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  • #181
  • Nov 2, 2015 10:20pm Nov 2, 2015 10:20pm
Quoting tashkent
Before discussing the randomness of the price, one need to have a clear understanding of the market (and in no way i am claiming that i clearly understand the markets). my simple mind tells me that financial market is a complex system with hundreds of components (instruments, mechanisms) interacting with each other every single moment and adapting to the outcomes of these interactions. Just to give a few example for financial market components: capital markets (stock markets, bond markets), commodity markets, money markets, derivatives markets,...
while I do agree that market is complex being, and price movement has various factors in play.However,there are major players which is mainly responsible for price movement .I called 'it' simply as 'Big money'(not Smart Money) because they also get it wrong time to time.
Regarding backtesting,theoretically it is possible to predict the future by backtesting the past datas simply because patterns('habits') repeat again and again and will be repeating again and again in future also.The only problem is in the complexity in devising an computer algorithm that translates the successful manual trade strategies.
-CKB
  • #182
  • Nov 2, 2015 11:37pm Nov 2, 2015 11:37pm
It's obviously important to consider every corner before decision, but i believe for starters it's completely alright to go with technical way of things and then of course it's very much okay to be increasing upon things.
  • #183
  • Nov 3, 2015 12:52am Nov 3, 2015 12:52am
Quoting skyway
{quote} Appreciate you don't buy it, you shouldn't.....nobody should unless he/she is a dumbass and I believe we are not. Having said that, few of us have found ways to exploit the price. 'How and show me' you ask if not you will not believe. You go through this mathematical process with this thread discussion to establish this for yourself, fully appreciate and understand. As to the 'how and show me' stuff it won't happen-stop dreaming, if you are on this side you won't too, I'm sure you agree with that. BUT the least we can tell you is YES it...


Hahaha... ee tou ko ko toh hm sek chong lang lek..ngoh choy lei tho ong ah......hao swea toh ko cha ....tai sei.


GS
  • #184
  • Nov 3, 2015 2:13am Nov 3, 2015 2:13am
Quoting tashkent
Therefore, i really can't make a sense of anything that tries to predict the future by back-testing the past data. that historical data, is something like a decomposed organic body from which left only chemical components/elements. back-testing the historic data is like trying to resurrect a life organism out of chemical elements and trying to test how this body will react to a given live condition. Because this is what the current price exactly does - the market reacts to live conditions of this moment through complex interactions and as...
a question for you , if you are charged a certain price for any goods/product over a period of time, lets say for the last few months and today that product
is 80% cheaper would you consider buying it ? if so, how did the past/history of the price affect your decision making process of today ? (summersale/wintersale,etc.)

OTOH , if one set a stop loss level on an intermediate low , which was printed in the past , how does it affect his decision making if price breaks that low today ?
so does the past/history have any influence in entering and exiting the markets ? unless you use market orders , it sure does

is value random ? < Price + Time = Value

is the market chaotic ? < yes

is the price predictable ? < no
  • #185
  • Edited 4:25am Nov 3, 2015 4:11am | Edited 4:25am
sounds very much like your talking in Fractal terms to me ,the highly repetitive way of the market governed by nature ,if you took lower tf patterns its all the same ,but thats what your doing ,


Quoting Captain Jack
{quote} The EURUSD price map as posted here long ago was a projection of price based on lower time frame price patterns... unlike the map on AJ that I'm trading now... it follows an already established pattern so I did not have to project it. This is a good example of when I say there can be multiple patterns that look similar within the pair... but the child pattern for each structure on your posted chart exists within the lower time period charts. You may have to go back in chart history to find them -CJ-
Attached Image (click to enlarge)
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On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #186
  • Nov 3, 2015 5:01am Nov 3, 2015 5:01am
Quoting Bones
sounds very much like your talking in Fractal terms to me ,the highly repetitive way of the market governed by nature ,if you took lower tf patterns its all the same ,but thats what your doing , {quote} {image}
I've preached patterns as fractals for many years now Bones... some people get it, most don't. It has a lot to do with mapping price, but like I said, I rarely map it, I just trade.

Some people actually pay attention closely to what I say, and when I say the tick pattern is the DNA of lager patterns they will understand that it's the smallest fractal of the pattern. The fractals mature across each and every time period... from the smallest to the largest, at varying times, based on the time period.

Been preaching it for years now....

