What are the big Ideas in successful trading? | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Planning: A Key to Successful Trading, by Joe Ross 4 replies

Successful Trading & Determining the Probability of a Trading System 10 replies

Successful Fundamentals trading (DAY Trading WILL BE Ignored) 17 replies

Big Pig's Successful Day Trading 43 replies

Honest answers please! Are you successful trading on Forex or not? 102 replies

Attachments: What are the big Ideas in successful trading?
Exit Attachments

What are the big Ideas in successful trading?

  • #41
  • May 28, 2016 7:35am May 28, 2016 7:35am
Quote
Being objective in the method you use to measure and define a 'trend' or 'range' does little to avoid the fact that accepting such a definition is completely subjective.
I'm not sure I understand fully this sentence. I understand it in the sense that it brings the question about where is the point that separates "this is a trend" from "this is a range". It is like if you would try and define the limit this is black and this is white over a shade of grey. It would indeed be subjective and useless.

I first thought a range was special because it was mean-reverting (opinion). I found no evidence of mean reversion in a range (evidence based rejection of the belief). Of course the price stays around an average price since there is no trend but nothing I could identifier MAKES it stay there. Nothing forces it back to the mean if it wanders too far away from it. Not only I found no "rubber band effect" but I found that if the price goes too far it tends to escape easily (call it a breakout). Without evidence of this reversion I can only consider a range to be no more than a trend with a slope of zero (just a special case). Should a strong evidence that there is rubber band effect, at least some times, I would have to reconsider. This is the Bayseian idea: prior belief -> observation of evidence -> posterior belief.
Quote
You are being objective in saying that within a chosen price series your chosen model objectively defines a 'trend' and/or 'range'. Of course, when you define your scope of study you can objectively describe what has happened in the past. The market (the totality of buyers and sellers) may not share your definition and the limits you set.
Yes it is only the projection of a model onto the recent data. George Box said "All models are essentially wrong. Some are more useful than others". There is no need for the market to share the point of view of the model. Neither the Nile river needs to accept the modeling of its levels of water. What is important is to reject the model when the evidence makes it out of the limits.
Quote
Allusions to 'trends' in the present/future such as in a statement like "the market is trending" or your own "shall I stay with the down trend..." are necessarily a projection of an expectation of the future; a notion that does not rise above the level of an opinion.
Quote
the very idea of trading with the 'trend' (or against it, if you fancy losing) contains a belief about the nature of markets and an inherent expectation of the future
It implies the belief that the price that trends will continue to trend in the same way in a short term future. I've shown in another thread that the trends of the markets are much more stable than the spurious trends in a generated random market (by boostrap). The data validate the belief: trends do exist. The second implied belief is that this will continue to be so. It has been so for hundreds of years and no evidence of the contrary came. Should evidence come models would have to be changed.

Quote
Objectively defining what constitutes a 'trend' (even if you use a complex definition involving different fractal resolutions) cannot avoid the fact that speculation based on this concept is very much rooted in one's personal opinions.
When you drop an object you expect it to fall. When you drive your car you expect the road to be continuous. When you drink a glass of water you don't expect the water will evaporate before it reaches your mouth. When you walk in the forest you don't expect to encounter a unicorn. So yes it is all opinion based if you will so. It is opinion based like absolutely everything in our lives. My opinion is that unicorns don't exist. Should I meet one I would reconsider. Do they exist or not at the end of the day is not that important.

And no, following the trend is not only an opinion or a choice. It is again based on stats. What is a choice is the scale of you trend.
No greed. No fear. Just maths.
  • #42
  • May 28, 2016 11:35am May 28, 2016 11:35am
Quoting PipMeUp
{quote} The data validate the belief: trends do exist. The second implied belief is that this will continue to be so. It has been so for hundreds of years and no evidence of the contrary came. Should evidence come models would have to be changed.
I thought so as well. However, I recently read Steidlmayer's book, and there is a clear statement (chapters 3 and 4) that the '60s commodities markets tended to be mean-reverting (when he developed the market profile), whereas with the advent of commodity trading funds the volatility significantly increased so his mean-reverting techniques did not work anymore.

k
  • #43
  • May 28, 2016 12:17pm May 28, 2016 12:17pm
A summary of what's going on so far. Apologies if I did not capture the essence of your post or if I missed yours.

feline207:
- Humility as a core quality: Whenever you start to think that you are bigger than the game you play, things could happen that will get you out of it really fast.
- Realistic expectations: It is important to acknowledge what you are part of as a trader, and do not expect more and do not expect less than what is realistic for your job.
- There is no escape from the learning curve: Also, avoid listening to others predictions and analysis, because it doesnt develop your own ways.Looking at the market from the eyes of another person is pretty much impossible, so there is no way to avoid building your own neural pathways, the more you postpone that the later you will start seeing desired results.
- Be wary of terms like trend.

