Quote from dtrader98:
The problem with this argument is that you are cherry picking one chart window from a universe of millions and constructing your version of what happened behind the scenes. It is a simple matter for me to cherry pick a few charts of my own, with clearly defined support and resistance levels in hindsight, then request that you tell me what the future inflection points will be (and we can say that the inflection points must have a minimum +/-% deviation from both sides of the trough or peak to be considered an inflection point). I doubt your results would be much better than determining the output of a random coin toss (notice I don't include volume and price velocity/momentum since I think these variable add significant weight to intraday guesstimates).
At best you are using support/resistance levels as a "guess"
based upon your prior experience to determine where the future turning points will lie. What's important is to determine when to get out when you are wrong in your guess. Because I can assure you from experience, that you will be wrong plenty of times.
----------------------------------------------
I've said it a dozen times, and I wish the OP would change his thesis, since it deviates from the useful argument on the trap of subjective visual interpretation of real chart patterns vs. randomly generated patterns. Markets DO NOT follow a random walk in the Gaussian sense, this has been shot down by lo, Mandelbrot and others ad nauseam.
In some ways they are better, in others worse. Better because the mean of the distribution is greater than zero (upward drift/ edge bias), worse because fat tails and large sigma variations can occur and are occasionally worse than gaussian random models predict.
Anyone who looks over my prior threads will notice I use plenty of TA in my arguments and beliefs, but I will be the first to concede that every one of those boils down to a guess whereby I believe the overall argument (TA/fund/history/probability/experience) is weighted in my favor. I believe that's the best any of us (outside of market makers with client order flow/ that's a whole nother world/debate) can do, aside from managing how we will risk our bets, and determining how we will respond to the outcome in advance.
___________________________________________
There is no hindsight here dtrader98, the snapshot of the 1st chart was taken several days before the market opened. The key support & resistance zones noted days before had a an undeniable impact on how the market moved days later, so it was not after the fact as you claim either, so get that straight. It's not what my version of what happened behind the scenes that's important, it's what the market was telling us. What was the market telling us before the market opened? that buyers & sellers had a historical past, albeit several days that was very significant, what was clear was that buyers were unwilling to concede to the sellers below support(11,720) & the sellers were unwilling to concede to the buyers above resistance(11,800). What was undeniable was how the market visibly moved upwards from 11,720 & down from 11,800. This observation validated that buyers & sellers were in fact exerting great influence above & below these influential zones. I have a number of before & after examples that clearly demonstrate that this phenomenon occurs with great regularity & great accuracy. But of what value would that be to you anyway? you're probably to stubborn to even acknowledge how utilizing support & resistance works very well. What I will not do is expend energy in trying to convince incredulous traders that it works wonders, either you see it or you don't. I disagree with mu200411's theory of markets being random in their movements because it does not have a foundation or it can easily be disproven, but what all traders can agree on is that all trading methods are correct if it helps you to become profitable, there are many paths leading to the same road.
And just one more thing, your assurance that I will be wrong plenty of times in my "guess" is extremely rare when one understands what the dominant theme is of the market, if the market is rising, buyers possess greater authority while the sellers are countering against that strong influence & vice versa, thus exploiting the bigger picture or trends means that I will not play that cat & mouse game of going toe to toe with the markets all day long, the trading to break even scenario that many new traders are drawn to that lead many to call it quits & your experience does not insinuate that I will be wrong many times before I get it right, get that straight as well. Your experience has value to you perhaps, but to me it means nothing.
The problem with this argument is that you are cherry picking one chart window from a universe of millions and constructing your version of what happened behind the scenes. It is a simple matter for me to cherry pick a few charts of my own, with clearly defined support and resistance levels in hindsight, then request that you tell me what the future inflection points will be (and we can say that the inflection points must have a minimum +/-% deviation from both sides of the trough or peak to be considered an inflection point). I doubt your results would be much better than determining the output of a random coin toss (notice I don't include volume and price velocity/momentum since I think these variable add significant weight to intraday guesstimates).
At best you are using support/resistance levels as a "guess"
based upon your prior experience to determine where the future turning points will lie. What's important is to determine when to get out when you are wrong in your guess. Because I can assure you from experience, that you will be wrong plenty of times.
----------------------------------------------
I've said it a dozen times, and I wish the OP would change his thesis, since it deviates from the useful argument on the trap of subjective visual interpretation of real chart patterns vs. randomly generated patterns. Markets DO NOT follow a random walk in the Gaussian sense, this has been shot down by lo, Mandelbrot and others ad nauseam.
In some ways they are better, in others worse. Better because the mean of the distribution is greater than zero (upward drift/ edge bias), worse because fat tails and large sigma variations can occur and are occasionally worse than gaussian random models predict.
Anyone who looks over my prior threads will notice I use plenty of TA in my arguments and beliefs, but I will be the first to concede that every one of those boils down to a guess whereby I believe the overall argument (TA/fund/history/probability/experience) is weighted in my favor. I believe that's the best any of us (outside of market makers with client order flow/ that's a whole nother world/debate) can do, aside from managing how we will risk our bets, and determining how we will respond to the outcome in advance.
___________________________________________
There is no hindsight here dtrader98, the snapshot of the 1st chart was taken several days before the market opened. The key support & resistance zones noted days before had a an undeniable impact on how the market moved days later, so it was not after the fact as you claim either, so get that straight. It's not what my version of what happened behind the scenes that's important, it's what the market was telling us. What was the market telling us before the market opened? that buyers & sellers had a historical past, albeit several days that was very significant, what was clear was that buyers were unwilling to concede to the sellers below support(11,720) & the sellers were unwilling to concede to the buyers above resistance(11,800). What was undeniable was how the market visibly moved upwards from 11,720 & down from 11,800. This observation validated that buyers & sellers were in fact exerting great influence above & below these influential zones. I have a number of before & after examples that clearly demonstrate that this phenomenon occurs with great regularity & great accuracy. But of what value would that be to you anyway? you're probably to stubborn to even acknowledge how utilizing support & resistance works very well. What I will not do is expend energy in trying to convince incredulous traders that it works wonders, either you see it or you don't. I disagree with mu200411's theory of markets being random in their movements because it does not have a foundation or it can easily be disproven, but what all traders can agree on is that all trading methods are correct if it helps you to become profitable, there are many paths leading to the same road.
And just one more thing, your assurance that I will be wrong plenty of times in my "guess" is extremely rare when one understands what the dominant theme is of the market, if the market is rising, buyers possess greater authority while the sellers are countering against that strong influence & vice versa, thus exploiting the bigger picture or trends means that I will not play that cat & mouse game of going toe to toe with the markets all day long, the trading to break even scenario that many new traders are drawn to that lead many to call it quits & your experience does not insinuate that I will be wrong many times before I get it right, get that straight as well. Your experience has value to you perhaps, but to me it means nothing.
Chaotic seems a reasonable description. 75% (I am pretty sure it was higher) is statistically significant. I really don't care if they are random or not as they exhibit observable tendencies. I will repeat -with random volume added in you would be able to spot the real series from the fake.