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  • #761
  • Feb 13, 2022 1:24am Feb 13, 2022 1:24am
Quoting ohitsyou
{quote} Fair enough. And would it have been so difficult to ask: What is your next point? Instead it's a command. If you look at your keyboard there is a question mark key (?) in the lower-right corner. Perhaps your keyboard doesn't have one -- I don't know...
Hahaha.... I'm more concern about staying out of controversy with that line. I'm actually curious about your next point. I don't have an inkling where you're headed. So, what's you next point?
Know what you trade
  • #762
  • Feb 13, 2022 1:43am Feb 13, 2022 1:43am
Quoting BWilliam
{quote} Hahaha.... I'm more concern about staying out of controversy with that line. I'm actually curious about your next point. I don't have an inkling where you're headed. So, what's you next point?
Ahhh, thank you. I have to take the dog for a walk -- I'll be back shortly...

By the way, controversy is fine. If we all agreed then there would be nothing to learn. You have good and interesting insights to share, so no reason to avoid controversy. When two people disagree but carry on then it's a win-win proposition. If you win the debate then you win. And if you lose the debate you still win -- because you've gained a new perspective you can carry with you the rest of your life -- the embarrassment of losing the debate is brief. A couple of years ago I had a debate with another member here -- at the time it didn't go so well. But if you were to ask me if I'd do it again my answer would be "in a heartbeat". And not because I like to argue -- which I do -- but because in hindsight I learned so much during that time.

PS: Spoiler alert: Here's where I'm headed -- (1) FX is not random, (2) There is no master-algo, (3) It makes no difference whether I am right or wrong.
  • #763
  • Feb 13, 2022 1:48am Feb 13, 2022 1:48am
Quoting ohitsyou
{quote} Fair enough. And would it have been so painful to ask: What is your next point? Instead it's a command. If you look at your keyboard there is a question mark key (?) in the lower-right corner. Perhaps your keyboard doesn't have one -- I don't know... One thing I've learned on FF is to distinguish between the genuinely curious and the non-curious. I'm perfectly fine interacting with the non-curious, but I do learn more discussing things with the curious.
Go walk the dog mate....suggestion from a mutual friend!
Evidence required and not a copy of a poo bag unless you want to deposit it onto another thread!!
  • #764
  • Feb 13, 2022 3:35am Feb 13, 2022 3:35am
Quoting moodybot
{quote} Go walk the dog mate....suggestion from a mutual friend! Evidence required and not a copy of a poo bag unless you want to deposit it onto another thread!!
Send me your address -- I'll mail it to you...
  • #765
  • Feb 13, 2022 3:59am Feb 13, 2022 3:59am
Quoting ohitsyou
{quote} Send me your address -- I'll mail it to you...
Would get his address but have been banned from the thread. Would try Roger but he was kicked out as well..
  • #766
  • Feb 13, 2022 4:40am Feb 13, 2022 4:40am
Continuation: My subscription for the how/why of market behavior.
Spoiler alert: Here's where I'm headed -- (1) FX is not random, (2) there is no master-algo, (3) it makes no difference whether I am right or wrong.

An example of the DSS Bressert (Double Smoothed Stochastic) indicator by Walter Bressert is shown below. Its algebra is related to the well-known stochastic formula. You probably don't have a clue how stochastics works -- no problem -- I'll provide a simple explanation later. DSS Bressert and Stochastics are legitimate and valid indicators that have stood the test of time and have been applied for analyzing a variety of different financial instruments. I don't care to debate whether you like them or not -- I just want to share how they chart bar data. I do not use them for trading -- I've found alternatives.

Attached Image (click to enlarge)
Click to Enlarge Name: DSS_Bressert.png Size: 85 KB


FX indicators are interesting because they use a variety of colors and markings and lines to highlight certain aspects of an otherwise very boring price chart. Some indicators are more revealing than others. When it comes to data analysis, how data is charted can make a yuuge difference. With some charts certain features of the data remain hidden, whereas with other charts features jump out that you hadn't noticed before. Consider the DSS Bressert chart above of GJ / H1. Does anything jump out at you -- hmmmm -- like the repeating pattern? What's that about? BTW -- the repeating pattern has no relation to trading sessions.

