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Is price direction predictable?

  • #21
  • Jun 11, 2015 11:13am Jun 11, 2015 11:13am
Quoting Ponzi Jr
Reading many posts on here, I'm beginning to believe that price direction is not predictable. I've seen so many "profitable" systems that seem to have no logic behind them, such as people claiming that they can predict where prices will go by finding the square root of the last few periods; people drawing shapes; using 'magic' formulas and levels. There is no rationality behind this. I may not know much about markets, but I do know that the only thing moving prices is supply and demand. No formula, number, square root, etc, is going to tell you...

I'd say that the price can indeed be predicted. Reason being is simple. The market can only do 1 of three things. Extend, reverse, accumulate. If you simply look at most, if not, all systems which you clear have mentioned, they ALL go against the rule of extension, reversal, and accumulation. Thus making that so called "system" a "coin toss" at best. You'll also notice people say "the market is overbought/oversold" when that of course doesn't follow any set of rules. As this thread grows you will that people will contend that the market is indeed predictable, while only pointing at higher tf charts, which of course doesn't promote accurate entries. Once a trader aims for accuracy, the weaknesses of supply and demand will become more evident.
Men lie, women lie, the numbers don't.
  • #22
  • Jun 11, 2015 11:22am Jun 11, 2015 11:22am
Quoting mima
{quote} I will be happy to learn more about order flow ....you could put all you want in one pdf file, post here, and that would not disturb this thread at all.....those who want more again can pm or e-mail you as you wish...After reading I could conclude that is not for me and wouldn't bother to take your valuable time corresponding with me by pm or e-mail...that was my point...
Order flow can not be learned, because forex doesn'thave "Level III" access as stocks do. Even if forex were to have Level III access you wouldn't have any edge only because you won't be able to know if fresh volume will hit the market. All in all sells have the slight edge, as those who are in can simply dump what they have in order to force the price to drop! Fundamentals are nothing more then an excuse for the market to move wildly in a short amount of time in one direction.
Men lie, women lie, the numbers don't.
  • #23
  • Jun 11, 2015 1:23pm Jun 11, 2015 1:23pm
Quoting Ponzi Jr
Is price direction predictable?
yes, .....but only during news times.
i'v found that the price always fallow the news outcome 100% of the time.

now the question is, how to predict the news outcome and you'll be zillionair
i lose money for a living
  • #24
  • Jun 11, 2015 6:23pm Jun 11, 2015 6:23pm
Quoting tylerbose
{quote} yes, .....but only during news times. i'v found that the price always fallow the news outcome 100% of the time. now the question is, how to predict the news outcome and you'll be zillionair
You may want to check the EUR/USD thread. That thread clearly reveals market data that was in support of USD, but the price went up, (in favor of EUR) instead of down (in favor of USD) as the news would indicate. (based on what you hold to be true).
Men lie, women lie, the numbers don't.
  • #25
  • Jun 11, 2015 8:56pm Jun 11, 2015 8:56pm
you think you can not predict an action in this world ,any thing that can be sensed can be studied and predicted lack of information or tools can not be a barrier
all have a nice day
focus while relaxed to see better
  • #26
  • Jul 11, 2015 1:47am Jul 11, 2015 1:47am
Quoting solidc57
I just did two back tests of the last 90 days, EUR/USD, and USD/JPY. The E/U has been in trending market with a range of over 1000 pips and two trends each 1000 pips. The U/J is choppy with only a 379 pip range.
Hi Solid,

Did you use strategy tester to perform the backtest? If so, may I ask you how you coded up how to determine what the range was over the last 90 days? Just interested...
  • #27
  • Jul 11, 2015 2:22am Jul 11, 2015 2:22am
Out of interest, what does predictable really mean to readers? Each trader may have a different opinion. Can something that is predictable always be relied upon? If not, then from a statistical perspective, what does the word predictable suggest to you? Being correct 50% of the time, 60%, 70%?????
  • #28
  • Jul 11, 2015 11:11am Jul 11, 2015 11:11am
you have ever wondered the same information but different times, different price action ???
The main participants in the market:
1 / investors - consider the economic potential in the long term (several months to several years)
2 / speculators. - Several weeks to several months, reading the news and its impact in the future. (Speculative currency => scarcity => rose)
3 / retailers. - A few days to a few weeks.

problem, as the news happens, speculators have entered the market ???
- Big players consider every possibility that the impact of the news, they consider the case which could happen most and look for signs to prove.

