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Technical Analysis Fallacy

  • #46,241
  • May 24, 2014 3:25pm May 24, 2014 3:25pm
Quoting SupraSense
{quote} lol, yeah people doin't like it when you point it out. You can show plenty of examples where price moved the opposite direction to what the news would suggest, but the usual get out clause is 'it was priced in'.

Good for you, the interesting thing though is that more often than not the news does influence the orders that are placed, and so many traders wouldn't make the connection. However when the news doesn't influence the orders and it moves against them, they just right it off a one off situation. It's the reason why some traders use a mix of both fundy and TA to try and make up for the loss comings. But it still remain buying and selling are the only thing that moves the market.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,242
  • May 24, 2014 3:27pm May 24, 2014 3:27pm
Quoting priceaction1
good!!! let establish the point 1. price move by orders. ok what factor effecting on order placing with respect to there direction? most of technical tools were developed for stock/commodity trading trading, not for Forex it is totally different,( my opinion)
There are a multitude of reasons. Someone may actually need to exchange this money just as you exchange money when you go on holiday, except in much larger size. Someone may be speculating. Another may be market making. A bank could be hedging an option position. Lots of factors.
  • #46,243
  • May 24, 2014 3:29pm May 24, 2014 3:29pm
Quoting priceaction1
good!!! let establish the point 1. price move by orders. ok what factor effecting on order placing with respect to there direction? most of technical tools were developed for stock/commodity trading trading, not for Forex it is totally different,( my opinion)
That's a valid point, that's why I am getting better tools develop to take the "noise" out. Although you can trade without them, good tools are always better to have. We don't use a calculator because we can't count, we use it because based on our formulas, it would come up with a faster answer than us. And in Forex especially in Flow trading speed of information can mean the difference in missing out 5 or even 10 pips.

You have to also understand that TA was made before FX trading could be done by the public at all, heck we were still on the gold standard back then. Although you can use some of it, in my view it's not the best. In stocks which I buy and hold sometimes for my wife (she wants to invest), VSA is king, but over in Forex Land, you are going to learn very soon that this market doesn't respect much TA. It could mean the difference between 80 percent winning in stocks with high RR to 60 percent in FX if you brought it over without no modifications.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,244
  • May 24, 2014 3:32pm May 24, 2014 3:32pm
Quoting saneblane
{quote} Good for you, the interesting thing though is that more often than not the news does influence the orders that are placed, and so many traders wouldn't make the connection. However when the news doesn't influence the orders and it moves against them, they just right it off a one off situation. It's the reason why some traders use a mix of both fundy and TA to try and make up for the loss comings. But it still remain buying and selling are the only thing that moves the market.
Agreed. In fact news is probably a good point for the other thread about whether the market is random or not. After all, for those who think it is completely random, how do they explain why volatility will dramatically increase around important news events. That alone indicates some non-randomness, but anyway, now I'm off topic
  • #46,245
  • May 24, 2014 3:35pm May 24, 2014 3:35pm
ok than what is wrong with CHF why it almost mirror of eur??? all these factors are there but she refuse to act upon them?
don't predict direction, but dance with flow of water
  • #46,246
  • May 24, 2014 3:39pm May 24, 2014 3:39pm
Quoting priceaction1
ok than what is wrong with CHF why it almost mirror of eur??? all these factors are there but she refuse to act upon them?
it's not the EUR or CHF that mirror each other, it's the USD that is doing the dance. Have you ever seen youself in the mirror? well tha's what happening, the EUR/CHF don't really move much from each other, it's the USD that is dancing with the two of them.

This is one of the Butterfly effect knock on things I was trying to mention in the last post. You can also get way more advanced with this, but it's the basics.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,247
  • May 24, 2014 3:40pm May 24, 2014 3:40pm
Quoting priceaction1
ok than what is wrong with CHF why it almost mirror of eur??? all these factors are there but she refuse to act upon them?
I don't understand your question. Could explain it a bit more clearly? Which two instruments are we talking about EUR/USD and USD/CHF ... or something else?
  • #46,248
  • May 24, 2014 3:44pm May 24, 2014 3:44pm
Ok let me put it like this.