And below is Stochastics overlaid on top of DSS Bressert -- do you see how they align? Not perfect, but they definitely correlate (as expected).
Attached Image (click to enlarge)
Click to Enlarge Name: DSS_Bressert-plus_Stochastics.png Size: 105 KB


PS: A little bit about Stochastics -- not too technical. It differs from the more common MA indicators we are familiar with. Stochastics has a bunch of peaks and valleys at, roughly, equally spaced intervals. But when you compare Stochastics with the corresponding price chart you don't see how these could possibly align. The reason is because the Stochastics data is ***normalized***. What that means is that a Stochastics data point is charted relative to a ***local*** High/Low. That is, a Stochastic peak isn't one of the highest prices over the past week or month or year -- rather, it's the highest price over the most recent 5 bars (K period). Again -- the Stochastic data is normalized and charted relative to local High/Low. If you look ***very*** closely at the price chart then you may notice these local Highs/Lows and then the Stochastic peaks and valleys will make more sense.

PPS: If you aren't curious about the genesis of this repeating pattern then speak up now and I will return rattling chains on the COVID thread.

To be continued if no one objects...

Oh, yes, and here's the DSS Bressert indicator (not my creation).
Attached File(s)
File Type: ex4 DSS Bressert.ex4   12 KB | 334 downloads
  • #767
  • Edited 9:17am Feb 13, 2022 9:06am | Edited 9:17am
Continuation: My subscription for the how/why of market behavior.
Spoiler alert: Here's where I'm headed -- (1) FX is not random, (2) there is no master-algo, (3) it makes no difference whether I am right or wrong.

Since there haven't been any objections then I'll continue a bit more.

At this point I think it is valid to point out there is no way FX prices are random. The repeating pattern of peaks and valleys at regularly spaced intervals -- revealed by the DSS Bressert and Stochastics indicators -- in no way can reflect random prices. Furthermore, I think we all agree that price meanders within a range -- i.e. within a channel or envelope with an upper and lower boundary. The upper and lower boundaries are not random. The fact the price remains within boundaries would contradict the proposition that price is random. So -- let's lay the random / non-random debate to rest. FX pricing is not random.

Before moving on to the next point I need to introduce the concept of "system" -- in particular, what is a system. Even though you may think you know what a system is, we need to be on the same page. Any non-inanimate object has all the elements necessary to be a system. A system has at least one metric that can be measured, one or more sensors to monitor that metric, and one or more feedback mechanisms that can be used to adjust that metric whenever it drifts away from its optimal value. Everything -- and I literally mean everything -- can be described as a system. Below are some examples:

* a tree blowing in the wind
* body temperature
* blood pressure
* relationship with your spouse
* driving a car
* an internal combustion engine
* politics
* a guided missile
* breathing
* a bridge
* our immune system
* a rubber band
* bank's interest rate
* stocks / bonds
* a pendulum

Again -- all systems include the following as a bare minimum: a metric (something that can be measured), a sensor (some means to monitor the metric), and a feedback mechanism (a means for adjusting the metric to some optimal, inherent state).

And where am I headed with this -- of course -- FX is also a system. Here the metric is price. The sensor are the liquidity providers / brokers who broadcast the price to anyone or anything that consumes price data. And the feedback is the buying/ selling of currencies that cause a price to rise or fall.

Again -- to be continued if no one objects...

PS: Oh, yes, one other thing about systems. You can measure its current state, but you don't know its next, future state. And that's okay. The purpose of the feedback mechanisms allows a system to adjust to unknown, future conditions. Without feedback mechanisms the price of a currency could implode to zero or explode to infinity. The fact that doesn't happen implies there are feedback mechanisms at work, and the fact there are feedback mechanisms means that FX operates as a system. Is there manipulation -- of course -- we're talking about money. That's what we humans do -- try to get an edge. But even though price may be manipulated doesn't detract from the fact that FX behaves as a system. Manipulation is just another form of a feedback mechanism used to adjust price.
  • #768
  • Feb 13, 2022 9:57am Feb 13, 2022 9:57am
Here is some food for thought as you work through this discussion.