-CJ-
A man is not defeated when he is beaten, he is defeated when he quits.
  • #187
  • Nov 3, 2015 5:03am Nov 3, 2015 5:03am
we see eye to eye more and more Chris
for me this phenomenon only happen with large amounts of people looking at the same thing

Quoting albchr
{quote} http://www.forexfactory.com/showthre...38#post8545938
On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #188
  • Nov 3, 2015 5:05am Nov 3, 2015 5:05am
thanks Captain I've defiantly come out of the conversation wiser ,
Scott will tell you pattern recognition is not easy for me ,but seeing him do it day in day out I know it can be done ,



Quoting Captain Jack
{quote} I've preached patterns as fractals for many years now Bones... some people get it, most don't. It has a lot to do with mapping price, but like I said, I rarely map it, I just trade. -CJ-
On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #189
  • Nov 3, 2015 5:09am Nov 3, 2015 5:09am
Quoting Bones
we see eye to eye more and more Chris for me this phenomenon only happen with large amounts of people looking at the same thing {quote}
I think we've always seen eye to eye Tony. We just tend to get bull headed with each other sometimes. ... lol

I personally think it goes a bit deeper brother. It's not "just" that large groups of people look at the same things. We're wired such that there really isn't much choice. Just my humble opinion of course.
Ghost Rider - WWTBMD?
  • #190
  • Nov 3, 2015 5:10am Nov 3, 2015 5:10am
Quoting Bones
thanks Captain I've defiantly come out of the conversation wiser , Scott will tell you pattern recognition is not easy for me ,but seeing him do it day in day out I know it can be done , {quote}
The hardest thing I had to do was start actually looking at the patterns and not all the other BS the forex world said we needed to look at. They are wrong!

I hope you can continue to gleam bits of info from all the distortion that surrounds us... it makes a world of difference if you can tune it out.

-CJ-
A man is not defeated when he is beaten, he is defeated when he quits.
  • #191
  • Nov 3, 2015 5:13am Nov 3, 2015 5:13am
Quoting albchr
{quote} I think we've always seen eye to eye Tony. We just tend to get bull headed with each other sometimes. ... lol I personally think it goes a bit deeper brother. It's not "just" that large groups of people look at the same things. We're wired such that there really isn't much choice. Just my humble opinion of course.
It's kinda like the old post I dug up and threw into the other thread... about me showing you something, 4 different ways, in 3 patterns. I actually showed it 4 times , but nobody seems to see the 4th as it was presented... they believe the 3 patterns, but miss the 4th...

-CJ-
A man is not defeated when he is beaten, he is defeated when he quits.
  • #192
  • Nov 3, 2015 5:14am Nov 3, 2015 5:14am
your right Chris ,it can't be helped ,but when I read about it ,volatility is important ,I already couldn't get my head around it till I thought 1 or 100 people is too erratic to make it work lol ,like anyone I question and look to justify a thought process of what I'm seeing
end of the day I suppose its not important


Quoting albchr
{quote} I think we've always seen eye to eye Tony. We just tend to get bull headed with each other sometimes. ... lol I personally think it goes a bit deeper brother. It's not "just" that large groups of people look at the same things. We're wired such that there really isn't much choice. Just my humble opinion of course.
On-site guru & also FF member's' psychiatrist, when not drinking tea
  • #193
  • Nov 3, 2015 5:28am Nov 3, 2015 5:28am
Quoting Captain Jack
{quote} It's kinda like the old post I dug up and threw into the other thread... about me showing you something, 4 different ways, in 3 patterns. I actually showed it 4 times , but nobody seems to see the 4th as it was presented... they believe the 3 patterns, but miss the 4th... -CJ-
Quoting Bones
your right Chris ,it can't be helped ,but when I read about it ,volatility is important ,I already couldn't get my head around it till I thought 1 or 100 people is too erratic to make it work lol ,like anyone I question and look to justify a thought process of what I'm seeing end of the day I suppose its not important {quote}
Ghost Rider - WWTBMD?
  • #194
  • Nov 3, 2015 7:53am Nov 3, 2015 7:53am
Quoting PrymeTyme
{quote} a question for you , if you are charged a certain price for any goods/product over a period of time, lets say for the last few months and today that product is 80% cheaper would you consider buying it ? if so, how did the past/history of the price affect your decision making process of today ? (summersale/wintersale,etc.) OTOH , if one set a stop loss level on an intermediate low , which was printed in the past , how does it affect his decision making if price breaks that low today ? so does the past/history have any influence in entering...
at first i was going to explain my point and answer your questions but i thought you can do that much better then me just reading more about the meanings of the terms "price", "value" and "rate".
once we understand why "rate" is a more appropriate term to use in forex, then we learn that using the words like "cheap", "expensive", "overbought" and "oversold" in reference to a currency exchange rate is meaningless. the rate is just an expression of one currency in terms of another right at this moment. therefore, yesterday's rate does not dictate today's rate.
As Above, So Below
  • #195
  • Nov 3, 2015 8:34am Nov 3, 2015 8:34am
Quoting the redlion
Technical Analysis alone will not give you an edge
Interesting thoughts, a job well done for the learn of this issue.
But let me disagree with you.