Neio:
- Less is more: Real cognitive ability in trading is being able to focus on the relevant bits and deliberately ignore the rest.
We need to ignore the noise and look for the most important cues that we can use to make better decisions in our trading.

RTM:
- Success = Discipline: plan your trade(s), trade your plan. patience. success is discipline friends.
chartsndream:
- Risk management & Sizing are paramount
- You are going to have losing trades
- The complexity of the market has simple solutions

jen101:
- Less is more: When I started I used to look at everything. Nowadays I'm a one trick pony. I only trade 2 pairs and I look for the same thing over and over. Boring as hell, but I plod along nicely.

olsen-yersen:
- Only quantitative methods and ideas are successful in trading

albchr:
- Supply and Demand
- Market is fluid -> traders must change
- Probabilities; not certainties
- take some and leave some

skillz16:
- Focus on the price
- Backtests do not tell the real story
- Automate risk controls
- Tracking your statistics

simond2002:
- Method Method Method: I reached the conclusion that one can only arrive at a trading method by seeing the market through our own eyes. Having read the first post, however, I'd add to the statement and say that perhaps seeing the market through our own eyes is actually a step along a journey that begins with hopelessness. I "hope" this is wrong, but I've got a feeling it might be right.

dancingphil:
- PROBABILITY MANAGEMENT is the ART of trading successfully.
- Forex trading is akin to a martial art, most especially of a martial mind.

PipMeUp:
- Bayesian thinking: Trading is no more than modulating the exposure over time after all. TP, SL or closing half the position are just special cases of a Bayesian MM.
- By statistical inference, trends exist: I've shown in another thread that the trends of the markets are much more stable than the spurious trends in a generated random market (by bootstrap). The data validate the belief: trends do exist. The second implied belief is that this will continue to be so. It has been so for hundreds of years and no evidence of the contrary came. Should evidence come models would have to be changed.

skyway:
- Discretion is necessary: For objective models where even a robot will come to the same conclusion, then the plausibility of whatever is more readily accepted. It's in the subjective models which relies on individuals belief that draws a lot of contention. Managing probability is math hardly an artform which must derive it's nature from the subjective discretion applied.

hanover:
- The market does what the market does: Decisions should be based on probabilities, and levels that are recognized by the 'market'. The market doesn't care about levels related to the trader's P/L.
- Randomness is the real enemy: To whatever extent manipulation creates an indelible and recurring pattern in price movement, then discover the pattern, build a trading system around it, and you're on your way.

big-cheez:
- Trade with the big money

iDoubleStoch:
- Avoid directional trading
- Models of trading are required: Retail Forex Trading is about liquidity and the imbalance of buy/sell orders. It is about "Dumb Money" and its Fear & Greed. Retail Forex Trading is a PSYOP where one either learns how to identify Market Maker Accumulation Phases or one blows their account without such an understanding.

bauta:
- It's not a zero sum game; it's a negative sum game for traders: cost = spread + commission + swap + slippage + latency + virtual dealing + delaying + + +
I did learned that we are not on two ends equally, we are at the end where cost favors the other side.
be prepared emotionally to deal with that, you are playing baseball where your turn get out at 2 strikes, the other team get out at 4 strikes. Odds are the other team will win. (not equally game)

Feo:
- Dream big and stay inspired

mzvega:
- Element of time is very important: Measuring price against price does not have the same informational value as measuring "price over time"...

Atokys:
- The idea of trend itself is subjective
Build good relationships with others.
  • #44
  • May 28, 2016 12:55pm May 28, 2016 12:55pm
Your summary of my input is correct
  • #45
  • May 28, 2016 11:24pm May 28, 2016 11:24pm
How many traders reading this thread, or even on the whole forum, were able to make big profits from the recent bear move in EUR.USD? It didn't even cross its SMA-50 on the daily from about 1.37 to 1.10! That's $27,000 per lot with no effort and no pyramiding. And if you'd added to your position on the retraces you would have made a life-changing amount of money. The same goes for USD.JPY, S&P, gold, oil, and so on. It was so easy, right?

