Day Trading & Forex Forum

trendie

This bothers me more and more.

There is a reality to the markets, that a specific size of transaction results in a market move. Government decisions on rates and such-like, as well as banks, also cause a real and specific, and qualitative move in prices.

We trade patterns, candletsicks, support and resistance, and MA bounces.

But, arent patterns, bounces, etc, artefacts of reality, rather than the reality itself?

A candlestick is an artefact of a price move, however it may be caused.
MAs are artefacts of price movements.
(last week, when I read that "price bounced off an MA", I cringed, I used to believe stuff like that, ages ago.)
Even double-tops and 1-2-3 reversals, for heavens sake, are artefacts.

How do you feel trading an abstract representation of reality, rather than reality itself??

I mean, when you're driving a car, you are driving your visceral experience of the vehicle, not the manufacturers recommended figures. Your experience of the stopping distance is based on your knowledge, not the manuals matrix of stopping distances.
When a dentist decides to drill a tooth, he is drilling a specific, unique event, not a standardised, ideal event taken from a manual.

Charts: reality or artefact?

Doing my head in, and the week hasnt even started.

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Warning: May contain nuts.

N Rothschild

im beginning to believe less and less in charts

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Bullsh!t, Bearsh!t all smells the same to me!

Trader333

Yes and no in my view. The past no longer exists so from that perspective it is not real. However, the patterns could give prices where others are likely to enter or exit in sufficient volume (or have orders ready to trigger if price approaches these levels) to affect a likely move in present time. As such all you can do is use probability to determine what the likelihood is that price will react in a predictable way when it approaches these previous price levels.


Paul

arabianights

Overwhelming majority is complete nonsense. Hell, look at the relative frequency of professional traders in any of the popular threads here which inevitably end up about charts. Have you ever seen a JP Morgan research report talking about pin bars?

I've consistently said my edge comes from the bid offer spread and trading news but it's rarely picked up on.

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Glenn

Markets are not technical all of the time, including intraday periods, which is why contigious backtests are useless, in company with most indicators.
When news comes through the door, technicals go out of the window.
If you can identify a technical period of time, trade it, otherwise keep out.
imho.
Glenn

Calinor

I'll give my 2 cents. How do you feel about living an abstract representation of reality? You think what you see with those eyes is reality? Are your thoughts real? Who even are you? Are memories reality? Do they actually exist? You can keep on with that, and confuse yourself more and more until you realise that everything you thought was real, isn't. What you say about trading doesn't seem any different to that.

The idea that the markets have a 50% chance of going up or down is actually quite crazy if you consider it. Why on earth would it be 50%? Why not 43%, 26% or 49.7% or whatever. Why the hell would a large number of people with their different motives produce something that of all the possible probablilities is 50-50, completely random and unpredictable? So once you accept that at different points, probabilities shift, then you wonder how to predict and utilise those probabilities. Some people like arabianights are fortunate enough to make money from the spread. For him it isn't necessary and probably not even worth it for him to spend large amounts of time trying to master technical analysis and a system based on it. For others that isn't a possibility, so they are forced to try to predict likely outcomes by other means.

When you think of prediction, you consider things in your life and try to guess what is likely to happen. This prediction could be with people, or on the road when you're driving or something else. Some people look for underlying reasons (fundamental), some people look at history, patterns and their experiences (technical) and so on. Both are actually quite sensible approaches.

So I think Trader333 hit the nail on the head.

cloud321

there is no spoon

0007

Trading is all about probability and you can work it out in many different ways. Charts are an artefact of price just like speech is an artefact of brainthought. Price is an artefact of the market.

So what's the problem?

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