For example, I successfully use technical analysis. For me it's the basis of the analysis. Fundamental analysis can be used in combination with a technical, but not necessarily.
Graphical models, wave analysis, indicators, candlesticks, an analysis based on support and resistance levels - excellent working methods of technical analysis.
It is important to experiment, try, look for options that are suited you personally.
I understand that my opinion might cardinally different from yours. But we are here to share opinions and discuss.
Good luck to all.
--------
GD
Looking for partners
  • #196
  • Nov 3, 2015 3:18pm Nov 3, 2015 3:18pm
From an Auction Market perspective, this is just my opinion about Technical Analysis
Auction Markets produce hard information of two sorts: price data (technical) and value data (market generated).
Again, this just my opinion

Price is a linear, one dimensional variable.

Value is a non-linear two dimensional variable (price over time).
Profiles convert one-dimensional price data to two-dimensional value (price over time).

Price Data:
1. Ticks and transactions reported during the day.
2. End of day "daily summary" of open, high, low, close, volume and open interest.

These data are basically one dimensional, tied to price. Price data are the raw material for 'Technical Analysis'.
Technical analysis encompasses charting (gann, elliot, candlesticks, bar charts, etc.); price and pace indicators (moving averages, relative strength, oscillators); sentiment (psychology, consensus, volume analysis, open interest analysis); and price projection (spreads, seasonals, cycles).

Technical analysis is, briefly, a search for indicators, for market timing. Is the market ready to trend? Is a trend finished? Is the public bullish?, bearish? Many, many indicators can and have been developed. Often, different indicators give conflicting signals.

Value Data:
1. Meta-Profile Data (tpos)
2. Overlay Demand Curve (composite profile)

Unlike one-dimensional technical data, Value data is developed from a combination of time and price.

Markets are complex, self-regulating and driven by feedback.

Meta-Profile is the only tool we know that decodes the market's feedback into Value. This finding lies at the root of auction market value theory. We find that the market's feedback becomes the principal arbiter, the limiter of how theory can be applied

Basic market analysis that applies the concepts of feedback, day value and market condition (multi-day value); and, 3) A set of axioms and observations forming the basic principles of auction market value theory.

Complex systems are generally nonlinear with feedback acting to continually adjust the system. There appears to be no hard and fast definition of a complex system.

Markets are driven by feedback; therefore new information comes in at the feedback rate.

1) Feedback occurs within the system (all agents observe the system and make changes in their behavior)
2) The system adapts to information from feedback (losers get out, winners increase holdings)

Feedback is diverse, affecting each agent or trader in a unique, personal way. The net effect of the feedback manifests itself in macrosocpic market parameters such as price movement and volume. But it is impossible and not even desirable to isolate a particular feedback element from any one of the agents; the useful observable is the net market change related to that element.

Feedback: change contains an element of remembering, agents behavior evolves thru feedback and adaptation

Looking at the complex market from a differential equation standpoint, a descriptive equation would likely be nonlinear (feedback does not behave linearly), non-homogenous (variables most likely could not be separated, even if they could be defined) and the coefficients are non-constant.

Although changing price and varying timeframes are observables from the market feedback, that variation makes the definition of value uncertain in its practice. Value is a macroscopic variable while market behavior parameters in a non-stable market are microscopic variables. Feedback cannot generally provide predictive information since the feedback depends on trader behavior. Market response time to a pulse is non-zero (feedback takes time)

Another characteristic of Auction Markets is a time delay in a market's response to a pulse of activity. Feedback from the widely scattered agents/traders takes time: each trader acts within his/her own interpretation of the market action and within his own timeframe. In a market driven by feedback the time to respond is variable depending on the impetus, And value, not price, guides the way

"Price" and price to price relationships (time-series data) are a linear, one dimensional variable.
"Value" is a non-linear two dimensional variable (price over time).

Using Price data and price to price relationships (time-series data), as opposed to Value data for Auction Market Analysis is like using a tape measure, to measure the amount of sugar required to bake a cake or using a tape measure to measure the amount of water it takes to fill a 50 gallon fish tank.

From an Auction Market Analysis Perspective if you wouldnt use a tape measure to measure the amount of water it takes to fill a 50 gallon fish tank. It is just as illogical to use "Price" and price-to-price relationships (price action) a (linear, one dimensional variable) to measure the amount of "Feedback" it takes to measure "Value" (nonlinear two dimensional variable (price over time).

