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Why do I see "Trends" in Randomly Generated Data?
- Thread starter Rahula
- Start date
Quote from theboxer:
You're absolutely right: the world is pretty much black and white, and things are either one way, or this other way. One way is clearly the correct way, and the other way is clearly incorrect; that makes things easy. Thanks for the reminder.
Trading is black or white if your environment is layed out logically.
I mean the market can only move up or down, from a top to a bottom, from a bottom to a top, from specifically defined resistance to specifically defined support, from specifically defined support to specifically defined resistance . . . forever and ever and ever.
People that say that charts move sideways are clueless and can't read a chart. Price will consolidate in ranges before moving higher or lower but that isn't "sideways" movement. People are so used to being lazy and using general terms that they have forgotten that they CAN be specific.
IMHO - Those that use statistics use general terms as a crutch for their laziness, those that use logic know they HAVE to be specific because there are no generalities in logic.
I don't mean to be argumentative over a fruitless discussion but, you need to be corrected.Quote from ProfLogic:
Trading is black or white if your environment is layed out logically.
I mean the market can only move up or down, from a top to a bottom, from a bottom to a top, from specifically defined resistance to specifically defined support, from specifically defined support to specifically defined resistance . . . forever and ever and ever.
People that say that charts move sideways are clueless and can't read a chart. Price will consolidate in ranges before moving higher or lower but that isn't "sideways" movement. People are so used to being lazy and using general terms that they have forgotten that they CAN be specific.
IMHO - Those that use statistics use general terms as a crutch for their laziness, those that use logic know they HAVE to be specific because there are no generalities in logic.
In the financial markets, 100% of events are derivatives of Time Series and, the Time as we all know cannot be stopped.
There is just ONE way to define a Market action and that is utilizing a Polynomial degree of which depends on the choice and so does the time frame. Now what you are not taking into effect is the same time span within which while a first degree PN might exhibit a perfect horizontal graph which would then define the market as flat but remember the Time cannot be stopped hence, it has move althouh on a horizontal axis.
Now, having said that, a 5th. degree PN for exactly the same time span will show several waves that shows the path the market has gone through to get to where it is.
Accumulation and distribution are just some of the many forces applied to the markets whose effects cause the surfs and can be shown by higher degrees PN's and the resultant of which by a first degree PN.
So, to make a long story short, one needs to determine if it's the resultant of the forces and it's angle is what needs to be identified or the effects of the forces applied to the event that is being identified.
p.s.
The markets should not be looked through the lens of a Zig Zag representation as you are actually recommending, rather the Polynomial which is a True representation of the price action(volume is a whole different story not covered in the above analogy).
My two cents,
95% of technical analysis is crap, and for that matter fundamentals don't mean too much either (especially over shorter time frames).
The stock market and price action is merely a representation of sentiment: that is, the perception of value attributed to an instrument based on expectation and personal bias. The price is not a representation of anything real, just opinion - and opinion changes on a whim and a prayer.
For me, i like to approach the market with an unbiased approach - statistically relevant algorithms filter out all the crap and find instances when humans are being human. Trends or mean deviations exist because people get excited or scared or any other emotion takes hold of market participants - i don't really care what makes them move (fundamental or technical), but i do know that we are all creatures of habit and we are all "statistically predictable", therefore I predict that tomorrow morning (Monday) there will be an influx of cars on the road for the between 0700 and 0900. My money management takes care of when i a wrong - because when it comes down to it it really is just a numbers game isn't it?
I use algos because i can simultaneously "watch" an infinite number of instruments and react accordingly. No human can do can be that efficient. I don't need to be right, i don't care about the US economy or the exchange rate or the price of oil - i am just looking for those instances where humans behave predictable.
pneuma
95% of technical analysis is crap, and for that matter fundamentals don't mean too much either (especially over shorter time frames).
The stock market and price action is merely a representation of sentiment: that is, the perception of value attributed to an instrument based on expectation and personal bias. The price is not a representation of anything real, just opinion - and opinion changes on a whim and a prayer.
For me, i like to approach the market with an unbiased approach - statistically relevant algorithms filter out all the crap and find instances when humans are being human. Trends or mean deviations exist because people get excited or scared or any other emotion takes hold of market participants - i don't really care what makes them move (fundamental or technical), but i do know that we are all creatures of habit and we are all "statistically predictable", therefore I predict that tomorrow morning (Monday) there will be an influx of cars on the road for the between 0700 and 0900. My money management takes care of when i a wrong - because when it comes down to it it really is just a numbers game isn't it?
I use algos because i can simultaneously "watch" an infinite number of instruments and react accordingly. No human can do can be that efficient. I don't need to be right, i don't care about the US economy or the exchange rate or the price of oil - i am just looking for those instances where humans behave predictable.
pneuma
Quote from pneuma:
My two cents,
95% of technical analysis is crap, and for that matter fundamentals don't mean too much either (especially over shorter time frames).
The stock market and price action is merely a representation of sentiment: that is, the perception of value attributed to an instrument based on expectation and personal bias. The price is not a representation of anything real, just opinion - and opinion changes on a whim and a prayer.
