takes massive pockets...and they talk to each other...if you donīt believe me you probably think polirticians in this planet are non corrupt, honest beautifull people.
The trick is for them to be stealth, (not easy), and play a deceiving game,just like poker...make it look like perfect elliot wave, or excellent stochastic, trendline support...etc...it goes forever...let a few pigeons run with a little prize in their hands...like lottery....then turn around and collect the big pot...
Business as usal, by no means random...

"Know yourself, and know your enemy, then you can withstand 100 battles without perill"..old chinesse wisdom...600 BC
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  • #338
  • Edited 6:35am May 22, 2014 6:14am | Edited 6:35am
Quoting cuchuflito
{quote} Youré right, itīs just business as usual. 57% of Forex is held by roughly 10 banks, you can verify on Wikipedia, it varies day to day...Deutsche Bank usually at the top, roughly 10%.. 80 billion traded dayly. The chart atached is from EURGBP this morning...like any other morning...By no means random, exactly calculated...donīt forget they can read retail orders!! How they move the market?...it takes massive pockets...and they talk to each other...if you donīt believe me you probably think polirticians in this planet...
More than 57%, but remember that not all bank cash is their proprietary account.Pension fund & hedgefund funds are also routed through banks, but the banks use them as leverage for their proprietary trading.

And dont think of them as evil, because they are not, nor they are good, they just do their business as usual.Moratiliy in the market is irrelevant.

And also not all banks are on the same side, the fact that if Citi buys , Goldman can still sell , sell to them as market maker, and Citi will be the proprietary trader.But both of them will profit, its just that they take profit at different times.And if the retailer jumps in in the right moment, it can be profitable too, if not then not.

So technically because the banks dont take profit at the same time, it is possible for every participant to be profitable, if not all of them take profit at the same time, and if new capital is put into the market, which is, on a minute-minute basis.And thats the beauty of it, banks are giving you the opportunity to be profitable, while they are in a drawdown, and later theY will reverse that and they will be profitable too.
Its like a large pyramid scheme, which will never collapse because the size always grows, as new people are born and new traders join the market.So as long as new value money (not inflated one) with labour and wealth is produced, the market will go on

Its only the stupid retailer because of himself cant be profitable, not because the banks dont let you.So everyone could win, but still only the pro's do it, because novices cant handle the market

In my illustration, Jonny could have been profitable if he would have exited his sell trade before the XYZ bank would bought against him, but he didnt, so its obvious that the retailer's fault is it.
"There's a sucker born every minute" - P.T. Barnum
  • #339
  • May 22, 2014 6:22am May 22, 2014 6:22am
Attached Image (click to enlarge)
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Sure all of this isn't happening by random chance. But

  1. How many Jonnhies are in the market?
  2. Will Big Boy enter now or after his morning meeting?
  3. How much will the market move when Big Boy enters?
  4. Does Big Boy really have a second half to enter today?
  5. How many Smart Bobs will try to catch the top?
  6. Will the price really retrace or will other big players enter and push the price higher?
  7. How much higher?

All of this is random.

No greed. No fear. Just maths.
  • #340
  • May 22, 2014 7:00am May 22, 2014 7:00am
Quoting PipMeUp
{image} Sure all of this isn't happening by random chance. But How many Jonnhies are in the market? Will Big Boy enter now or after his morning meeting? How much will the market move when Big Boy enters? Does Big Boy really have a second half to enter today? How many Smart Bobs will try to catch the top? Will the price really retrace or will other big players enter and push the price higher? How much higher? All of this is random.
1) Jonny is a stereotype, 90% of retailers are like Jonny
2) Big boys have also their plans, they enter at market opens (NY-London-Sydney-Tokyo-Shanghai , Bond and other market opens) or at news, otherwise you dont see really much movement, they may be an underlying strength because the price is moving slowly up/down because some pension funds invest in that move and hold it for years, but otherwise the market is just flat, either by accumulation of orders, or just because nobody is trading

3) Atleast as much as they acumulated before, i mean if 100 Jonny like guys sold in total 15 milions, if the bank buys it the market should atleast move back to the place where the acumulation started, but it will generally move much higher because other investors see the move and join in with the bank, and other retailers too join in.But for certainty atleast to the point where it started

Attached Image (click to enlarge)
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  1. Does Big Boy really have a second half to enter today?
  2. How many Smart Bobs will try to catch the top?

The herd usually goes in the same direction

4) Will the price really retrace or will other big players enter and push the price higher?

Retracement is usually takeprofit for 1 big boy, so you have to ask yourself, why should he exit here?

Also after retracement other guys might join in too to push it higher, but the ones who started will probably stick with it to the end

5) How much higher?

Answer 3

None of it is random, you just have to understand their logic, and then it will be easy to interpret them.

"There's a sucker born every minute" - P.T. Barnum
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