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Why it is possible to predict price movement?

  • #81
  • May 3, 2012 6:58pm May 3, 2012 6:58pm
Quoting katrooo
hi thelws,

actually, tact1cal, rooicol and halifax answered your questions,

there is no liquidity for big seller at resistance level because mass is trying to go short there with limit/market orders and much less people want to buy at resistance.....so in order to execute the order there must be the forced move above the resistance (aka stop hunt) to trigger buy stops which are faded by heavy selling by big seller - actually its not always done by a stop hunt, there are more ways to do it (fading "good" news, fading "another" leg in a trend)

tact1cal...
This comment literally changed the way I trade overnight lol. Can't wait to put it into practice.
  • #82
  • May 3, 2012 7:02pm May 3, 2012 7:02pm
Of course it is possible to predict immediate price behaviour.

Someone said:

Just below resistance - everyone sells
Above resistance - everyone buys

The rest is obvious. This is more powerful than anything in trading - at least in my charts and observation. What else do you wish for?


Success and insight everyone
  • #83
  • May 3, 2012 7:08pm May 3, 2012 7:08pm
Quoting Brutalpip
Of course it is possible to predict immediate price behaviour.

Someone said:

Just below resistance - everyone sells
Above resistance - everyone buys

The rest is obvious. This is more powerful than anything in trading - at least in my charts and observation. What else do you wish for?


Success and insight everyone
how about the fakies that are used as stated here by some member to fill large orders?

that is why i asked for statistical proof, an idea that you observe is not always valid, what is your sample space?
and are you having selective attention?
can you justify it with evidence or are ignoring the evidence to justify your way of trading?
AVT INVENIAM VIAM AVT FACIAM
  • #84
  • May 3, 2012 7:17pm May 3, 2012 7:17pm
Quoting the redlion
how about the fakies that are used as stated here by some member to fill large orders?

that is why i asked for statistical proof, an idea that you observe is not always valid, what is your sample space?
and are you having selective attention?
can you justify it with evidence or are ignoring the evidence to justify your way of trading?
It is not needed. As mentioned in some of the posts at page 1.

Successful trading is a combination of a few things. There will always be a chance that you are wrong. But when you combine the knowledge that big players will want to fade, near a s/r/fib/trendline etc place, use proper money management and limit your risk, you can be sure more than 50% of the time you will be right.

That is all that matters. It is mentioned that knowing why does not equate to making money. Sometimes you don't need to know why to make money.
  • #85
  • May 3, 2012 7:26pm May 3, 2012 7:26pm
Quoting thelws
It is not needed. As mentioned in some of the posts at page 1.

Successful trading is a combination of a few things. There will always be a chance that you are wrong. But when you combine the knowledge that big players will want to fade, near a s/r/fib/trendline etc place, use proper money management and limit your risk, you can be sure more than 50% of the time you will be right.

That is all that matters. It is mentioned that knowing why does not equate to making money. Sometimes you don't need to know why to make money.
We are always speculating regarding price that is why My posts state research regarding the randomness of price movement so we REALLY DON'T KNOW where the big players will be... We speculate.

as humans we over estimate the order of the markets
and we over estimate our ability to read price movement.
AVT INVENIAM VIAM AVT FACIAM
  • #86
  • May 3, 2012 7:26pm May 3, 2012 7:26pm
Quoting the redlion
I understand how to trade S/R and the rationale behind it.
But do you have any evidence that the market actually follows this?
any statistical objective study that states that 68% 80% or x% of the time when price reaches this S/R, S/D area it actually reverts to the mean?

that is what I mean
No, I don't know about any such objective statistical study. Different traders have different criteria and use various methods to identify what they consider a relevant S/R area. In addition there are other variables to consider before taking a S/R trade, be it previous price structure/bias/time of day...I think discussion on this would go beyond the scope of this thread.
I assume such objective study could be done if all S/R areas were equal.
  • #87
  • May 3, 2012 7:30pm May 3, 2012 7:30pm
Quoting 96flavors
No, I don't know about any such objective statistical study. Different traders have different criteria and use various methods to identify what they consider a relevant S/R area. In addition there are other variables to consider before taking a S/R trade, be it previous price structure/bias/time of day...I think discussion on this would go beyond the scope of this thread.
I assume such objective study could be done if all S/R areas were equal.
then they are not RELIABLE.
AVT INVENIAM VIAM AVT FACIAM
  • #88
  • May 3, 2012 7:46pm May 3, 2012 7:46pm
Quoting the redlion
then they are not RELIABLE.
Reliable to what extent? If it was 100% reliable how could price ever move? If this or other method never failed then there would be no market, nobody could make any money.
  • #89
  • May 3, 2012 8:08pm May 3, 2012 8:08pm
Quoting 96flavors
Reliable to what extent? If it was 100% reliable how could price ever move? If this or other method never failed then there would be no market, nobody could make any money.
exactly, you made my point for me.
AVT INVENIAM VIAM AVT FACIAM
  • #90
  • May 4, 2012 12:05am May 4, 2012 12:05am
Quoting the redlion
I understand how to trade S/R and the rationale behind it.
But do you have any evidence that the market actually follows this?
any statistical objective study that states that 68% 80% or x% of the time when price reaches this S/R, S/D area it actually reverts to the mean?

that is what I mean
you will soon realize that nobody here in this forum is actually doing a statistical analysis. Lot's of blabla and no hard numbers behind that blabla.
  • #91
  • May 4, 2012 12:55am May 4, 2012 12:55am
Quoting the redlion
exactly, you made my point for me.
I'm not sure how you could test support and resistance objectively, as they are subjective concepts in a sense, in that factors such as the strength of the rejection of the S/R will force a trader to use his discretion on whether something is a true support or is just a small obstacle or nothing at all... and then how large a zone do you assign to the S/R to still call it successful?

