Ghost of If You Can Draw A Straight Line

[Gringo]

Quote from kerry888:

You have created an interesting thread DB, but a question please..why should price obey strait lines? You don't think the algo's and the bots haven't seen your lines before and take them into consideration?

Hi Kerry,

Price isn't supposed to obey the lines. It probably doesn't know lines exist. The lines are all in our head. We use them to see which way price is moving by tracking the interacting between demand and supply. If a demand line is intact we know that the price is moving upwards. This means shorting is a lower probability endeavour. That's all we need a line for. Price doesn't have to obey anything, except the law of supply and demand.

In other words, the lines guide us into seeing what the Algos and all other participants are collectively doing. Once you get used to trading using price you won't need to draw the lines to figure out whether price was moving up or down or trending up or down.

Note that the first post highlighted the below:

1. Anything can happen.

2. You don’t need to know what is going to happen next in order to make money.

3. There is a random distribution between wins and losses for any given set of variables that define an edge.

4. An edge is nothing more than an indication of a higher probability of one thing happening over another.

5. Every moment in the market is unique. (Douglas)


And the principles of Auction Market Theory:

1. An auction market's structure is continuously evolving, being revalued; future price levels are not predictable.

2. An auction market is in one of two conditions: balancing or trending.

3. Traders seek value; value is price over time; price is arrived at by negotiation between buyers and sellers.

4. Change in demand drives change in price.

5. One can expect to find support where the most substantial buying has occurred in the past and resistance where the most substantial selling has occurred.

Gringo

 

[kerry888]

Quote from Gringo:

Hi Kerry,

Price isn't supposed to obey the lines. It probably doesn't know lines exist. The lines are all in our head. We use them to see which way price is moving by tracking the interacting between demand and supply. If a demand line is intact we know that the price is moving upwards. This means shorting is a lower probability endeavour. That's all we need a line for. Price doesn't have to obey anything, except the law of supply and demand.

In other words, the lines guide us into seeing what the Algos and all other participants are collectively doing. Once you get used to trading using price you won't need to draw the lines to figure out whether price was moving up or down or trending up or down.

Note that the first post highlighted the below:

1. Anything can happen.

2. You don’t need to know what is going to happen next in order to make money.

3. There is a random distribution between wins and losses for any given set of variables that define an edge.

4. An edge is nothing more than an indication of a higher probability of one thing happening over another.

5. Every moment in the market is unique. (Douglas)


And the principles of Auction Market Theory:

1. An auction market's structure is continuously evolving, being revalued; future price levels are not predictable.

2. An auction market is in one of two conditions: balancing or trending.

3. Traders seek value; value is price over time; price is arrived at by negotiation between buyers and sellers.

4. Change in demand drives change in price.

5. One can expect to find support where the most substantial buying has occurred in the past and resistance where the most substantial selling has occurred.

Gringo

A "demand line" presupposes more demand at and above the line does it not? My confusion is how are you determining this excessive demand by a line?

 

[SIUYA]

Quote from kerry888:

A "demand line" presupposes more demand at and above the line does it not? My confusion is how are you determining this excessive demand by a line?

I view it is a reflection of what 'is' actually happening, as opposed to 'what' was happening.

eg: for a trend line that was going down.....when it breaks, the previous lack of demand/or extra supply (or how ever it suits you) has changed....so be aware that what was happening has potentially changed.

 

[dbphoenix]

Quote from SIUYA:

I view it is a reflection of what 'is' actually happening, as opposed to what 'was' happening.

eg: for a trend line that was going down.....when it breaks, the previous lack of demand/or extra supply (or how ever it suits you) has changed....so be aware that what was happening has potentially changed.

True. The line can't be drawn until the change in demand/supply has already manifested itself. There are plenty of charts in the other threads (see post #1) that show the intervening lines, but this thread is intended to be an extension of the previous threads, not a reboot.

As to why the lines are drawn at all, they are necessary for discussion, like plotting an X and Y axis on a chart. If I start talking about demand, the first question would be "where?" The lines draw and focus attention.

In today's example, if price never returns to the demand line, then the level of demand has changed and is stronger. This is worth knowing.

I realize that only a few people are going to get this. Ask Gringo how long it took him. But getting it is central to long-term success, at least the kind of success that enables one to quit his job and make a living at trading.

And welcome, Siuya. I've checked into "the other place" several times recently and more often than not there's been no one logged in at all. How long can that last?

 

[SIUYA]

Always a pleasure to read your posts regardless of where they occur. I hope as always to be able to contribute in a positive way if I can, and if I inadvertently rehash/ or reboot something its always sorry in advance.
Looking forward to being here after a small trading hiatus while renovations and a move to the land of Tulips was completed.
Back on board now.

 

[dbphoenix]

Quote from SIUYA:

Always a pleasure to read your posts regardless of where they occur. I hope as always to be able to contribute in a positive way if I can, and if I inadvertently rehash/ or reboot something its always sorry in advance.

Looking forward to being here after a small trading hiatus while renovations and a move to the land of Tulips was completed.
Back on board now.

I envy you. I hope the rising waters don't become a problem

 

[niko]

Just coming back from hibernation, will get up to date in the thread´s content and start posting next monday.

 

[slugar]

Quote from niko:

Just coming back from hibernation, will get up to date in the thread´s content and start posting next monday.

. Nice to hear you are still alive niko

 

[Gringo]

Quote from dbphoenix:
I realize that only a few people are going to get this.

Simple, yet not easy.

Quote from dbphoenix:
Ask Gringo how long it took him.

Wisdom takes time.

Quote from dbphoenix:
But getting it is central to long-term success, at least the kind of success that enables one to quit his job and make a living at trading.

Wealth takes wisdom and time.

Gringo

 

[dbphoenix]

Price continues higher. Those of you who are familiar with the preceding threads (see post #1) will note that price made a higher high at the open which made it possible to fan the demand line slightly to include the immediately-preceding swing low (see the preceding chart, above). Thus when price tested this line later in the afternoon, the line was already there.

Why did price stop and reverse there? Magic.

Incidentally, anyone who's been wondering what trend and consolidation/ranging looks like, well, here it is.

Since it's been more than a week since the daily was posted (post #1), the upper trendline is of course higher, since it's diagonal. Therefore, it is now just above 3600. If and as we get closer, I'll post a new one.