What Happens Next

[Triggerfish]

Basically you can have a very good idea of where price might go and what you will do in those circumstances, that is in no way a dead cert though.

As an example, go to the main page of this forum - tell me exactly when the next post will occur, how big it will be and who will post it.

Another way of saying it - there is a certainty that someone will post within the next 10 mins (if no one else does I will 😆 ).
That post may well trigger further posts.
That is probability versus exact prediction.

Same thing in a market

Then is it possible to have certainty?.....and how would one go about getting it?
If it can be achieved, then the trader applied that understanding, it can be 100% hit rate!!

Although one can "believe" the markets are random without understanding.....while it is another thing "knowing" what it is.....so I guess the question is can it be known?.....so it can become certain?
Your comparison of the next post in T2W is not ideal as the markets are about "price" direction and not about who is going to open a new account.....?

 

[Liquid validity]

Then is it possible to have certainty?.....and how would one go about getting it?
If it can be achieved, then the trader applied that understanding, it can be 100% hit rate!!

Although one can "believe" the markets are random without understanding.....while it is another thing "knowing" what it is.....so I guess the question is can it be known?.....so it can become certain?
Your comparison of the next post in T2W is not ideal as the markets are about "price" direction and not about who is going to open a new account.....?

No there is no certainty.
The forum analogy was simply to highlight the fact that no one knows
exactly what will happen next.
That doesn't mean you can't have an idea of whats likely to happen next.
That was the sole purpose of using it as an example.

Maybe, but I don't care 🙂 I know what I need from a trade to keep my account ticking along nicely and I take it unless there's a damn good reason why not.

Agree, thats why I said as long as it suits you, thats all that matters 🙂

 

[Shakone]

I was initially going to suggest you stick a 49 moving average and an ichimoku on there and that would sort it all out, but then realised it wasn’t funny.

Could be quite depressing if it hadn’t given me some comfort it’s OK to feel clueless as it’s all totally random. Probably essential to assume cluelessness in fact and keep in mind you’re just betting on raindrops on a window pane – a window pane which sometimes inverts –and don’t forget the random gusts of wind which can come from any direction too, at any time.

What’s missing though is the way each of those data points ended up where they did: there’s no OHLC and no way to drill down and tell how each data point got from O to C. I’m advised the formation of each point/candle/bar is more than half the picture.

How about this? Does it look real?

 

[Shakone]

Lot of sense in that, Shaky, but there's not much predictive in saying "I'll risk £100 and take £200 if it comes (I disagree about limiting profits in this way btw)" nor if you climb on momentum and go when it's gone, albeit that their might be a bit of prediction in that depending how you judge it. True, if you manage trades by deciding when it looks like enough is enough then it has a predictive element, although not necessarily one related directly to TA.

Well I would think that in the first case you're predicting that you will hit your £200 target before the £100 loss more than 33% of the time. But yes, a lot of it can be non-TA as well, such as psychology. I mean even many of those who say they are using TA are sometimes just trading based on gut feelings and fear and greed.

 

[new_trader]

Then is it possible to have certainty?.....and how would one go about getting it?
If it can be achieved, then the trader applied that understanding, it can be 100% hit rate!!

Although one can "believe" the markets are random without understanding.....while it is another thing "knowing" what it is.....so I guess the question is can it be known?.....so it can become certain?
Your comparison of the next post in T2W is not ideal as the markets are about "price" direction and not about who is going to open a new account.....?

Large operators don’t telegraph their intent to the market in an obvious manner. If they did then all we would need to do is buy when they buy and sell when they sell and we would all be rich. If only it were that simple.

 

[Purple Brain]

no sorry
volatility is 2 directional and velocity is 1 direction.
This is very important when discerning real from noise.🙂

I'd normally not dream of voicing an alternative view to an experienced trader, but if your velocity is the same as my velocity it has 2 dimensions: Direction and Speed.

I'm guessing we're not talking about the same velocity.

 

[Purple Brain]

How about this? Does it look real?

It looks realistic.

A genuinely random OHLC would have opens a mile away from prior close and highs lower then the low on the same bar. I was, and am, disputing the basis of comparison between random and empirical, not that a comparison is invalid per se.

There are a number of different discussions going on in this thread all loosely related to the subject. Some hugely technical and above my head and vital brain matter for further research. Others interesting in their way for underlining we're all going about the same business in largely different ways with contrasting methods and perspectives. A good thread.

barjon - what have you started?

 

[counter_violent]

I'd normally not dream of voicing an alternative view to an experienced trader, but if your velocity is the same as my velocity it has 2 dimensions: Direction and Speed.

I'm guessing we're not talking about the same velocity.

No problem at all, it makes a change having a thread worthy of comments.

So anyway, just to clear up price velocity. It's not just direction and speed. Speed also needs to be defined as "speeding up", as opposed to, a "constant speed" in one direction.