Wrong. I bet there aren't many traders here who sold near 1.4 and bought near 1.05 (in the case of EUR.USD) with not much trading in between. I was like most people, and tried to outguess the market, took profits way too early, waited for retraces that never came, believed it couldn't go any lower and took longs, and so on. I, like most people, only made a fraction of what was available on that move. I'm kicking myself now. These opportunities don't present themselves very often, especially on the daily, and I knew what to do but I just didn't do it. Disgraceful.

Jesse Livermore always said that it was never his thinking that made the big money for him. It was always his sitting. That means that once he found himself in a good position he never got out of it until the bitter end. I know that Livermore was ultimately a loser but that was due to a different problem: he didn't move a portion of his profits to an untouchable non-trading account, even though that's exactly what he advised others to do.

In short, the big idea to successful trading is to catch and exploit the big moves. If we can keep our trading account together during the accumulation and distribution phases, hop on shortly after the big move starts, hop off shortly after it finishes (and not before), then we stand a good chance of winning. And if we bank some of those winnings in a separate account each time then we stand a good chance of becoming rich
You reap what you sow.
  • #46
  • Edited 8:48am May 29, 2016 6:33am | Edited 8:48am
Quoting PipMeUp
I'm not sure I understand fully this sentence.
You may objectively define a 'trend' or a 'range' according to a particular method but accepting that definition is a purely subjective matter.

You may apply your model to the market and conclude that "the market is currently trending up" while another person may apply his own definition to arrive at a different or even contrary conclusion. Shouldn't this be obvious?
Quote
Yes it is only the projection of a model onto the recent data. George Box said "All models are essentially wrong. Some are more useful than others". There is no need for the market to share the point of view of the model. Neither the Nile river needs to accept the modeling of its levels of water. What is important is to reject the model when the evidence makes it out of the limits.
My post wasn't a critique on how right or useful your model is. The discussion is regarding objectivity/subjectivity. Accepting any definition of a 'trend' is a subjective matter. Alluding to your tools doesn't avoid this. To substantiate the claim that a statement like "The market is currently trending" is an Objective statement one would have to demonstrate that at least an overwhelming majority of observers share this view and it is not, in fact, based on your own subjective interpretation.
Quote
It implies the belief that the price that trends will continue to trend in the same way in a short term future. I've shown in another thread that the trends of the markets are much more stable than the spurious trends in a generated random market (by boostrap). The data validate the belief: trends do exist. The second implied belief is that this will continue to be so. It has been so for hundreds of years and no evidence of the contrary came. Should evidence come models would have to be changed.
Good news for me I guess.
Quote
When you drop an object you expect it to fall. When you drive your car you expect the road to be continuous. When you drink a glass of water you don't expect the water will evaporate before it reaches your mouth. When you walk in the forest you don't expect to encounter a unicorn. So yes it is all opinion based if you will so. It is opinion based like absolutely everything in our lives. My opinion is that unicorns don't exist. Should I meet one I would reconsider. Do they exist or not at the end of the day is not that important. And no, following...
Following the 'trend' is based on your personal opinions and assumptions about the market. Using statistics to arrive at these conclusions doesn't change this.

You release a ball and it falls predictably. The predictability and repeatability of what will transpire based on physical laws lead to the general acceptance of the objectivity of a statement like "given <certain conditions>, balls fall when released".

Quite obvious to see how your analogy is spurious when applied to markets. If price movements shared the predictability of "water entering your mouth when it is drunk" then there would be no need for participants to hedge against market uncertainty. Do I have to continue? It just seems silly for me to have to explain how the expectation of future market events does not rise beyond an opinion given the uncertain nature of markets.