- something extremely important: the monetary value to be compared with the goods. If the central bank reduces interest rates but low inflation, monetary value is not changed.
assumption: you live in Europe, the ECB cut interest rates, domestic demand is reduced,
demand reduction => falling commodity prices => EUR not lose value.

Well, until the present time, I do not use any trading system or trading tools. (Fibonacci, Trend, s / r ....)
I know the best times big players enter the command, and when finished and moving average price is 50pip / day .... Enough said.

very lengthy and complex, ... good luck !!!
http://www.forexfactory.com/showthread.php?t=216097
Trading in the zone
  • #29
  • Jul 18, 2015 3:16am Jul 18, 2015 3:16am
Quoting Ponzi Jr
Reading many posts on here, I'm beginning to believe that price direction is not predictable. I've seen so many "profitable" systems that seem to have no logic behind them, such as people claiming that they can predict where prices will go by finding the square root of the last few periods; people drawing shapes; using 'magic' formulas and levels. There is no rationality behind this. I may not know much about markets, but I do know that the only thing moving prices is supply and demand. No formula, number, square root, etc, is going to tell you...
heyy,
i think you can predict price movement only to some extent. following news and other fundamental aspects and using different technical analysis aspects like charts of different time frames, recognizing patterns, using strategies, different technical indicators, price movement prediction is somewhat possible. however, you never when market starts going against you and your predictions. so always beware
  • #30
  • Jul 19, 2015 4:09pm Jul 19, 2015 4:09pm
Market is fractal all the time. Learn how to study fractals and you get general direction of market.
  • #31
  • Jul 19, 2015 4:32pm Jul 19, 2015 4:32pm
the price direction is predictable but not space-time of them
  • #32
  • Jul 19, 2015 6:02pm Jul 19, 2015 6:02pm
yes the price direction is predictable about 70-80 % becoz 90 % traders think the same ..and they should from beginning of word till end of world ...
CSP = candlestick pattern
SSI
chart patterns
EW
all technical analysis are true . becoz these analysis base on those 90 % trades
sometime the ratio of those 90 % trades change like 80 % sometime 70 % sometime 95 % . that is the reason out SL hit
  • #33
  • Jul 19, 2015 6:20pm Jul 19, 2015 6:20pm
In 95% cases it's predictable on basic pairs like EURUSD GBPUSD, but with exotic pairs like TRY ZAR MXN it's not as much predictable as basic
  • #34
  • Edited Jul 20, 2015 5:31am Jul 19, 2015 6:21pm | Edited Jul 20, 2015 5:31am
Quoting Ponzi Jr
Reading many posts on here, I'm beginning to believe that price direction is not predictable. I've seen so many "profitable" systems that seem to have no logic behind them, such as people claiming that they can predict where prices will go by finding the square root of the last few periods; people drawing shapes; using 'magic' formulas and levels. There is no rationality behind this. I may not know much about markets, but I do know that the only thing moving prices is supply and demand. No formula, number, square root, etc, is going to tell you...
In my opinion price direction is predictable but perhaps not in the way we use it in retail trading.

For example consider the monthly chart of a currency pair such as the EURUSD. There appears to be a direct relationship between the relative strengths of each currency in the pair whose directionality appears to be related to economic factors. For example long term directional price movement may appear clearly evident on a 1-2 year timespan on the MN chart.

With this info at our disposal there should be windows of opportunity on the long term price chart where a retail trader can use the principle of probability to improve their chances of predicting price directionality with better than even odds (or slightly less than even odds considering frictional costs). For example, in a long term trend on the MN chart, simple eyeballing the chart gives clues for a retail trader when that window of opportunity exists (eg. a retracement from median price where probabilities increase that a mean reversion is likely to occur). It is only at these times you activate your trading strategy on short term timeframes such as D1 or H1 using the principle that the Law of Large Numbers is slightly on your side. Over the long term, despite each trade effectively representing a random trade attempt, with increased trades, over time, positive performance bias should start to be displayed statistically.

Once you play with positive bias, then progression techniques etc. help to magnify the positive result provided you are merciless with your risk management techniques applied.

What this therefore requires is patience and attention to the Macro-picture to achieve this. The Macro picture is the time horizon that investors use as opposed to retail traders.