So, in whatever price and time series we choose, it might look like this.

 

[rsh01]

if you think markets are random, is spoofing (+ any number of more macro market manipulation) a figment of your (or anyone elses) imagination?

 

[rsh01]

Large operators don’t telegraph their intent to the market in an obvious manner.

unless your dumping 2mill ounces (iirc) of (paper) gold on a fri open, ok you cldnt jump on the back of it as their intent was the aim.

in efficient, free markets, i agree. whatever they are.

 

[darktone]

With the TA predictive (indicative) argument, I often read from many people that you don't need to be able to predict, it's how you manage the trade. I understand what they mean, because you can't know how the trade will go, it may go 10 pips, it may go 100. You shouldn't limit profits arbitrarily as LV pointed out earlier, and management is key. But the management of the trade is just another form of prediction. You take the trade, it's not working out after so many minutes or hours, so you exit, or you move stops or whatever. You've exited, perhaps, not because you knew with certainty what would happen, but because it wasn't doing what you expected or wanted, and you've predicted the probabilities are not in your favour any more. But this is just prediction - based on TA - of likelihood, rather than a precise outcome.

So if TA is not predictive, then the dilemma becomes, how is it that it can suddenly become predictive when in a trade, but not before? How can it be, that "It's what happens next that counts (limiting loss, taking adequate profit, finding momentum etc", when these are just decisions, each of which can clearly be (and usually is) based on price movement (TA)?

I know we all see things different but for me predictive is "it will do X when it gets here" it will bounce at support for example. Non predictive is "it is doing X right now" it has just closed above the X ma. Maybe a better way of putting for me would be:
predictive = "it will or it wont do that because of X reason"
non predictive = "It has done X and i hope it will continue"
I think its more a question of ego than technical method per say. I used to be in the predictive (ego driven) camp for years, to my cost.

Regarding targets. I like the idea nowadays. In a trending market you can take chunks, which may or may not hurt profits for the duration of the trend. In a ranging market you have the chance of the odd target getting taken too. To my mind this in itself makes the method more durable and keeps you out of the 'give back' area. Probably most importantly for me at least is it gives you less to do, less to consider, and in turn frees you up to focus on more important areas.

All imho.

 

[Triggerfish]

Large operators don’t telegraph their intent to the market in an obvious manner. If they did then all we would need to do is buy when they buy and sell when they sell and we would all be rich. If only it were that simple.

yes!.....So at least there is something which can be described, if so, this would also mean there is something which can be known, even though what is noted is only an aspect of the equation.

It is then not a matter of applying one's own belief that there is no certainty and believe this as a fact but to be "aware" that there is something there to be discovered and known to make it concrete.....something that lays undiscovered doesn't mean it is not there, yet one naturally choose to belief one's own false beliefs!.....does this correspond LV?

 

[Liquid validity]

yes!.....So at least there is something which can be described, if so, this would also mean there is something which can be known, even though what is noted is only an aspect of the equation.

It is then not a matter of applying one's own belief that there is no certainty and believe this as a fact but to be "aware" that there is something there to be discovered and known to make it concrete.....something that lays undiscovered doesn't mean it is not there, yet one naturally choose to belief one's own false beliefs!.....does this correspond LV?

Its impossible to know every single thing that will affect price.
You would basically need to know the intent and timing of every individual
or collective that is capable of moving price.

As they rely on taking other peoples money off the table,
they aren't going to tell you are they.
No more than anyone would show you their hand in poker.
Certainty is impossible in any game.

 

[Liquid validity]

There are many parties whom "they "relate to. What if you could just concern yourself with the "they" who are really most likely to move the market/control price. Would this then make the mission less complex? Can this even be done?

Yeah agree, thats pretty much what I was driving at here:

You would basically need to know the intent and timing of every individual
or collective that is capable of moving price.

Tough to say it can be done all the time, there are times and instances where
it is abundantly clear (Soros and sterling, obviously rare).
Other areas like small cap stocks - not worth the hassle of HFT icebergs there,
so things like large round size EOD trades still stand out - can be worth following
if its not isolated.
Downside with that is liquidity, spreads and easier manipulation - no free lunch.

Then you have the no brainer market shocks, downside moves are nearly always
steeper and faster.
Market shock scenarios that occur during or before the session preceding yours
can spill over into your session depending on severity.
Those need care though - is it real shock or over reaction.
An over reaction is more likely to claw back the losses of the prior session.

I spose what I'm saying is you can never truly know what 'they' are doing,
but there are certainly times that bring them out of the woodwork in force,
or circumstances in which its not worth them trying to hide their footprint.

From your point of view, you mean the tape and DOM, if you are good at it,
then the answer is yes, on balance you usually have a better idea of what 'they'
are doing.