Definition of opinion in this context:
1. A belief or judgment that rests on grounds insufficient to produce complete certainty.
2. A personal view, attitude, or appraisal.

http://www.dictionary.com/browse/opinion

I shall repeat these again in case we stray away:
- Defining what constitutes a trend is a subjective matter. It does not command the force of objectivity.
- Your expectation of the future in what is essentially a complex game where the outcome is uncertain is an opinion.
  • #47
  • May 29, 2016 6:39am May 29, 2016 6:39am
Quoting shellsnail
Want to start a thread to throw around and discuss some big ideas in trading. I'll start with some of my thoughts. 1. Hope v.s. Wishful Thinking The dictionary defines 'Hope' as "a feeling of expectation and desire for a certain thing to happen." When such expectations are grounded in objective reality, hope is good. Otherwise, hope is dangerous and is in fact wishful thinking. The difficulty of trading is in telling objective reality apart from subjective thoughts. When someone first starts out as a trader, he or she has a lack of trading knowledge....

there is no bigger idea then others.trading is life.sucess and and fail walk together
live die repeat

suceesful trader
little sense of market sentiment in general
strategy with true logic behind
money manegement
no over-enjoy
self control
no upset
plan

Attached Image
  • #48
  • May 29, 2016 6:41am May 29, 2016 6:41am
Quoting shellsnail
Atokys: - The idea of trend itself is subjective
Thanks, however, I do not regard that as a 'big idea'. I have never really shared what I consider to be the 'big ideas' because I wouldn't be quite as capable in doing them as much justice as Edwin Lefevre in his magnum opus Reminiscences of a Stock Operator.
  • #49
  • May 29, 2016 7:55am May 29, 2016 7:55am
Quoting NorthTrader
I know that Livermore was ultimately a loser but that was due to a different problem: he didn't move a portion of his profits to an untouchable non-trading account, even though that's exactly what he advised others to do.
He actually did do that. The location of his assets wasn't the problem, a lifetime of untreated depression was.

Livermore's fate doesn't concern me, his ideas are what matter.
  • #50
  • May 29, 2016 9:07am May 29, 2016 9:07am
Quoting Atokys
{quote} He actually did do that. The location of his assets wasn't the problem, a lifetime of untreated depression was. Livermore's fate doesn't concern me, his ideas are what matter.
Sorry, you're right. I thought he died penniless but he actually had $5m left when he shot himself. This was about $100m less than what he gained in 1929. $5m was still a heck of a lot of money in those days, but I think he considered himself a failure for losing his fortune. In fact this was maybe his biggest flaw: linking winning trades to personal success and losing trades to personal failure. You just can't do that with trading, because no one really knows what the market will do next. So there shouldn't be any concept of success and failure, right and wrong. The market gives what it gives, and the only thing you can really control is your risk (slippage and inter-session gaps notwithstanding). Easier said than done though.
You reap what you sow.
  • #51
  • May 30, 2016 4:30am May 30, 2016 4:30am
Quoting Atokys
{quote} You may objectively define a 'trend' or a 'range' according to a particular method but accepting that definition is a purely subjective matter. You may apply your model to the market and conclude that "the market is currently trending up" while another person may apply his own definition to arrive at a different or even contrary conclusion. Shouldn't this be obvious? {quote} My post wasn't a critique on how right or useful your model is. The discussion is regarding objectivity/subjectivity. Accepting any definition of a 'trend' is a subjective...
No the definition of a trend is nothing subjective. What is subjective is the SCALE one choose to define the trend because of the fractal nature of the price movement. Should you use a baysian estimator or a SMA or a MACD or a regression line or lower highs and lower lows, E/U goes down on the scale I chose arbitrarily. Should someone else had chosen a scale 3-4 time smaller he would have found a up move last week. I would have as well using his scale.
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSD-H4.png Size: 29 KB


Quote
It just seems silly for me to have to explain how the expectation of future market events does not rise beyond an opinion given the uncertain nature of markets.
We just don't give a shit of knowning if the trend will continue or not. We care that the markets will keep trending some time. That the trends are stable. That the price will keep being multiscale. That it will keep being heteroskedastic. That the price series will continue to be autocorrelated...


Now I will just stop feeding the troll as you just do your best to go nowhere.
No greed. No fear. Just maths.
  • #52
  • May 30, 2016 6:55am May 30, 2016 6:55am
Quoting PipMeUp
No the definition of a trend is nothing subjective...
All methods of defining trends compare various combinations of historical price points. The direction of the trend depends upon the method we use to perform the comparison. We have an enormous supply of historical points to use to determine trend. As such, we can determine as many instances of trend as we please, in any direction that we please.

There is no way to determine the current trend, or even define what current trend might mean; we can only determine historical trends.

There is no such thing as the trend; there are countless trends, depending on the method we use to determine a trend.

When we speak of trends, we are speaking, necessarily, from some or another view of history. As such, we are necessarily projecting our own definitions.

