Why do I see "Trends" in Randomly Generated Data?

Quote from ljmlmvlhk:

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 it’s a ranging or tradeable market.

But to say “….People that say that charts move sideways are clueless and can't read a chart.”

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.
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I've totally distanced myself from general terms when I view price movement.

For you, when a tight range exists that is outside your trading comfort range, you stand aside. You can call it whatever you want but the result is still what is only relevant and important to you. Which is how it should be. But start describing the actions so you know EXACTLY when to return to trading inside that environment.

For me, when a tight range exists that is outside my trading comfort range, I simple slow the chart down to either allow me to trade in that particular environment or to allow me to see exactly where in the longer term cycle price is existing.

IF that tighter range (consolidation) exists at an extreme top on that longer term chart, I simply wait for the breach of support and then a subsequent resistance LH on the faster chart to then allow me to comfortably start shorting that chart.

IF that tighter range (consolidation) exists at an extreme bottom on that longer term chart, I simply wait for the breach of resistance and then a subsequent support HL on the faster chart to then allow me to comfortably start going long on that chart.

Either of these situations perfectly allows me to see where the overall strength of those charts is heading.

My comment regarding the term, "sideways" was meant to force people to start using specific terms and to stop using general terms. The word "sideways" denotes a definition of generalization. There is nothing specific about it and when trading one needs to be as specific as possible.

Durning consolidation at extreme tops and bottoms, price will always create a series a LH's & HL's before it breaks out either heading in the same direction it came or reversing direction. Those specific LH's & HL's act as a specific range where we as traders can physically see where price needs to break through to continue on its cyclic journey.

I hope this is a better explanation.
 
Quote from ProfLogic:

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.
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If we base our discussions purely on scientific facts, then it becomes easy to identify that the markets in fact only move sideways in a mono directional manor and the forces applied to it cause it to meanwhile rise and fall and although the forces applied are of great interest but the solution is determined by the resultant of the forces and Not the momentary forces themselves.
Think of it as an ocean with a continuous current that has lots of waves too!
ZIg Zags is also a form of interpolation with mostly a very bad fit but helpful in identifying the extremes of the highs and lows during an specific time span with an arbitrarily predetermined pivotal constant whereas other forms and degrees of polynomials without reliance on any arbitrary constant factors would much better interpolate the Time and Price combination and represent a much more realistic representation of the price action.
Hence, please note, that, the markets Only move sideways and this is not an opinion or belief but rather a scientific fact which is why they call them the Time Series, which during the mono directional constant side way move, it also rises and fall....
What you probably mean to say, is that, to better analyze the price action you prefer a Straight-Line Approximation method from the Convergence Of Fourier Series Vs. other Numerical Methods...?! Which in fact I too happen to agree with but not in the sense as the only method but rather as an interesting method amongst many more.


...the purpose of technical analysis is insight, not merely solutions.
 
Quote from ML_QUANT:

If we base our discussions purely on scientific facts, then it becomes easy to identify that the markets in fact only move sideways in a mono directional manor and the forces applied to it cause it to meanwhile rise and fall and although the forces applied are of great interest but the solution is determined by the resultant of the forces and Not the momentary forces themselves.
Think of it as an ocean with a continuous current that has lots of waves too!
ZIg Zags is also a form of interpolation with mostly a very bad fit but helpful in identifying the extremes of the highs and lows during an specific time span with an arbitrarily predetermined pivotal constant whereas other forms and degrees of polynomials without reliance on any arbitrary constant factors would much better interpolate the Time and Price combination and represent a much more realistic representation of the price action.
Hence, please note, that, the markets Only move sideways and this is not an opinion or belief but rather a scientific fact which is why they call them the Time Series, which during the mono directional constant side way move, it also rises and fall....
What you probably mean to say, is that, to better analyze the price action you prefer a Straight-Line Approximation method from the Convergence Of Fourier Series Vs. other Numerical Methods...?! Which in fact I too happen to agree with but not in the sense as the only method but rather as an interesting method amongst many more.


...the purpose of technical analysis is insight, not merely solutions.
More...

Your post is the exact reason I now trade for a living and no longer teach at a corporate level.

For me, simple "zig zags" can not define the extreme levels of support and resistance. They simply give a very rough definition of the oscillation patterns they create.

For me the simplicity of price movemnt is to see, in real-time, the direction and strength of these oscillations on any Constant Volume/Share based chart my method is applied to.

"Any fool can make things bigger, more complex, and more violent. It takes a touch of genius-and a lot of courage-to move in the opposite direction."
*Albert Einstein

"Fractal geometry will make you see everything differently. There is danger in reading further. You risk the loss of your childhood vision of clouds, forests, flowers, galaxies, leaves, feathers, rocks, mountains, torrents of water, carpets, bricks, and much else besides. Never again will your interpretation of these things be quite the same.''
*Michael F. Barnsley

"Big whorls have little whorls,
Which feed on their velocity;
And little whorls have lesser whorls,
And so on to viscosity.''
*L. F. Richardson

"Nature itself, even in chaos, cannot proceed except in an orderly and regular manner.''
*Immanuel Kant


Great trading and thinking to you!!
 
Thank you for the quoted words of wisdom although, not quite sure what could be done with them...?!

Back to the original theme, are we yet convinced that, the Time Series indeed Only move Side Ways, east bound?

BTW, FWIW, Zig Zags per se, Do Not Oscillate!

