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Quantify the market - breakout or fakeout

  • #1
  • First Post: Dec 9, 2014 8:54am Dec 9, 2014 8:54am
Hi,
this is the results of research i'm still doing. I write this thread to find some ideas.

What we see about market is price (quotes) and this price is always going up or down.
This is why market will never change.
What is a trend?
For me a trend is a move from point A to point B.
Can I make profit from every trend? No.
If the move from point A to point B is less than spread I can’t make profit from it.
Trend is not anything we define as static or changeless, trend is variable.
Looking at market we can see fakeout or continuation and breakout.
Fakeout = we have a trend and we see a false break
Breakout = we have a trend and we see a clear valid break
What does it mean “valid”?
To define “valid” we need to quantify a fakeout or a breakout.
For me market is the sum of all intentions (price).
So in a way I want to sum all past prices (for example past hour) to have the intentions of the market and then compare that to current market condition.
This is what I’m trying to do, looking for a way to quantify breakout or fakeout.
I'm looking to apply these concepts to a tick chart or 1second chart.
All ideas are welcome.

Alex
  • #2
  • Dec 9, 2014 9:20am Dec 9, 2014 9:20am
the market is an auction place of buyers and sellers, traders want to buy low and sell high.
a trend is a series of higher highs and higher lows (uptrend)
obviously if it where a downtrend a series of lower highs and lower lows.
if this sequence is broken, it is videly considered that also the trend is over.
can you profit in every trend? yes but you profit more in higher timeframes, in the 1 minute chart, not so much.
most of the times, price fails to develope into a trend, thats why you see failed brakeouts,
a failed brakeout can be a valid brakeout at first and then falls back into a range.
a valid brakeout is a long strong candle and it must close above the brakeout point. that makes it valid,
but note that it can still fail in the next coming candles and return into the range it was braking out from.
tick charts are not based on time, it is only based on price movement, so if price does not move in 100 hours, then no new bar will be printed.
if you want to use a timeless charting method simular to tick charts, you can use Renko, there is an indicator called RenkoLiveCharts,
I don't know of any tick charts indicators to MT4
I hope that helps
Bulls are stupid Animals!especially when Im short!
  • #3
  • Dec 11, 2014 2:35am Dec 11, 2014 2:35am
Quoting alexx90
So in a way I want to sum all past prices (for example past hour) to have the intentions of the market and then compare that to current market condition.
Yeah, and don't remember to multiply it on pi, then divide on e and then take lg from it. Name it "GMV" (global market variable) and start to sell for $. A bit patience and you'll really start to rake in the shekels

P.S. Summing all past prices for certain period you just find average market price for that period, that's it. How you want to associate it with future?? MACD in my Hotforex MT4 does the same ..
  • #4
  • Dec 11, 2014 4:43am Dec 11, 2014 4:43am
Quoting leebsurag
{quote} Yeah, and don't remember to multiply it on pi, then divide on e and then take lg from it. Name it "GMV" (global market variable) and start to sell for $. A bit patience and you'll really start to rake in the shekels P.S. Summing all past prices for certain period you just find average market price for that period, that's it. How you want to associate it with future?? MACD in my Hotforex MT4 does the same ..
I don't want to find the future, I don't believe in future, I believe in "the moment". I want to compare present with a little past (the system).
Take this example.
System A 10 cards numbered from 0 to 9, system B 20 cards numbered from 0 to 19.
Knowing how many cards there are on the systems you can measure the probability of finding a card.
Sure you will choose system A cause your probability is 0.1 respect to system B 0.05.
Knowing the system you are working on, allows you to "measure" what is happening.
One more example.
Take a container A with 10 balls and B with 20 balls.
Then add a ball to A and a ball to B.
Variation is different, you are adding a ball (with the same mass) on system A and B, but system A and B are different from each other.
Take this law of Newton:
For every action there is an equal and opposite reaction.
And now leave a ball to fall from 1 meter to the water, and then with the same ball, leave it to fall from 1 meter to the floor. Do you have the same reaction?
No, because there are 2 systems, water and floor.
You can't expect the same reaction if you work with different systems.
Hope it helps.

Alex
  • #5
  • Edited Oct 19, 2016 8:57am Dec 18, 2014 7:12am | Edited Oct 19, 2016 8:57am
After a lot of work, time and dedication, it is amazing what everyone can achieve.

{ sensitive information deleted by staff, per request }

Alex
  • #6
  • Dec 18, 2014 6:24pm Dec 18, 2014 6:24pm
Quoting alexx90
After a lot of work, time and dedication, it is amazing what everyone can achieve. {image} Alex
Hi Alex,

What are you showing us in the image above? The image is not self descriptive. It mentions, ticks and momentum. What are we to make of this?
What's it all about? It's all about money.
  • #7
  • Dec 19, 2014 1:51am Dec 19, 2014 1:51am
Quoting Innate
{quote} Hi Alex, What are you showing us in the image above? The image is not self descriptive. It mentions, ticks and momentum. What are we to make of this?
I opened this thread to find some help to quantify the market, at the end I made it by myself.
  • #8
  • Dec 19, 2014 3:01am Dec 19, 2014 3:01am
Quoting alexx90
{quote} I opened this thread to find some help to quantify the market, at the end I made it by myself.
Way to go
Even if you fall on your face, you're still moving forward.
  • #9
  • Dec 19, 2014 3:21am Dec 19, 2014 3:21am
Hi there Alex
Kudos on raising an important and meaningful aspect of trading!
I would like to express support to you for opening a discussion thread with this useful question.

Please develop the discussion and ignore shallow remarks of anti-intellectual persons who just want more of the same-old-same: they just want "quick and clear holy-grail recipe ".

Discerning the difference between breakout and false-breaks is one of the most crucial aspects of any TRADING!