You may objectively define a trend one way and arrive at some conclusion. Another observer may objectively define a trend a different way and arrive at a different conclusion. Being contingent on the observer, 'trends' are thus Subjective.
Quote
We just don't give a shit of knowning if the trend will continue or not. We care that the markets will keep trending some time. That the trends are stable. That the price will keep being multiscale. That it will keep being heteroskedastic. That the price series will continue to be autocorrelated...
All well and good. But again, I am not commenting on the usefulness of your model in serving its intended purpose, im sure its a fine model in that regard.

Once again, here is the definition of 'Opinion':
1. A belief or judgment that rests on grounds insufficient to produce complete certainty.
2. A personal view, attitude, or appraisal.

So if Mr. Speculator studies charts from centuries past to the present and empirically arrives at the conclusion that his trading strategy will be profitable because it capitalizes on an enduring property of markets this does little to address the point that each trade is based on an opinion of an uncertain future outcome.

Quote
Now I will just stop feeding the troll as you just do your best to go nowhere.
Come now, Mr PipMeUp, no need for namecalling.

There are many accomplished speculators who will admit that trading the markets is a personal matter. The abhorrence to making personal committments, while cute, is really quite silly.
  • #53
  • May 30, 2016 1:30pm May 30, 2016 1:30pm
Quoting PipMeUp
{quote} No the definition of a trend is nothing subjective. What is subjective is the SCALE one choose to define the trend because of the fractal nature of the price movement.
Yes.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #54
  • Jun 4, 2016 4:53pm Jun 4, 2016 4:53pm
Quoting mzvega
From an Auction Market Value Theory perspective......................... Market generated data/info is closely tied to something real and observable in the market;whereas an indicator is the result of a computation--typically from a moving average related process, removed from observation. Using "market generated information" means using only inputs or information provided by the market itself. For example, using only a market's high, low, and closing prices in your analysis. What makes the high, low, and closing prices market generated info, distinguishable...
From an Auction Market Value Theory perspective..........

If you break the data down to its smallest measurable (quantifiable) measure the market consists entirely of price time events (units/tpo's). This is not subjective. Every price reported in the market has a time element. This is set by the market itself.
Attached Image (click to enlarge)
Click to Enlarge Name: tick data.JPG Size: 174 KB


Raw market data is not a linear series
What happens next is the data is "subjectively" broken into TF's ( 1m, 5m, 15m, 30m.etc.) depending on the viewer. This artificially skews the data. Each place where the data has been "subjectively" broken into TF's creates a high and a low. This is "subjective" info because it is biased by the observer's choice of TF. Already you have "flaws" in your data set.

Now that the data has subjectively been broken into TF's. The data inside timeframe is now "sorted" (rearranged) into a linear "series" from high to low forming a bar/candle. Now you have skewed your data set once again. Remember the tick data didnt start as a linear series. Your TF's only look like a series of highs & lows because you manipulated the data to do so. This is not "Market Generated info".

Bar chart data, the high & low was determined by the viewers choice of TF, not set by the market itself, and "price and the time which it actually occurred is removed by sorting/rearranging the data into a high to low series.

A bar/candle only has 4 points of reference. OHLC. Each one of the values is the result of skewed & manipulated data process.
A candlestick "high" is not a "market" high. It only "looks" like a high because thats where you chose to break the data into time increments (tf's). The candle open & close are determined again by the viewers choice of TF.

Using bar charts (TA) uses the HL's of candles as S&R (blue lines). These are not set by the market. The HL's are created & determined by the viewers choice of TF, not the market. TA will use these blue levels, to determine a trade, long above the break of upper trend line, short below
Attached Image (click to enlarge)
Click to Enlarge Name: TA1.jpg Size: 172 KB


From an AMVT perspective (using market generated info), prices and the time which they occur are used to determine S&R levels. This price (upper yellow) was used 3 times over time, a failure in prices being used higher. This price is creating a resistance. This would be the upper BO level, determined by price itself. Not biased by the TF (candle HL) of the observer.

The price (lower yellow) was used 3 times over time, a failure in prices being used lower, this price is creating a support. This would be the lower BO level, determined by price itself
Attached Image (click to enlarge)
Click to Enlarge Name: amvt 1.JPG Size: 189 KB


Compare upper BO entries, one from using TA bar chart (upper blue line) and one using "market generated info" (now marked in green)

From a TA perspective, in the instance of a false bo you know you are wrong at your entry BE -minus fees. Or worse a SL strategically placed in the area of the AMVT entry.