if they were EURUSD AND CHFUSD then they would follow each other around because they are so close in volatility, but since they are backward they have no choice but to do the opposite of each other. Study the correlation chart and it would help clear this up.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,249
  • May 24, 2014 3:47pm May 24, 2014 3:47pm
oh I just want to point out the action of CB in price of any currency, they are the main reason behind any major change and they maintain the balance.
don't predict direction, but dance with flow of water
  • #46,250
  • May 24, 2014 3:49pm May 24, 2014 3:49pm
Quoting SupraSense
{quote} Agreed. In fact news is probably a good point for the other thread about whether the market is random or not. After all, for those who think it is completely random, how do they explain why volatility will dramatically increase around important news events. That alone indicates some non-randomness, but anyway, now I'm off topic
I think people here just classify anything they don't understand as random. When I first looked at a chart it was as random as snow in spring. But the more you learn the less "random" it becomes. I am not saying it's all clear not at all, but some are saying it's "completely random".
Being a trader is lonely, but being a great trader is lonelier still
  • #46,251
  • May 24, 2014 3:51pm May 24, 2014 3:51pm
Quoting priceaction1
oh I just want to point out the action of CB in price of any currency, they are the main reason behind any major change and they maintain the balance.
Lol Now you're talking about high level manipulators. Truth be told they are always talking about Free Market but they are always messing things up. In a true free market the banks wouldn't step in, I'm not even going to touch the subject of these guys, but what they do affect the market alot.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,252
  • May 24, 2014 3:52pm May 24, 2014 3:52pm
@ saneblane CHF is forcefully maintain at fix ratio with EUR by swiss center bank after AUG 2011 massive appreciation it can be lower but not more than a fix ratio with eur not usd.
don't predict direction, but dance with flow of water
  • #46,253
  • May 24, 2014 3:58pm May 24, 2014 3:58pm
Quoting saneblane
{quote} Lol Now you're talking about high level manipulators. Truth be told they are always talking about Free Market but they are always messing things up. In a true free market the banks wouldn't step in, I'm not even going to touch the subject of these guys, but what they do affect the market alot.
I was pointing from the start, if durgi can't speak about possible action did you think eur down to this level or if BOJ doesn't take action than yen does come to that level, FED meting, FOMC etc. order are noting they are by product of CB actions. they don;t move the price but action of CB does that is what I thought.
don't predict direction, but dance with flow of water
  • #46,254
  • May 24, 2014 3:59pm May 24, 2014 3:59pm
Quoting priceaction1
@ saneblane CHF is forcefully maintain at fix ratio with EUR by swiss center bank after AUG 2011 massive appreciation it can be lower but not more than a fix ratio with eur not usd.

Lol you see what I mean, there are so many ins and outs man, I don't really follow those things to be honest. I only follow the effect they have on the market, unless they send big orders my way I don't care much. Truth be told in a sense you can say I think like the market, I only care about buying and selling. But I guess that kind of info would be good If I was a TA or Fundy trader.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,255
  • May 24, 2014 4:01pm May 24, 2014 4:01pm
Quoting priceaction1
{quote} I was pointing from the start, if durgi can't speak about possible action did you think eur down to this level or if BOJ doesn't take action than yen does come to that level, FED meting, FOMC etc. order are noting they are by product of CB actions. they don;t move the price but action of CB does that is what I thought.

It's true, but this is the thing. How do you quantify or calculate the kind of action they would have on the market? To this day I still haven't figured that out.
I think you are misunderstanding what we are saying. I see the market differently than you so It might be hard to describe. And when I say differently I mean literally, I don't look at a chart, so the actions anyone takes even a central bank, can only be measured when the orders are placed. Nothing else the market is not moved by talking or announcements, it's the orders that are placed based on those talking or announcements that move the market.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,256
  • May 24, 2014 4:02pm May 24, 2014 4:02pm
Quoting priceaction1
{quote} I was pointing from the start, if durgi can't speak about possible action did you think eur down to this level or if BOJ doesn't take action than yen does come to that level, FED meting, FOMC etc. order are noting they are by product of CB actions. they don;t move the price but action of CB does that is what I thought.
though order are tools to do the job.
don't predict direction, but dance with flow of water
  • #46,257
  • May 24, 2014 4:07pm May 24, 2014 4:07pm
Let put it in a more simple way. A car needs gas to run, and if you're out of gas, you can talk from now until God comes back for his green earth but it is not going to run. We don't place announcement or talking, we place orders, that's the only thing that we can do. Order are the only gas the market uses.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,258
  • May 24, 2014 4:13pm May 24, 2014 4:13pm
Quoting priceaction1
{quote} though order are tools to do the job.
What trading style do you use? That would help me to understand better where you are coming from.
Being a trader is lonely, but being a great trader is lonelier still
  • #46,259
  • May 24, 2014 4:14pm May 24, 2014 4:14pm
yes we are near the point. orders, there are different types of orders and come from many areas, but what factor effect upon punting the order direction either I go long or short, that is the point.
don't predict direction, but dance with flow of water
  • #46,260
  • May 24, 2014 4:15pm May 24, 2014 4:15pm
you drive a car a suddenly you end up at dad end, what did you do turn the car or hit the dad end????
don't predict direction, but dance with flow of water
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