Certainty is just a word, does it really have to mean 100%? After all, we make our own rules, we dont have to use the dictionary as the gospel.

Certainty brings with it a consensus that we are able to bet the ranch on one single trade. Thinking like this prevents us from really getting down to the nitty gritty IMHO, as we have created a state of mind which seeks this certainty before we even begin trying to understand true market dynamics.

Yeah in terms of the true definition you are correct.
Instead of saying there is no certainty, a better way of phrasing it:
there is no trade with a 100% guaranteed outcome.
Yet you can still have some degree of certainty of your decision making
based on long term results, until or unless the certainty of those results disappears.

Another thing to ponder with regards to the term "random"; What if we were to change the word random and replace it with "interference". Then cycles of randomness become cycles of interference. You can see how using words changes the way we consider things. Interference implies that there will be a cause and effect, where as with randomness, we can never gain anything from the information.

Generally randomness, or at least times of randomness in markets is really
just a synonym for a collection of events:
Low volume day, high volume buyer / seller equilibrium etc.
Plenty more, point is even those events are not truly random.
There is a reason for all of them:
Low volume - no reason to trade, or unified opinion that its time to sit on hands.
Equilibrium - no imbalance in opinion or volume.

I don't know about anyone else, but for me randomness is just a loose term for
saying price is unclear.
Strictly speaking it isn't really randomness or anything else.

True market randomness simply does not exist.
If it did you would have monster trends and peak volume in ETH instead of just RTH,
frequent and large gaps during RTH
and major economic releases at any time during a 24 hour day and so on.

For me randomness largely applies to trade outcome - I don't know which trades
will be winners or losers, if I did, I wouldn't ever take the losing trades.
So why does a losing trade occur?
Its simply because your stops, timing and opinion are out of whack with
those who are moving price at the same time you enter.
Nobody will ever solve that, because its hindsight trading.

 

[Liquid validity]

wtf? 😆
Where did wallstreets post I just replied to go?

WallSteet, if you deleted it, it was a good post, interesting.

 

[kimo'sabby]

if you think markets are random, is spoofing (+ any number of more macro market manipulation) a figment of your (or anyone elses) imagination?

I'd hazard a guess that most members of this site trade using charts only. Is order driven trading anymore predictive than chart only trading?

 

[Liquid validity]

I'd hazard a guess that most members of this site trade using charts only. Is order driven trading anymore predictive than chart only trading?

If you're good at it and it suits you, yes.
If it doesn't suit you and you're no good at it, then no.
Its just another tool really.

 

[wallstreetwarrior87]

wtf? 😆
Where did wallstreets post I just replied to go?

WallSteet, if you deleted it, it was a good post, interesting.

Sorry LV, my error, copying it over to word at the same time as double checking spelling:cheesy:.

Here it is again:

Its impossible to know every single thing that will affect price.

Very true!

As they rely on taking other peoples money off the table,they aren't going to tell you are they.

There are many parties whom "they "relate to. What if you could just concern yourself with the "they" who are really most likely to move the market/control price. Would this then make the mission less complex? Can this even be done?

Certainty is impossible in any game.

Certainty is just a word, does it really have to mean 100%? After all, we make our own rules, we dont have to use the dictionary as the gospel.

Certainty brings with it a consensus that we are able to bet the ranch on one single trade. Thinking like this prevents us from really getting down to the nitty gritty IMHO, as we have created a state of mind which seeks this certainty before we even begin trying to understand true market dynamics.

Some good points on this thread:

Another thing to ponder with regards to the term "random"; What if we were to change the word random and replace it with "interference". Then cycles of randomness become cycles of interference. You can see how using words changes the way we consider things. Interference implies that there will be a cause and effect, where as with randomness, we can never gain anything from the information.

Nice thread!

 

[wallstreetwarrior87]

For me randomness largely applies to trade outcome - I don't know which trades
will be winners or losers, if I did, I wouldn't ever take the losing trades.
So why does a losing trade occur?
Its simply because your stops, timing and opinion are out of whack with
those who are moving price at the same time you enter.
Nobody will ever solve that, because its hindsight trading.

Thanks for the reply LV.

Your last paragraph is interesting, I don't know about you, but the problem (if you see it as one) tends to occur if the result is taken in isolation, rather than in comparison to a group of trades.

So certainty in isolation is impossible (to my level), and if i ever met anyone who can prove otherwise I would say well done that man/woman.

 

[new_trader]

I'd hazard a guess that most members of this site trade using charts only. Is order driven trading anymore predictive than chart only trading?

This has relevance to the price/time graph posted earlier. Make sure you ingrain this into your brain: The public is attracted by price changes, not by volume.

This is why the majority here, who are spread betters, trade like the markets are random. They insist that market movements are inexplicable simply because they can't explain it. If only they would dare to venture outside of their £1/point spread betting comfort zone they would actually see wot is wot for themselves.