For me, i like to approach the market with an unbiased approach - statistically relevant algorithms filter out all the crap and find instances when humans are being human. Trends or mean deviations exist because people get excited or scared or any other emotion takes hold of market participants - i don't really care what makes them move (fundamental or technical), but i do know that we are all creatures of habit and we are all "statistically predictable", therefore I predict that tomorrow morning (Monday) there will be an influx of cars on the road for the between 0700 and 0900. My money management takes care of when i a wrong - because when it comes down to it it really is just a numbers game isn't it?
I use algos because i can simultaneously "watch" an infinite number of instruments and react accordingly. No human can do can be that efficient. I don't need to be right, i don't care about the US economy or the exchange rate or the price of oil - i am just looking for those instances where humans behave predictable.
pneuma
Behavioral Finance (Wikipedia)
Behavioral economics and behavioral finance are closely related fields which apply scientific research on human and social, cognitive and emotional factors to better understand economic decisions and how they affect market prices, returns and the allocation of resources. The fields are primarily concerned with the bounds of rationality (selfishness, self-control) of economic agents. Behavioral models typically integrate insights from psychology with neo-classical economic theory.
So isn't this just another form of TA? Since you're using price data (or whatever other data) to find opportunities?
Quote from pneuma:
My two cents,
95% of technical analysis is crap, and for that matter fundamentals don't mean too much either (especially over shorter time frames).
[...]
For me, i like to approach the market with an unbiased approach - statistically relevant algorithms filter out all the crap and find instances when humans are being human.
[...]
pneuma
Quote from ML_QUANT:
I don't mean to be argumentative over a fruitless discussion but, you need to be corrected.
In the financial markets, 100% of events are derivatives of Time Series and, the Time as we all know cannot be stopped.
There is just ONE way to define a Market action and that is utilizing a Polynomial degree of which depends on the choice and so does the time frame. Now what you are not taking into effect is the same time span within which while a first degree PN might exhibit a perfect horizontal graph which would then define the market as flat but remember the Time cannot be stopped hence, it has move althouh on a horizontal axis.
Now, having said that, a 5th. degree PN for exactly the same time span will show several waves that shows the path the market has gone through to get to where it is.
Accumulation and distribution are just some of the many forces applied to the markets whose effects cause the surfs and can be shown by higher degrees PN's and the resultant of which by a first degree PN.
So, to make a long story short, one needs to determine if it's the resultant of the forces and it's angle is what needs to be identified or the effects of the forces applied to the event that is being identified.
p.s.
The markets should not be looked through the lens of a Zig Zag representation as you are actually recommending, rather the Polynomial which is a True representation of the price action(volume is a whole different story not covered in the above analogy).
Communication isn't necessarily argumentative but at least should be sharing of information.
I totally understand your point and understand how "others" look at price movement but for me, time is only relevant from a standpoint of when markets are open and active. Time is not traded in the Markets, the markets are traded IN time.
Oscillations and cycles are how any chart in any market is viewed. Everything in the universe is cyclic . . . including price movement. I've created a fixed non variable environment where your simple zig zag" patterns are perfectly, consistently and objectively formed and defined.
Your definition and understanding of "zig zags" in price is correct based on what you know and understand.
My definition and understanding of the pure objectively defined support and resistance "zig zags" that are created on each chart each moment that action is created there is true as well.
The difference is that you don't understand what I do or how I view price movement so my statement, in your eyes is wrong.
This is why sharing if ideas should open up all kinds of discussion but ultimately doesn't. What usually happens is that someone makes a statement that someone doesn't aggree with and instead of the person varifying the statment they argue the point and summarily dismisses it. This is where the communication dies a tragically short death. ET is a perfect environment where this happens way too often.
Hi ProfLogic.
If markets / stocks are trading up and down in a tight range and that range for my trading style is too short for me to make a meaningful profit, then my definition would be the environment is trending sideways.
A short term scalper may find that environment ideal for their time frame or pips, so for them itâs a ranging or tradeable market.
But to say ââ¦.People that say that charts move sideways are clueless and can't read a chart.â
Well a very strong and definite statement which I respectfully disagree with as you are attempting to put everyone into the same box.
PS: I agree with much of what you say, but not this point.
Perhaps you can clarify some more if I and others have missed something.
If markets / stocks are trading up and down in a tight range and that range for my trading style is too short for me to make a meaningful profit, then my definition would be the environment is trending sideways.
A short term scalper may find that environment ideal for their time frame or pips, so for them itâs a ranging or tradeable market.
But to say ââ¦.People that say that charts move sideways are clueless and can't read a chart.â
Well a very strong and definite statement which I respectfully disagree with as you are attempting to put everyone into the same box.
PS: I agree with much of what you say, but not this point.
Perhaps you can clarify some more if I and others have missed something.
Quote from Indrionas:
So isn't this just another form of TA? Since you're using price data (or whatever other data) to find opportunities?
Of course - custom indicators looking for specific events.
No Fibs, Gann, Astro charts, support/resistance lines, patterns, dojis, hammers, Elliott. That's all crap - subjective emotion based interpretation.
pneuma
Quote from pneuma:
Of course - custom indicators looking for specific events.
No Fibs, Gann, Astro charts, support/resistance lines, patterns, dojis, hammers, Elliott. That's all crap - subjective emotion based interpretation.
pneuma
And what isn't crap is trading signals which are based on what ? Trend ?
I would have thought support/resistance lines were not crap, not that I really trade S/R, but trends basically are S/r are they not ?
Regards