The majority of forex transactions are forwards and swaps. These contracts contain pre-arranged exchange rates, and banks are incented to come as close as they can to hitting those contracted exchange rates. The bank understands their upcoming contract obligations and usually have a few days to hit their objectives, allowing them time to get a jump on their needs, farm out work to lower tier banks, hedge their risks, etc. Much of what is happening each day is simply the banks trying to keep their customers happy, while reacting to changing fundamentals. So, nearly everything that you see on the charts is processing contracts and managing risks for clients. Very little of the chart is a result of guessing or chance.
  • #769
  • Feb 13, 2022 10:10am Feb 13, 2022 10:10am
Quoting GEfx
Here is some food for thought as you work through this discussion. The majority of forex transactions are forwards and swaps. These contracts contain pre-arranged exchange rates, and banks are incented to come as close as they can to hitting those contracted exchange rates. The bank understands their upcoming contract obligations and usually have a few days to hit their objectives, allowing them time to get a jump on their needs, farm out work to lower tier banks, hedge their risks, etc. Much of what is happening each day is simply the banks trying...
Solid comment GEfx.

That's why it's important to me to understand the behind the scenes daily operations then see how this play out on the chart. This connection give logic and confidence to the basis of the strategy design, sort of fill the answer to the why.
Know what you trade
  • #770
  • Feb 13, 2022 10:21am Feb 13, 2022 10:21am
Quoting GEfx
Here is some food for thought as you work through this discussion. The majority of forex transactions are forwards and swaps. These contracts contain pre-arranged exchange rates, and banks are incented to come as close as they can to hitting those contracted exchange rates. The bank understands their upcoming contract obligations and usually have a few days to hit their objectives, allowing them time to get a jump on their needs, farm out work to lower tier banks, hedge their risks, etc. Much of what is happening each day is simply the banks trying...
This is great -- thanks for the food. I would consider what you just described as part of the feedback mechanism inherent in the FX system. There can be more than one feedback mechanism. A feedback mechanism is simply a way for the system to be adjusted so that it doesn't implode or explode. Even if you consider the feedback mechanism as a form of manipulation -- it's still a feedback mechanism.

A feedback mechanism is not the same as a vendor asking for your opinion or feedback on their product or service. The feedback mechanism I'm referring to is not your opinion. Again -- a feedback mechanism is any process that can adjust the metric that is under study. And GEfx this comment is not directed at you -- I was just making a general comment.
  • #771
  • Feb 13, 2022 10:29am Feb 13, 2022 10:29am
A comment about random versus non-random... Many believe that if something is "not predictable" then it must be random. That is absolutely, 110% not true. The opposite of "not predictable" is not random. For example, I can't predict the next time I'll have to pee, but that doesn't mean my trips to the bathroom are random. Rather, they are "probabilistic". There is a certain probability I'll need to pee in the next 5 minutes, the next hour, the next day, the next week. So, though I can't predict when, there are underlying probabilities. The same is true of FX. So, again, definitely not random.
  • #772
  • Feb 13, 2022 11:04am Feb 13, 2022 11:04am
Quoting BWilliam
{quote} Solid comment GEfx. That's why it's important to me to understand the behind the scenes daily operations then see how this play out on the chart. This connection give logic and confidence to the basis of the strategy design, sort of fill the answer to the why.
Let me add another piece of the puzzle to add a little more clarity to PA: options expiry during the NY session. It's a good idea to keep an eye on options expiry during NY, and pay attention to PA if the strike is close or reasonably close. Bankers are more than happy to help the option owner hit the strike price, costing a competitor lots of money. Sometimes, you can watch as PA pushes towards the strike price as the strike is defended by the option issuer. It is sometimes a real knife fight. PA before the strike and after the strike is interesting and worth noting is you are considering a trade or managing a trade.

There are lots of things going on with the big banks that make PA, as it is unfolding, a lot clearer if you think about what the banks do and how they do it. Banks view charts in many ways, but often as a way to communicate their desires and intent. The charts are both past performance, and current intent.
  • #773
  • Feb 13, 2022 11:12am Feb 13, 2022 11:12am
Quoting GEfx
{quote} Let me add another piece of the puzzle to add a little more clarity to PA: options expiry during the NY session. It's a good idea to keep an eye on options expiry during NY, and pay attention to PA if the strike is close or reasonably close. Bankers are more than happy to help the option owner hit the strike price, costing a competitor lots of money. Sometimes, you can watch as PA pushes towards the strike price as the strike is defended by the option issuer. It is sometimes a real knife fight. PA before the strike and after the strike is...
GEfx, you speak the language I understand, I was wondering if someone else think the same. You use the word intent, that's what the chart tells us. Without intent, Idk how to trade. Example btc has to fall NY session today, reason is intent.
Know what you trade
  • #774
  • Feb 13, 2022 11:45am Feb 13, 2022 11:45am
Quoting BWilliam
{quote} GEfx, you speak the language I understand, I was wondering if someone else think the same. You use the word intent, that's what the chart tells us. Without intent, Idk how to trade. Example btc has to fall NY session today, reason is intent.
IMHO, when you begin to view PA moves as intent, you are better prepared when there is follow through, rejection, or a pause to consider. All are proper forms of communications and are factors in managing trades, taking trades, or cutting losses early. All are set ups to think about and possible trade.