It is not hard to see why at low level timeframes how random price movements can trick the trader to believe that there is price directionality at work but the reality is that visually it is extremely difficult to identify on a chart say on an H1 timeframe what is a random pattern versus what is a random pattern with perhaps a small degree of non-random price bias in it. The only way to tell (in hindsight) is in how price directionality extends random price movement in particular directions. This can only be detected on the fly (and not by hindsight) by statistical tools such as Bollinger Bands or Standard Deviation Channels which interrogate extended price series and mine the data to determine whether a bias exists in the longer term.
  • #35
  • Jul 19, 2015 6:22pm Jul 19, 2015 6:22pm
Price movements are NOT predictable - by definition. If the "true" price were known, the market would immediately jump to it and trading wouldn't be possibe.

"yes the price direction is predictable about 70-80 % becoz 90 % traders think the same"

90% of traders lose - that should tell you something . Also, learn some economics. If you took even a freshman econ class, you'd know how silly it is to say price is predictable. Indeed, if it were, there would be no market (see first statement in this post).

"CSP = candlestick pattern
SSI
chart patterns
EW "

All of these are complete garbage. They have no predictive power. If they did, you'd be richer than the Koch Brothers. You aren't......

Instead of looking at garbage indicators, look at the economic caleandar on FF's front webpage. THAT will tell you what moves the market.

Good luck in your trading and may you live delusion-free.
  • #36
  • Jul 19, 2015 6:29pm Jul 19, 2015 6:29pm
Quoting gravitist
Price movements are NOT predictable - by definition. If the "true" price were known, the market would immediately jump to it and trading wouldn't be possibe. "yes the price direction is predictable about 70-80 % becoz 90 % traders think the same" 90% of traders lose - that should tell you something . Also, learn some economics. If you took even a freshman econ class, you'd know how silly it is to say price is predictable. Indeed, if it were, there would be no market (see first statement in this post). "CSP = candlestick pattern SSI chart patterns...
fundamentals are the reason of market to move price up and down ... but technicals are important to tell u when to enter and when to exit so nothing is garbage
  • #37
  • Jul 19, 2015 9:08pm Jul 19, 2015 9:08pm
predicting means knowing something before it happens.
the universal law is that there is nothing that does not obey the law of cause and effect.
IF you have the INFORMATION and know the cause, you know the future.
To predict the direction of the price, one must know the sum of all intentions of the market participants.
Fundamentals point to the direction, technicals draw it.
As Above, So Below
  • #38
  • Jul 19, 2015 9:14pm Jul 19, 2015 9:14pm
Quoting tashkent
predicting means knowing something before it happens. the universal law is that there is nothing that does not obey the law of cause and effect. IF you have the INFORMATION and know the cause, you know the future. To predict the direction of the price, one must know the sum of all intentions of the market participants. Fundamentals point to the direction, technicals draw it.
Big thumbs up on that post tashkent :-)
  • #39
  • Jul 21, 2015 6:16am Jul 21, 2015 6:16am
a lot of traders (especially with couple of years experience) believes in it. One of my friend, who was teached me to trade, say that it's possiple to predict, he writes EAs for sale and has a lot of materials for many years of market activity, so he consider that there are some repetition and similar situation
  • #40
  • Jul 21, 2015 7:21am Jul 21, 2015 7:21am
Quoting Ponzi Jr
Reading many posts on here, I'm beginning to believe that price direction is not predictable. I've seen so many "profitable" systems that seem to have no logic behind them, such as people claiming that they can predict where prices will go by finding the square root of the last few periods; people drawing shapes; using 'magic' formulas and levels. There is no rationality behind this. I may not know much about markets, but I do know that the only thing moving prices is supply and demand. No formula, number, square root, etc, is going to tell you...
Technical analysis helps you to know where you are in the market, but does not give you market direction with absolute certainty. Everyone studies the same technical analysis, everyone has the same news, etc.

The market will reward you if you can reach a high level of trading skill and proper psychology. You can fly with the eagles.

Your own psychology is your enemy, not the market. You make the trades, you click the mouse, you go short at resistance and long at support, not the market.

You need to think independently when you trade-if you follow news reports, advice from other traders, etc. you will never become profitable. Trading is more of an art than a science. You need to learn the science end of it and then apply your knowledge "artfully" in a way that limits your losses and increases your wins.
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