Yes, no need to buy that it's definitely not random.... you can use some brain power and a blank chart with no indicators and come to that conclusion.
Reducing Noise for Dependent Variable
- Thread starter TheBigShort
- Start date
Yes, no need to buy that it's definitely not random.... you can use some brain power and a blank chart with no indicators and come to that conclusion.
Right, but what is random? There needs to be context around these words. Because just because something is "random" doesn't mean theres a pattern within the chaos.
I mean, the simple fact that one can overlay any Fibonacci type analysis on any chart, and it lines up perfectly is beyond mere coincidence, and it shows the market has a rhythm.
Have you ever read Niederhoffer's classic book: "The Education of the Speculator"?
That book and also "The Alchemy of Finance" by Soros should be read by every aspiring trader.
Also one should read into Claude Shannon and his dealing with the stock market and the pricing of warrants. And how he applied information theory to it. Also Ed Thorp. These are all essentials, hell even Paul Samuelson.
Beniot Bandelbrot is also a market guru, his discovery of the market's being fractal makes sense as well. Look at any time frame, its all the same shit really.
I haven't read those books. I genuinely don't fully comprehend your first question. I just know markets aren't random and yes you could consider it organized chaos. In simple terms there are patterns, but than they have "resets" of those patterns where now the short pattern or vice versa will become more in play once one side is loaded up enough that it can be taken advantage of. This causes those extreme up and down moves that alot of people think are always news related and also makes people think that markets can't be predicted or have no patterns.
After that it also causes a return to price areas or means reversion as some people call it. Once people are shaken out of their positions price just returns, nothing has really happened with the macro view just simply money being exchanged from weaker hands to stronger hands.
That doesn't feel like a very strong and precise explanation on my end, but my excuse is it's late and don't feel like retyping it.
What you just wrote is very similar to Peter Steidlmayers thoughts on market movements in his 1996 book on Market Profile published by CBOT. Its very imformative, and its one of the books that's made me understand the magnitude movements of the market and price discovery. The action is within the price range, which is more important as far as information, than the direction of the movement. Of course the latter is just as important, but developing a personal heuristic model which helps your eyes discover price action better. Balance/Imbalance, rinse and repeat, the ebb and flow of the market is like an ocean. My dad surfs on the west coast beaches of O'ahu, Hawaii daily and he'll tell you how to ride the momentum.
The markets like an ocean and I'm looking for tradewinds
Perfecting my strategy, hoping this trade.. wins.
Funny they call it currency.. because money supplies flow like a current. And we hold this current within a bond or stock, or maybe something else. And when you want cash you LIQUIDate. All the terms that explain our financial world are words that explain the human condition.
If there's a real edge there time frame doesn't really matter (beyond the persons ability to be able to read the information in a timely manner) because the markets are fractal.
Think of this way, which chart do the markets suddenly lose or gain integrity or why would an edge suddenly become stronger on a different chart?
Example: Let's say a 1 minute chart is too fast So is 1 minute and 1 second chart also too fast? what about 1 minute and 2 second chart? How many seconds or minutes would you have to add for the chart to suddenly reach some threshold?
I've never had someone give me a good counter to that, but if you can I wouldn't mind hearing it.
Yes its fractal but that doesn't mean opportunity across the time-space is equal.
Obviously we as traders find the time-frame that fits our personality. I always zoom out then zoom in when analyzing an underlying.
I would argue opportunity is equal, strictly from a market sense. Because the only changing factor will be the ATR of the move ( a smaller chart, smaller atr and etc).
Yes, if you add an external factors for other people like personality, speed of reading a chart, the size they are trading, the amount of time and attention they can devote to trading a trade than yes of course the opportunity isn't equal. I am just purely speaking without adding in external human factors.
It can't be equal.
For example lets take a 20 year chart of the SPX and a 1 minute chart of the SPX..
The 20 year will show a gain, but on any given day the SPX can close negative, thus its not equal, unless by equal you mean trading a monthly chart can give the same profits/losses as trading a 1 minute chart?
I am not that smart. Sure that makes sense, I don't care enough to be right besides on things that make money if that makes any sense. I do get you're using my own argument against me about charts being equal. But a 20 year chart takes 20 years for one bar to close, that's just so far beyond reason for trading that I don't feel like debating it, but I do understand your point.
Like the point of me posting here isn't to be right or win an argument. I am just saying what I know to be factual. So, iron chef was asking about different times frames. I am simply telling him changing the time frame isn't going to make the results better if you're talking about doing multiple trades and actively trading (if there's no advantage on a 5 minutes changing it to 5 minutes and 1 second isn't going to change the results). If you want to use a massive chart where you're taking very few trades, sure you just gave an example where I am wrong because if you went long on a 20 year chart you're 100% guaranteed to be up, but if you went long on a minute it's possible you would be down right now.
Anyways I appreciate the discussion, going to bed have a good night.