Hard to test indeed without a more definite concept of a support/resistance level, and more about discretion of the trader than mechanics if you ask me. One man's resistance may not be a blip on another's radar.
"Don't Panic..."
  • #92
  • May 6, 2012 12:20pm May 6, 2012 12:20pm
Hey guys,

I've often found myself asking the same question. Many here on this board claim that they have an edge trading the market using certain mechanical systems or methods. Yet, price movement appear to be completely random. One can simply draw a line across the chart, and convince oneself that the line he drew is a key level. Yet, in the future, no one knows whether price would obey that line or not.

For a proper edge, you need to have a statistical advantage of the market. How do we know that there is a >50% chance that price would bounce at a "supply level"? How can we quantify this probability? What can we base the measurement on?

I'm relatively new as a currency trader, and I'm hoping a more experienced and successful trader can explain to me how an "edge" can be quantified.

Otherwise, the only thing I see we can control on our side is money management, controlling your risk exposure and eliminating it as soon as the market goes in your direction.
  • #93
  • May 6, 2012 2:21pm May 6, 2012 2:21pm
[quote=sargedessy;5641346]
explain to me how an "edge" can be quantified.
/quote]

Some traders here that are mq4 literate (coders) would say the only statistically valid way would be to program the edge into an ea and back test it over thousands/tens of thousands of trades and see how it does.
  • #94
  • May 6, 2012 4:55pm May 6, 2012 4:55pm
Quoting Custos
hocus pocus, if you ask me.

I agree totally.Thats the best statement i've heard on this forum.
I actually, as an experiment, ran a thread on another forum,trading price action, i.e patterns off a daily chart. To be honest it did make some pips, but not enough to convince me. Whole industries are being formed, sucking in lazy, uneducated traders.
how many traders, when preparing to enter as a trader into a market,actually do due dillegence to ascertain the driving economic factors behind the market? Not many from what i can see. Is it a supply or demand driven market? Most are clueless.
I have no idea why people think they can summon a profit from the ether by watching squiggly lines, and determine where price will be in an hour, or 4hrs.
Any market, if a person is aware, will be affected my macro economic factors.People eschew fundamentals because they don't understand them, and are too lazy to investigate.
How many traders think of the opportunity cost when funding a trading account?I can walk down the highstreet and get 4.5% tax free on my acct,If you're making 6% trading, then unless you are trading size, it's pointless. An extra 1.5% for staring at a chart all day, as opposed to doing nothing? its a no brainer.
I have a very simple checklist for fundamentals, it enables me to have a bias or remain neutral on a country, hence currency.It is divide into 2 sections, one measuring economic growth, the other inflation.I measure some variables over 3 month periods, thus eliminating any particular month deviations, a smoothing out process if you will.
Then simply check a monthly chart, to ascertain the trend.
And heres another interesting point.If people took the effort to study economics for dummies, then they would realise that classical economic theory dictates that trends cannot occur! Why? Well, people can figure that out for themselves.
A long term view, when allied to a trend,can be hugely profitable. Something to think about..
  • #95
  • May 30, 2012 10:08am May 30, 2012 10:08am
Quoting the redlion
.....
and to top it off we distort probabilities in our head according to failing to understand our marginal utility.

most of us over estimate our ability to predict the market, not only that but we over estimate OUR strategy as the BEST one for this case.
we could make a comparison with religion, on the irrationality and lack of logic but I believe this forum is not actually open that discussion.

However the mechanisms and faith based believes with no logical reason behind them still correlate well to trading.

what statistical study do we have...
academic papers on technical analysis?

well, one can start from here: (double click on picture below to get a better view.)
https://docs.google.com/viewer?pid=b...umber=15&w=800
" It may mean something. It may mean nothing at all "
  • #96
  • May 30, 2012 10:13am May 30, 2012 10:13am
here is a link to an academic treatment of S/R levels.

statistical methodologies are also included.
" It may mean something. It may mean nothing at all "
  • #97
  • May 30, 2012 10:26am May 30, 2012 10:26am
trendlines are simple linear regression. what is wrong with using the method of least squares? what is wrong with using linear regression in analyzing packs of data?
this is done in math, engineering, the sciences, businesses and finances....but when it gets to a subset of finance: technical analysis, some people frown....claiming no statistical evidence.

the problem is: knowing how to properly draw a solid linear regression for EUR/USD. Not any random lines make analytical sense.
" It may mean something. It may mean nothing at all "
  • #98
  • Jul 15, 2012 6:11am Jul 15, 2012 6:11am
Price movement are random, traders psychology are not, still I think trying to predict will narrow our view. The momentum can give us clues to take chances.
"Men who can both be right and sit tight are uncommon."
  • #99
  • Jul 15, 2012 6:41am Jul 15, 2012 6:41am
the topic of this thread is ''why is it possible to predict price movement''. I think it isn't entirely possible to predict where the market would go. that's why professionals make and lose money.

the key is saving your equity and making sure you are around to place bets when your right!
  • #100
  • Jul 15, 2012 6:44am Jul 15, 2012 6:44am
impossible to predict price movement. our best bet is to follow the lead of price and react accordingly. take profits fast, and know how to manage losing positions.
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