Epiphany! (Laughing)

Quote from mgabriel01:

OK --- so 100 pages into the book and the answer to the 'time horizon' question occurs to me


The relevant patterns and trends are visible on 'many' time horizons


you can see them sometimes over a few days
or a few weeks
or a few months
or a few years

the pattern is the same
regardless of the units of time


this is good
this is very very interesting, grasshopper
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This is a correct observation. The market works like a fractal in the sense that geometric patterns are repeated in themselves. Markets definately show self-similarity.

In essence markets are a binary patern ("bid and ask") that expands by feeding on itself, causing new bids and asks to come in. A trader can then look at this patern and recognize signals for change and continuation.

Fractals can be recognized throughout nature:

Animated_fractal_mountain.gif
 
An interesting observation.
At this point I'm not competent to even attempt to elaborate on this
lol
Gotta finish the Shabacker book first



Quote from dtrader98:

I don't think that's something mandelbrot would say.

"patterns are the fool's gold of the financial markets... They are the inevitable consequence of the human need to find patterns in the patternless."
mandelbrot

He would say markets have self-similar fractals, very different than identical patterns. The difference is as big as comparing a deterministic system to a chaotic one.

The key to unglue yourself from these beliefs, is to try to find a way that they wouldn't work. For instance, if I say I found the holy grail pattern, and it consists of an up-down--up-long down pattern, I challenge you to find a way for this not to work. Show me any chart and I'll find a way to fit that pattern on to it (I may have to modify the count to sub patterns to make it work, but by golly I'll get it to work because that's what I believe).
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shorter timeframes are extractable in terms of profitability only when extreme emotion and volatility is present.

most of the time the 'noise' factor exceeds reward/risk ratios in the short timeframes.

forex is a prime example...a very high degree of noise in the smaller timeframes.
 
Quote from dtrader98:

I don't think that's something mandelbrot would say.

"patterns are the fool's gold of the financial markets... They are the inevitable consequence of the human need to find patterns in the patternless."
mandelbrot

He would say markets have self-similar fractals, very different than identical patterns. The difference is as big as comparing a deterministic system to a chaotic one.

The key to unglue yourself from these beliefs, is to try to find a way that they wouldn't work. For instance, if I say I found the holy grail pattern, and it consists of an up-down--up-long down pattern, I challenge you to find a way for this not to work. Show me any chart and I'll find a way to fit that pattern on to it (I may have to modify the count to sub patterns to make it work, but by golly I'll get it to work because that's what I believe).
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Whether you're able to recognize the market's patterns or not is irrelevant. The fact remains that I can see what you and others are are buying or selling and by how much. From this I can generate reliable signals to reverse. I couldn't care less about the believes of my counterparties.

Even if you believe that markets are random and chaotic you cannot deny that there is always a steady input of objective information that comes in the form of bid, ask and volume.
 
An interesting thought - based on dtrader98s post below....
Anyone have an example of and H&S top that broke the neck-line and then 'did not' experience a reversal?

I think its an excellent idea to find examples of when something 'doesnt' work as well as when it does



Quote from dtrader98:

I don't think that's something mandelbrot would say.

"patterns are the fool's gold of the financial markets... They are the inevitable consequence of the human need to find patterns in the patternless."
mandelbrot

He would say markets have self-similar fractals, very different than identical patterns. The difference is as big as comparing a deterministic system to a chaotic one.

The key to unglue yourself from these beliefs, is to try to find a way that they wouldn't work. For instance, if I say I found the holy grail pattern, and it consists of an up-down--up-long down pattern, I challenge you to find a way for this not to work. Show me any chart and I'll find a way to fit that pattern on to it (I may have to modify the count to sub patterns to make it work, but by golly I'll get it to work because that's what I believe).
More...
 
The shorter time frame (i trade 5 min charts exclusively) the worse PATTERNS are. The better way to trade a 5 min chart (ES, etc) is to trade the LEVELS, read levels as support. resist, pivot points or whatever you like to call DEM DAR LINES. I personally found many make the mistake of trying to trade short time frames with pattern recognition. Myself i say that is completely wrong because "patterns" take longer to from and set up properly............thus they are better for swing and or position trading and basically useless for daytrading and trying to catch the runs of the inTRAday chart.

NOTHING works better than support/resist for daytrading, think about it............daytrading requires fast thinking........daytrading requires an inert understanding of where and when the majority of other players will be moved by fear and greed.

Fear trumps greed for most new traders.........new traders take small profits for FEAR of losing the dinky profits so they cut winners short. Greed on the other hand is why new non-pros keep losers through thick or thin ( they think they married the trade), they hang on the loser because it hurts their ego and wallet to lose, they do not want to be proven a total jerk by having a losing trade. How many will go to the next cocktail party and bring up there losing trades? Greed takes in not only money but also ones self esteem and self worth. if a trader ever gets past the wrong idea that losing is for losers and not for them ...........then and only then might they have a slim chance to correct the wrong ideas and become a winner.

To win at trading .............you must UNLEARN all you ever were taught about how to become a winner in life.........this is not about winning inn life.......it is about taking money from others. Think about it.
 
fernandalx......

I would say you are blowing smoke with your FACT thast you can see what others are up to. the best we can do as traders is make assumptions.


Hog out
 
BigHog - I agree
I think the pattern part is more a swing trade kinda scenario
I'm not to the point where I know what an actual workable strategy is

Im just readin da books an tryin to unnerstan em!
:-)

Quote from bighog:

The shorter time frame (i trade 5 min charts exclusively) the worse PATTERNS are. The better way to trade a 5 min chart (ES, etc) is to trade the LEVELS, read levels as support. resist, pivot points or whatever you like to call DEM DAR LINES. I personally found many make the mistake of trying to trade short time frames with pattern recognition. Myself i say that is completely wrong because "patterns" take longer to from and set up properly............thus they are better for swing and or position trading and basically useless for daytrading and trying to catch the runs of the inTRAday chart.

NOTHING works better than support/resist for daytrading, think about it............daytrading requires fast thinking........daytrading requires an inert understanding of where and when the majority of other players will be moved by fear and greed.

Fear trumps greed for most new traders.........new traders take small profits for FEAR of losing the dinky profits so they cut winners short. Greed on the other hand is why new non-pros keep losers through thick or thin ( they think they married the trade), they hang on the loser because it hurts their ego and wallet to lose, they do not want to be proven a total jerk by having a losing trade. How many will go to the next cocktail party and bring up there losing trades? Greed takes in not only money but also ones self esteem and self worth. if a trader ever gets past the wrong idea that losing is for losers and not for them ...........then and only then might they have a slim chance to correct the wrong ideas and become a winner.

To win at trading .............you must UNLEARN all you ever were taught about how to become a winner in life.........this is not about winning inn life.......it is about taking money from others. Think about it.
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I never made this claim. Re-read my post.

Quote from bighog:

fernandalx......

I would say you are blowing smoke with your FACT thast you can see what others are up to. the best we can do as traders is make assumptions.


Hog out
More...
 
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