From the AMVT perspective the entry of the BO (now green) in the case of a false BO you know you are wrong the same place the bar chart PA trader is wrong. That is the planned exit for a trade gone wrong from an amvt perspective

When you look at it from an AMVT perspective, the TA bar chart/price action trader in almost every instance places their entry on an amvt exit, and uses the amvt entry as a SL.
Attached Image (click to enlarge)
Click to Enlarge Name: comare both entries.JPG Size: 91 KB


Using market generated data, levels set by the market itself, provide different S&R levels creating better timed entries & exits, than using skewed, resorted data, created by a bar chart.
Attached Image (click to enlarge)
Click to Enlarge Name: candle all entry.JPG Size: 71 KB


Rule 1 in AMVT is "data validity" is your data fit for the task at hand? Bar chart data is skewed and removes the "time" element from price.

AMVT "re-formats" the skewed OHLC data into its original "price time" (tpo) format

Market data in its rawest form is 2 dimensional,

But why is it more popular to view a 1 dimensional bar chart for a market that reports 2 dimensional data? Why? Because it's FREE. It is cheap easily available. Its provided FREE on every chart platform, and it takes no effort from the trader.

Retail & Novice traders take the path of least resistance/effort when it comes to learning and trading the market.

Tick data (price in its rawest form) is reported as price and the time in which it occurred. In order to access raw tick data (price time data) you either have pay, create indictors, subscribe to different type of platform, work it out on a spreadsheet etc. It actually takes work/effort.

Not very attractive for those who chose the path of least resistance/effort. It is so much easier to look at a bar chart which is a
1 dimensional linear display of 2 dimensional data. Because its free, takes no effort, and the work is already done for you in the form of a bar chart.

90% of traders lose probably because 90% of traders use bar charts for analysis. It doesnt matter to a retail trader, that you can demonstrate mathematically how OHLC data is skewed from the onset. The retail/novice trader will always choose the path of least resistance/effort

I am not saying all TA is wrong, what I am saying is, all analysis that produces results from the use of Skewed data is wrong. These are the reasons bar charts & TA are non- permitted practices in AMVT. It's not the methods used in TA that are flawed, it's the data that is flawed. Using TA or bar charts is trading at best with poor data.

Following the trend using flawed data (bar charts) is subjective" because the nature of the data is "subjective", biased by the observer. And any statistics using a flawed data set wont change this, I agree.

Price over time is "context"

However, when using data generated by the market itself, not biased by observation (tf's) the trend is..... what the market says it is

The idea behind using market generated info is to remove your own opinion from the equation and allow you to trade the actual market, rather than trade what you believe the market should be doing. An advantage to using market generated data for your analysis is the results lend themselves well to statistical validation rather than a belief system.........just my opinion from an Auction Market Theory perspective
Markets are not efficient, rather they are effective - Jones
  • #55
  • Jun 4, 2016 6:45pm Jun 4, 2016 6:45pm
Quoting mzvega
{quote} From an Auction Market Value Theory perspective.......... If you break the data down to its smallest measurable (quantifiable) measure the market consists entirely of price time events (units/tpo's). This is not subjective. Every price reported in the market has a time element. This is set by the market itself. {image} Raw market data is not a linear series What happens next is the data is "subjectively" broken into TF's ( 1m, 5m, 15m, 30m.etc.) depending on the viewer. This artificially skews the data. Each place where the data has been...

Are you implying the current daily open is not the current daily open?
Are you implying the current daily high is not the current daily high?
Are you implying the current daily low is not the current daily low?

These questions are for understanding.
Not trying to be argumentative.
Thank you.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #56
  • Edited 1:56am Jun 5, 2016 1:40am | Edited 1:56am
Quoting TooSlow
{quote} Are you implying the current daily open is not the current daily open? Are you implying the current daily high is not the current daily high? Are you implying the current daily low is not the current daily low? These questions are for understanding. Not trying to be argumentative. Thank you.
Quoting mzvega
A candlestick "high" is not a "market" high. It only "looks" like a high because thats where you chose to break the data into time increments (tf's).
No offense taken.even I surprised myself on how badly I worded that statement
I apologize I should have worded it different. That sure didnt come out quite right..