One note about trading tomorrow: the Fed is having an emergency meeting tomorrow that has not gotten a lot of press. If they make a change to policy it could be very volatile. Or maybe they just want to beat Bullard in the head for popping off last week. Anyway, caution might be the word of the day.

Good trading BW!
  • #775
  • Edited 12:12pm Feb 13, 2022 11:48am | Edited 12:12pm
Quoting BWilliam
{quote} GEfx, you speak the language I understand, I was wondering if someone else think the same. You use the word intent, that's what the chart tells us. Without intent, Idk how to trade. Example btc has to fall NY session today, reason is intent.
"Intent" is another form of feedback -- similar to broadcasting price values. If it causes price to adjust (i.e. funds to exchange hands) then it's no different than sweating to cool your body or constricting blood vessels to keep your body warm. Further confirmation that FX is a **system** with feedback mechanisms.

I'm not so concerned with the details of what feedback mechanisms participate in adjusting price. That's interesting, but immaterial to me and a distraction. All I need to know is that such mechanisms exist. At this point in the discussion I still have bigger fish to fry...
  • #776
  • Feb 13, 2022 11:54am Feb 13, 2022 11:54am
Whether or not you agree with me, does anyone grasp this concept of FX as a system that includes a metric, sensor and feedback? Or am I posting to myself?

My "intent" is to tie this in with the repeating pattern revealed by Stochastics.
  • #777
  • Feb 13, 2022 1:57pm Feb 13, 2022 1:57pm
There are some decent people on this thread, and in truth what I like about it most is that nobody claims to actually know definitively, they have well-formed opinions that they are willing to share and debate. I might argue GEfx gives quite the insight to the true mechanics and influence of derivatives in the market and when he explains it (as with most people here) it makes sense, I expect that is the tip of iceberg of knowledge there.

I think I agree with aspects of what you are saying ohitsyou. I do not believe the market is random, however I don't believe it is manipulated per se, it is a service which large institutions are compelled to provide - competitively. As such every now and again they have to balance their books. So it is their bat, ball and pitch - and whilst I don't have the skill of Timetells, BWilliam etc to actually see that for myself, I do believe it exists - routinely. In some ways whether that is bot or human activity (for the record I believe it is both) is slightly irrelevant to me, accepting it exists is the most important factor.

I work purely with indicators - I am an engineer at heart and as such, I seek a defined solution. Having said that over the last month or so I have been consistently profitable for the first time on this 15 year journey. The difference is simple, I have a set of rules to which I am alerted. However, rather than take the trade regardless, I am spending a few minutes evaluating the trade before executing, and I am passing on more than 50% of them. I can't code the difference though because it isn't mechanical, and that is the most obvious learning for me - the old grey matter is required. I think that because I am an engineer that despite spending hours and hours staring at CP charts, Timetells, BWilliams etc, I sort of get it but can't see it.... different set of skills I would say.

So yes, I do understand metric, sensor and feedback, and I think it's valid depending on how it is applied. But the key for me (as it stands this week at least) is a distinct lack of rigidity, something I never thought I would say and then obvious trade management, I see no need for bravado, there will be another trade along shortly.

