Can "Noise" Be Traded?
- Thread starter ktmexc20
- Start date
Quite right. My last post in this thread was similar to one that you made earlier on page 3 of this thread. Although our ideas were not identical, I will agree that there is considerable overlap. I did not intentionally "appropriate" the overlap and I should have acknowledged your ealier post. However, I confess that I only skimmed through the earlier submissions before posting my own. My apologies.
Here is the portion of the day that is the noise part.
The red line is the DU line for YM. You can see the 5 times DU is reached randomly and the price is migrating with less than 5 point YM bars mostly.
Correspondingly, the ES is running 2 and above tick 5 min bars. there are frequent "inside" bars then small BO's past bar ends.
You see "gausian" forms on YM volume at each end of noise.
Low volume gives you lateral moves on neutral and then volume bursts or pulses move the price off neutral temporarily.
Each chart shows little noise trading today relatively speaking.
The red line is the DU line for YM. You can see the 5 times DU is reached randomly and the price is migrating with less than 5 point YM bars mostly.
Correspondingly, the ES is running 2 and above tick 5 min bars. there are frequent "inside" bars then small BO's past bar ends.
You see "gausian" forms on YM volume at each end of noise.
Low volume gives you lateral moves on neutral and then volume bursts or pulses move the price off neutral temporarily.
Each chart shows little noise trading today relatively speaking.
Quote from Grob109:
I have read the thread since it's inception and I have reviewed it.
There are some really profound comments here and I feel the diversity is a quality thing. Different strokes for different folks.
I do trade noise.
My approaches to the markets key off making money primarily.
I feel noise is everpresent and it only comes into dominance when the indicators of the market go dormant and the pace of the market goes into DU and VDU.
This inactivity puts the market into a state I call drift. It is also termed "chop" by some.
Wouldn't this be askew to dormancy?
The easiest example of indicators demonstating a dominant noise condition is when realtavistic indicators cneter on the neutral and cannot reach the extreme levels where signals are given. Effectively the absence of delta (change) in price causes them to behave randomly.
By examining all fractals and crossing them with the range of possible volumes you get to see the bar tick length and it's std dev plus and minus reach convergence at lowest values.
In terms of elegence: Fractal fixed... Might there be layered considerations "if you will"...?
On this matrix you can divide the performance into all the paces of market performance. Noise is a fringe zone directly opposite and away from the most productive zones of making money (higher and highest paces).
This is the zone where "random walk and chaos theory best applies as a solution.
...as a solution... ? (Not as well read in the theories as I'd like to be at this time.
So I trade noise using volume as my indicator for price timing.
to orient to this look at a no noise portion of today. See attached. you will see that the ES (5min) is cycling and that the YM/INDU (2min) leads the ES. Also notice that the high/ low range of volume is small on the leading indicator (smart money of YM).
I must be mistaking my own cross reference, in that I have it as square, and another visualization square is muddy.
The day will get to a noise level when the least volume reaches 80 contracts per 2 mins on YM. The ratio of H/L volume will gain to a level of up to 5 times.
I do not trade noise using the same rules I use for all other paces (slow, medium, fast, and extraordinary.).
The channels of noise are "super" containers. The key operant of noise is the "neutral or centering" values. As a court testifying scientist who testifies on hydraulogy I can't get to the sand bar and riffle (rapids) illustration.
[color= purple]A reference to SOP ?[/color]
I draw an opposite to meandering association which would be the path of least resistance model.
A state of equilibrium.
In noise there is randomness in a context of a bounding container. The best picture I find for making money is this: A rubber band attached to price value and also attached to the neutral. To say it as abo did I would say the line of MLR is the neutral and the boundary is one deviation where the band on price strteches no further.
Abo Architecture.
Abo... LALOL !
As an aside, Exuberance is noted
The action is NOT to cycle from one side to the other. What is it? THe action is to pull away from neutral and then the stored potential energy is given up to pull to neutral as the kinetic action.
a force of central gravity kind a thing
DO NOT count on any underdamping that simulates cycling. All of this is because of the TC (time constant) of the system. The TC is MUCH longer than the harmonic or fundamental that cannot be created.
Beliefs ?
What insurance is there for when noise ends? The market wake up is telegraphed to you. It comes as a critical volume is reached on the extremes of the excursions. When the volume enters the slow pace region, you must discontinue the rubberband model. It is at this time you have the first potential for BO's instead of the guaranteed FBO's of noise.
...
An adjunct to post noise periods (after noise)is that the volume forms gausians of about 10 two min bars. In noise the gausian pattern is not formable and the volume lines are independnat in color and sequences. This random bar sequencing is a true measure of noise dominance.
...
Specifically, what I do is marinate. I enter on the boundary of the channel. I make half the run by getting to neutral. I may have to return to the entry value again before I exit. I hold at the low risk of the boundary condition. when the price finally goes to neutral and then begins to move to the opposite side I hold and exit (and reverse) on the boundary opposite and come back to neutral at the end of the stretch.
What I described is making money by going away from neutral and back again. Each pair of these gives me two profit turns, where I can come within a tick (market orders dictate that at best) of the bounds.
<= RR indicates hold or even side line (commish considerations)
When and as pace comes into play, I am holding and on the right side of the emerging move.
In consideration to the previous trend?... washing here could get a bit intense
The best reason to trade noise is to learn to do washes. The second best reason is to be monitoring at all times and mentally getting away from the concept of edge trading. The third best reason is to have the experience of always being on the right side of the market on BO's. The fourth best reason is to be better able to deal with stalls in slow paced markets where, within a channel, you can always use the "noise" condition of a stall to continue to profit until the trend resumes
Profit = delta > RR
or the FTT is reached to begin point 1 of the next trend.
With respect to this post: I have been told I am delusional, moderators call this gooblygook, and attack me personally. The guardother ians of ET will assure you that my post will damage you. That all is fine with me. For all these people, feel free to crap on this in your own way. My view is that I contribute here in the way I do and It is not going to hurt anyone because they can ignore me or if they read it, they can be assured that by thinking about what I say, there will be an effect that, later may be helpful.
Indeed ... Think !
Thank You
This is utter nonsense. We first started out with "noise", a thing not many around here seem to understand much about.
The term "mean" has an equally rigorous mathematical definition as "noise", albeit a bit less involved.
I'm sure this thread will keep wallowing along in utter foolish confusion.
An ET member PM'ed me to express his bewildrement about the different definitions advanced for the term "noise". This is an often encountered situation on these boards where many participants jump on the bandwagon juggling with stuff like "random, noise, mean, etc" while demonstrating that they don't have the least idea of what they are talking about.
Any textbook on probability theory and on signal theory will give a cogent definition of these terms.