I was referring to candlestick highs as it relates to how it is used in S&R.
highs used as a form of resistance. I used the word highs when I should have used resistance.

A candlestick high is not an actual price resistance level, it just marks the range of the candle tf. It looks/is used as like resistance. But there is no data using bar cart/candles to support that assumption.

The point I was trying to make is that drawing a line across candles highs doesn't make it a price resistance level, the actual prices where prices are being used determine S&R

A bar chart is linear and has only 4 pieces of info OHLC. What makes the high resistance? How many times did price test that high? Which prices in this range are creating S&R ? Which price was used most? Its hard to tell when you only have 4 prices to choose from.. The data (candlestick) only shows a linear "range" of prices, not the actual prices themselves.
Attached Image

Now if you re-format the data back to its original "price time" format, marking price and the "time" in which it occurred, you can see the "details" inside the candle range by looking at it in 2D
Attached Image (click to enlarge)
Click to Enlarge Name: example.jpg Size: 129 KB


The prices most utilized by Candlesticks, the high and low, are just the ones least valued (traded the least) by the market. Likewise, the open, in this case, was also quickly rejected, but was used by Candlesticks to form a base.
Candlesticks is using price, i.e. poor, non-representative data in their construction. Every day's high and low are those prices least valued by the market.
There's not enough trading (prices being used) in those areas (H&L) that creates any real S&R
Trading decisions taken on the basis of poor data are unlikely to prove to be good predictors of the market's future path or even provide a reasonable picture of the current market situation.

Now if you re-format the data back to its original "price time" format, marking price and the "time" in which it occurred, you can see the details inside the candle range and you can see which prices are creating S&R, which prices are being used most, which ones least.

Compare Candlestick representation with the representation of the same data (candle) using market generated info.
Both are representations of the same range of data.
Attached Image (click to enlarge)
Click to Enlarge Name: example 3.JPG Size: 50 KB
Markets are not efficient, rather they are effective - Jones
  • #57
  • Jun 5, 2016 5:26am Jun 5, 2016 5:26am
mzvega and PipMeUp: very interesting thanks a lot.
  • #58
  • Jun 5, 2016 7:53am Jun 5, 2016 7:53am
Quoting mzvega
{quote} {quote} No offense taken.even I surprised myself on how badly I worded that statement I apologize I should have worded it different. That sure didnt come out quite right.. I was referring to candlestick highs as it relates to how it is used in S&R. highs used as a form of resistance. I used the word highs when I should have used resistance. A candlestick high is not an actual price resistance level, it just marks the range of the candle tf. It looks/is used as like resistance. But there is no data using bar cart/candles to support...
Thank you for explaining your interpretation.
It is easy to understand.

There may be a flaw is your reasoning depending on how you define resistance.
Is resistance the point at which price fails the penetrate?
Yes would indicate using the high price because price failed to penetrate higher.
No would indicate an entirely different definition for resistance.

How do you define resistance?

What causes resistance in the market?
More sellers than buyers at a particular price at a particular time?
Yes would indicate your 2D interpretation supports this as there were the fewest buyers at the high.
No would indicate something else causes resistance.

What do you believe causes resistance?

By all means please refute my logic and point out any flaws.
Thank you for your time.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #59
  • Jun 5, 2016 8:38am Jun 5, 2016 8:38am
There are just THREE simple rules in trading (anything), assuming you do have capital:

1. Timing

2. Timing

3. Timing

Those who cannot catch the timing right, do create other rules like: money/risk, even doddy management, planning, ext. Some nice ideas, in general, which are good to follow, if timing is not your thing.

I do appologise, if offending someone here. Not having that in mind, really. Time is just the most important thing, among all other insignificanties or minorities I read about in this tread.
Maadik Hugiis. IQ 69.
  • #60
  • Jun 5, 2016 8:49am Jun 5, 2016 8:49am
Quoting MoneyZilla
There are just THREE simple rules in trading (anything), assuming you do have capital: 1. Timing 2. Timing 3. Timing Those who cannot catch the timing right, do create other rules like: money/risk, even doddy management, planning, ext. Some nice ideas, in general, which are good to follow, if timing is not your thing. I do appologise, if offending someone here. Not having that in mind, really. Time is just the most important thing, among all other insignificanties or minorities I read about in this tread.
The direction must be right, as well as, the time.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
0 traders viewing now