Having said that I expect my results will head down the toilet this week as they have done so many times in the past
  • #778
  • Feb 13, 2022 3:52pm Feb 13, 2022 3:52pm
Quoting rogerha
There are some decent people on this thread, and in truth what I like about it most is that nobody claims to actually know definitively, they have well-formed opinions that they are willing to share and debate. I might argue GEfx gives quite the insight to the true mechanics and influence of derivatives in the market and when he explains it (as with most people here) it makes sense, I expect that is the tip of iceberg of knowledge there. I think I agree with aspects of what you are saying ohitsyou. I do not believe the market is random, however...
Unlike some threads where one opinion only has to be vehemently followed, as a discussion thread I opened this one up to give some really decent people an opportunity to discuss their thoughts without the time honored trolls attempting to impose their will, effectively taking over.
The last run of posts basically leaves me hiding in the corner, I'll leave it to the ultra informed to carry on, its an eye opener, information that's not usually seen on a standard thread like this. I have my own view as to whether the market is an Algo or not, I just see a chart, that's what I'm working from, as most of us are. Fortunately the same moves happen continuously and whatever is actually setting and moving price, to me it doesn't matter as long as it can be traded.
Well done Roger on becoming profitable, i still have ups and downs but generally happy with where I'm heading, and like you, getting onto probably 12+ years of hard graft.
Thanks to those taking the time to post, and being respectful of opposing views...

One last point Roger, if you want to put up a chart and discuss, do so, it takes big boys pants to do that, we all have on this thread, and if your analysis, is wrong, don't bother coming back and putting another.......... so what, it's a learning curve, nothing like real pressure of people critiquing your thought process. Just like being married mate!!
  • #779
  • Feb 13, 2022 4:17pm Feb 13, 2022 4:17pm
Quoting rogerha
There are some decent people on this thread, and in truth what I like about it most is that nobody claims to actually know definitively, they have well-formed opinions that they are willing to share and debate. I might argue GEfx gives quite the insight to the true mechanics and influence of derivatives in the market and when he explains it (as with most people here) it makes sense, I expect that is the tip of iceberg of knowledge there. I think I agree with aspects of what you are saying ohitsyou. I do not believe the market is random, however...
Hey rogerha -- nice post. I think we are on the same page. One thing about manipulation, though. I didn't say the market is manipulated. Rather, I said that manipulation exists. I see the market as any other system. Manipulation is just one of the feedback mechanisms that cause price to adjust. But the entire FX market is not manipulated.

The market giveth and it taketh. I hope this upcoming week is not a toilet one for you.
  • #780
  • Feb 13, 2022 5:06pm Feb 13, 2022 5:06pm
Continuation: My subscription to the how/why of market behavior.
Spoiler alert: Here's where I'm headed -- (1) FX is not random, (2) there is no master-algo, (3) it makes no difference whether I am right or wrong.

Coming down the homestretch -- a couple more posts to go...

A pendulum is a simple system -- it includes a metric, sensor and feedback (gravity). What if I were to rotate a chart by 90 degrees and superimpose a pendulum. What would that look like?

Attached Image (click to enlarge)
Click to Enlarge Name: pendulum.png Size: 162 KB

Do you see what I see? Just as a pendulum swings from left-to-right and back again, so does price (when charted using Stochastics). Price is not a perfect pendulum, but you probably get the idea.

The time it takes to swing from left-to-right (or vice-versa) is the time it takes for feedback to make its adjustment. It is not instantaneous. The time for feedback adjustment differs from system to system. For example body temperature -- if you are overheated it may take an hour or two for perspiration to cool you off. A guided missile adjusts within microseconds. Adjusting the relationship with your spouse after the argument last night takes a few days. Same as FX -- there is an intrinsic interval of time associated with price adjustments.

FX is not a perfect pendulum. Often times there are events or, for those who like conspiracies and evil Swiss bankers, manipulations that affect the normal rhythm of the pendulum. This results in erratic swings. It happens. It's still a pendulum, but it's a pendulum with occasional erratic swings.

There are traders here who understand the underpinnings of how foreign exchange works much better than me. I'm not privy to that information or when the boss yells for price to jump. I only concern myself with what I can see and touch -- it's an empirical approach. I don't intellectualize about what may or may not be occurring behind the scenes. If I can't use it for trading then I'm not interested.

One additional point here -- I am biased toward algorithmic trading and converting observations and clues to rules that can be replicated in code. My EAs can not hold a candle to a good discretionary trader because they can only take into account a small subset of clues compared to a good human brain. I envy good discretionary traders. So when I say I'm not interested in something that's not to say that others shouldn't be interested -- I just mean that if I don't know how to use something for my trading advantage then it doesn't interest me. If at some later date I were to learn how to use something then, of course, I would be interested.

One more post to go -- tying this all in with volume...
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