Perhaps now that we may be more clear on the issue that, we are after all in the business of approximation, it must have become very clear the need to understand the random numbers too as part of the process and establish if they too could be approximated by any interpolation methods or not?
 
Quote from ML_QUANT:

Thank you for the quoted words of wisdom although, not quite sure what could be done with them...?!

Back to the original theme, are we yet convinced that, the Time Series indeed Only move Side Ways, east bound?

BTW, FWIW, Zig Zags per se, Do Not Oscillate!

Perhaps now that we may be more clear on the issue that, we are after all in the business of approximation, it must have become very clear the need to understand the random numbers too as part of the process and establish if they too could be approximated by any interpolation methods or not?
More...

os·cil·late -

1. To swing back and forth with a steady, uninterrupted rhythm.
2. Physics - To vary between alternate extremes

zigzag -

1. a line, course, or progression characterized by sharp turns first to one side and then to the other.
2. one of a series of such turns, as in a line or path

Call it what you want but price always moves from resistance (tops) to support (bottoms). Call is zigzagging or oscillating it never stops the process of creating perfectly sequential support and then resistance and then support and then resistance . . . forever and ever and ever. One needs then to find the ability to attribute levels of strength, or lack of, to each resistance and support level to see the perfectly readable flow of price.

sequential -

1. in regular succession without gaps
2. Succeeding or following in order


The quotes were meant to address the fact that price movement is a whole lot simplier than most think it is because most only look at the created overall complexity not the shear simpicity and beauty of it rhythm. Even ocean waves, as unique and individual as each is (no two are alike), their movement and strength can be read by what makes them alike.
 
Quote from ProfLogic:

os·cil·late -

1. To swing back and forth with a steady, uninterrupted rhythm.
2. Physics - To vary between alternate extremes

zigzag -

1. a line, course, or progression characterized by sharp turns first to one side and then to the other.
2. one of a series of such turns, as in a line or path

Call it what you want but price always moves from resistance (tops) to support (bottoms). Call is zigzagging or oscillating it never stops the process of creating perfectly sequential support and then resistance and then support and then resistance . . . forever and ever and ever. One needs then to find the ability to attribute levels of strength, or lack of, to each resistance and support level to see the perfectly readable flow of price.

sequential -

1. in regular succession without gaps
2. Succeeding or following in order


The quotes were meant to address the fact that price movement is a whole lot simplier than most think it is because most only look at the created overall complexity not the shear simpicity and beauty of it rhythm. Even ocean waves, as unique and individual as each is (no two are alike), their movement and strength can be read by what makes them alike.
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Do you see any Harmonic Motions, typically Periodic in a Zig Zag? Caution, if it is Harmonic and or Periodic then it can pretty much be easily approximated!

Also, do you see any position of stable equilibrium, or balance in a ZZ that it moves around it?

IMO, in the ZZ there are no Harmonic or Periodic movements and neither are there any points of equilibrium which all 3 factors are some of the must exist features of Oscillation.

Anyhow not an important issue but, you also like to eliminate the time factor from your ZZ's which is quite contrary to Oscilation.
 
Quote from ML_QUANT:

Do you see any Harmonic Motions, typically Periodic in a Zig Zag? Caution, if it is Harmonic and or Periodic then it can pretty much be easily approximated!

Also, do you see any position of stable equilibrium, or balance in a ZZ that it moves around it?

IMO, in the ZZ there are no Harmonic or Periodic movements and neither are there any points of equilibrium which all 3 factors are some of the must exist features of Oscillation.

Anyhow not an important issue but, you also like to eliminate the time factor from your ZZ's which is quite contrary to Oscilation.
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Agreed . . . price oscillates . . . It doesn't zigzag.
 
Quote from ProfLogic:

Agreed . . . price oscillates . . . It doesn't zigzag.
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Well, not quite...sorrrry.
Neither price nor ZZ Oscilate! Swing, maybe?
I do agree price Zig Zags though, if that's what you mean?
 
Quote from ML_QUANT:

Well, not quite...sorrrry.
Neither price nor ZZ Oscilate! Swing, maybe?
I do agree price Zig Zags though, if that's what you mean?
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I do not understand where people keep getting the energy to keep on discussing about the definitions of words. There is so much confusion about the words that are used and their meaning that every effort to talk about trading related items is impossible.

For each word that is used each party has another definition. It's like a discussion between a chinees that only understands chinese and a jew that only speaks hebrew. They both try to discuss with each although they both know that they don't understand what the other says.
 
Quote from spike500:

I do not understand where people keep getting the energy to keep on discussing about the definitions of words. There is so much confusion about the words that are used and their meaning that every effort to talk about trading related items is impossible.

For each word that is used each party has another definition. It's like a discussion between a chinees that only understands chinese and a jew that only speaks hebrew. They both try to discuss with each although they both know that they don't understand what the other says.
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Where do you get your energy from to spend it on such complaints, we get it from the same source too?
BTW, if you pay close attention, the discussion was NOT at all about words but rather scientific terms that have very different significances.
As in mixing up an scalar with a vector in physics would have been(like not understanding one has only a magnitude and the other a magnitude and a direction).
Some of your indicators Oscillate around zero and the others swing...now if you don't know the difference or do not care, then I wonder if you should be trading since you would not be able to interpret them properly?
Let me go the extra mile and explain this further to save you another none productive post.
In the case of the Oscie's you care how far from the zero line they are and with the swings, you'd care about the formation... or maybe your trading doe not require any of these.
 
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