Keep discussing!
Siddhartha G
  • #10
  • Dec 19, 2014 3:30am Dec 19, 2014 3:30am
Cont.
Some remarks:
Your way of posing the question is somewhat imprecise. Breakouts come in many situations

1. Breakout from a support or resistance levels

2. Breakouts from trend-line

3. Breakouts from ranging market (related to 1. but not equivalent to it)

and also , which for many traders including myself is THE relevant breakout
4. Breakout from some type of moving average support/resistance line.

Allow me to add one more question -

Is there such a thing as "the real" breakout at the moment it occurs ?
I mean by that: does the behavior of price and volume in the market AT_THE-MOMENT of breakout really determine
it is going to be a REAL ONE ? Or may be all breakouts , whether true or false , are the same at the moment
they occur but only some mature into REAL breakouts ?
Siddhartha G
  • #11
  • Dec 19, 2014 4:44am Dec 19, 2014 4:44am
Quoting leebsurag
{quote} Yeah, and don't remember to multiply it on pi, then divide on e and then take lg from it. Name it "GMV" (global market variable) and start to sell for $. A bit patience and you'll really start to rake in the shekels P.S. Summing all past prices for certain period you just find average market price for that period, that's it. How you want to associate it with future?? MACD in my Hotforex...
I wonder how they were trading the markets when there were no computers around Like Alex said, there is no point in trying to see into the future 1 year or trying to predict every price of the market ... but I like Alex's avatar
  • #12
  • Dec 19, 2014 5:25am Dec 19, 2014 5:25am
I saw this very potential thread to begin with. it's clear enough you have observe and absorb the market movement and got a single lined into trendline quantify.
I often use trend line ever since, simply strong method to narrow my view of how markets intend to in the next confirmation move.
i may trade for quite long, but i'm afraid i cannot contribute alot, while i would like to giving my thought, refers to :
To define “valid” we need to quantify a fakeout or a breakout.

for any measurement process we need to define a denomination. for example at speed we had MPH, nothing comes false when we already had such denomatioan at the right tool to measure. as for trend we had to find what denominatio gonna be.
quick example : tick range per last 10 sec let's put it that way . a tick range 100 pips per last 10 sec should consider a valid breakout, while 30 pips per last 10 sec should threat as fakeout.
perhaps any expert member would giving their view, a more proper one.
  • #13
  • Dec 19, 2014 6:01am Dec 19, 2014 6:01am
Quoting Isingh
Cont. Some remarks: Your way of posing the question is somewhat imprecise. Breakouts come in many situations 1. Breakout from a support or resistance levels 2. Breakouts from trend-line 3. Breakouts from ranging market (related to 1. but not equivalent to it) and also , which for many traders including myself is THE relevant breakout 4. Breakout from some type of moving average support/resistance line. Allow me to add one more question - Is there such a thing as "the real" breakout at the moment it occurs ? I mean by that: does the behavior of price...
Remember I'm still working on it.
Do you know surfing?
Attached Image (click to enlarge)
Click to Enlarge Name: surfing wave.jpg Size: 194 KB

You are there with friends waiting for the wave, but would you take every wave you see? Let's say you take the first wave you see, and then when you are inside you understand that it is not a good wave, you turn your head back and you see that your friends took the second wave that is much better than yours.
For me this is the difference from fakeout and breakout. I'm talking of the same things but at the same time they are different, they give different results.
  • #14
  • Dec 19, 2014 6:19am Dec 19, 2014 6:19am
Quoting Ralome
{quote} Way to go
Sure you know what I'm talking about.
  • #15
  • Dec 19, 2014 6:21am Dec 19, 2014 6:21am
Quoting dwmanfx
{quote} I wonder how they were trading the markets when there were no computers around Like Alex said, there is no point in trying to see into the future 1 year or trying to predict every price of the market ... but I like Alex's avatar
Regarding the picture, there are a lot of interesting things around us, but we usually don't pay too much attention.
  • #16
  • Dec 19, 2014 3:57pm Dec 19, 2014 3:57pm
Hey There
You started a promising looking question - yet if only general considerations will be brought up,
and 100% subjective 0% objective things - no-one will come to answer you.

Think about it and Green pips to you
Siddhartha G
  • #17
  • Dec 19, 2014 4:07pm Dec 19, 2014 4:07pm
Quoting alexx90
Hi, this is the results of research i'm still doing. I write this thread to find some ideas. What we see about market is price (quotes) and this price is always going up or down. This is why market will never change. What is a trend? For me a trend is a move from point A to point B. Can I make profit from every trend? No. If the move from point A to point B is less than spread I can’t make profit from it. Trend is not anything we define as static or changeless, trend is variable. Looking at market we can see fakeout or continuation and breakout....
if the answers to your questions were obvious everyone would be trading Forex and making money.Hope you will post how to determine if it is a true breakout or false.
all the best.
  • #18
  • Dec 19, 2014 4:50pm Dec 19, 2014 4:50pm
I read your first post, then i went straight to your subscription list, and i wasnt surprised to see crucialpoint there.
  • #19
  • Dec 19, 2014 4:58pm Dec 19, 2014 4:58pm
Quoting Isingh
Hey There You started a promising looking question - yet if only general considerations will be brought up, and 100% subjective 0% objective things - no-one will come to answer you. Think about it and Green pips to you
Well.., after a second and third (and even further) look(s) at the posts of Alexx I beg this thread farewell...

Still -good pips to all !
Siddhartha G
  • #20
  • Dec 19, 2014 4:58pm Dec 19, 2014 4:58pm
Quoting metta87
I read your first post, then i went straight to your subscription list, and i wasnt surprised to see crucialpoint there.
All of my first ideas come from CP, this is not a secret, is it?!
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