The Fundamental difference between Auction Market Analysis and Technical Analysis is the Data used. Auction Market Analysis analyzes Value, Technical Analysis analyzes price.
You have to ask yourself, are you using the correct Data for the task at hand? Are you using the correct Data for questions being asked???????
Markets are not efficient, rather they are effective - Jones
  • #197
  • Nov 3, 2015 9:19pm Nov 3, 2015 9:19pm
Quoting Captain Jack
{quote} I've preached patterns as fractals for many years now Bones... some people get it, most don't. It has a lot to do with mapping price, but like I said, I rarely map it, I just trade. Some people actually pay attention closely to what I say, and when I say the tick pattern is the DNA of lager patterns they will understand that it's the smallest fractal of the pattern. The fractals mature across each and every time period... from the smallest to the largest, at varying times, based on the time period. Been preaching it for years now.... -CJ-...

Hello Captain Jack:

Can you explain what you mean by mapping price ? Do you mean marking up the chart with the major s/r levels ?

Also congratulations on your GBPAUD prediction ? Looks like it is on its way down just like you said it would.

Cheers

Borg
May the Forex be with you.
  • #198
  • Nov 4, 2015 1:32pm Nov 4, 2015 1:32pm
There has been some very convincing papers regarding the inefficiencies of markets in times of financial crisis, and bubbles. How much can that carry in day to day or intraday events I wonder... Lately to my view the market has been seemingly reacting to the positioning of the ECB and FED regarding their monetary policy... when data comes back positive for the US such as ADP,NFP,PCE the market seems to be in agreement with the hinting of rate hikes for the USD while the ECB is hinting at expanding its balance sheets, continuing QE = Dovish ECB/ Hawkish FED = USD +. I have not yet model a side by side statistical comparison to make this an empirical observation , It is my apriori.

I am also willing to accept a drift element to price as some here have put forth convincing arguments as to the predictability of price...
by drift I mean Trend , among "noise" (this word seems to be more palatable here in the forums) which is why TA patterns would still be highly inaccurate even if we accept price clustering at certain levels.

"noise" =a function of of random normally distributed simulation ( mean =drift , standard deviation= volatility of the security [ either historical, implied] )
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at this point the market predictability would boil down to infinite simulations of P^e(noise) , unless a systemic shock such that creates forces that deviate the day to day "noise".

for those that use R , this is how I would model a monte carlo simulation of my above assumptions
p0<-p
r<-rnorm(x,mean=last(SMA(eurusd.log,n=22*12)),sd=last(runSD(eurusd.log,n=22)))
log.price<-log(p0)+cumsum(r)
prices<-exp(log.price)


how can you defend your idea that fractals, price patterns, or any other T/A can be accurate at predicting the events or "behavior" that drives participants to place orders? if historical price data could be predictive it would actually predict real events in our world ahead of time or at the very least predict the thoughts , feelings, decision making process of market participants.

I think too often we start reading too much into the tools we use.... I do not see fractals if we are using a box plot, or a histogram or a line chart with open,high, low, close lines

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however we do, if we use bar or candle charts
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is it our tools that make us see the patterns ? or are the patters actually there?

Neuro science has taught us that the brain is easily fooled, it seeks patterns, it anthropomorphises phenomena, yet can we think we are accurate when looking at charts?

http://www.michaelbach.de/ot/ the link is optical illusions that will illustrate how our adaptations can interpret inputs.
AVT INVENIAM VIAM AVT FACIAM
  • #199
  • Nov 4, 2015 1:45pm Nov 4, 2015 1:45pm
Quoting tashkent
Before discussing the randomness of the price, one need to have a clear understanding of the market (and in no way i am claiming that i clearly understand the markets). my simple mind tells me that financial market is a complex system with hundreds of components (instruments, mechanisms) interacting with each other every single moment and adapting to the outcomes of these interactions. Just to give a few example for financial market components: capital markets (stock markets, bond markets), commodity markets, money markets, derivatives markets,...
I have read your opinions here in the thread and I don't disagree with you...perhaps our disagreements would be mostly semantic.
I do have a question (possibly even rhetorical) how would you ascertain value in forex?
AVT INVENIAM VIAM AVT FACIAM
  • #200
  • Nov 4, 2015 1:49pm Nov 4, 2015 1:49pm
Quoting mirrfx
{quote} while I do agree that market is complex being, and price movement has various factors in play.However,there are major players which is mainly responsible for price movement .I called 'it' simply as 'Big money'(not Smart Money) because they also get it wrong time to time. Regarding backtesting,theoretically it is possible to predict the future by backtesting the past datas simply because patterns('habits') repeat again and again and will be repeating again and again in future also.The only problem is in the complexity in devising an computer...
seemingly yes, what you say should be correct... .However,there are major players which is mainly responsible for price movement .I called 'it' simply as 'Big money' ,

when all market participants place orders with many different goals and interest in mind.... even with intent if the the returns are so chaotic that vastly more intelligent people than me cannot figure out if this thing is random, mostly random, sometimes random, random with exceptions..... the intent becomes irrelevant.

if it walks like a duck and quacks like a duck..... is it some how a lion?
AVT INVENIAM VIAM AVT FACIAM
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