But by your measure, Tape reading is ultra noise because it is way below any chart. This is what I disagree with, if it were true, the XTrader wouldn't be used in all the prop shops and people wouldn't be trading off their DOM WITHOUT charts.
In terms of HFT - I trade off the DOM and I don't see anything that is making it less tradeable.
Spoofing for instance can only do so much and it needs to do it for long enough to sucker people. As such, I don't see what everyone is worried about. I can attest to being regularly suckered in by spoofing and so obviously it is not beyond the realms of humans. Like you - I've not seen anything that turns me off a market with the exception of C when it was at $4.50, the range was 5c and the volume was 300 million per day. Look at BAC now, it's a similar story - death by HFT rebate trading. That's not happening on futures markets IMO - they'd get their asses handed to them if it did.
If one guy uses a 15 min chart and they think a 30 second chart is noise, it just means they don't understand the dynamics of the 30 second chart and when this chart is chaotic and when it is predictable.
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Psychology changes the patterns.
We don't know what comes next, BUT (and this is a big one), depending on the previous psychological move, we can predict the next one since we tend to repeat the same psychological mistakes over and over.
"Algo" trading removes the psychology aspect of trading. Some say it's the only way to be profitable, others dismiss that since when psychology changes,"algo" tend do take its time to adapt.
"Noise", "random", is all the same thing, they are all part of the psychological aspect of the market, of us.
Why daytraders tend to hold a 4 tick maximum loss on an ES trade? Why ES tends to find support on every 4 tick counter trend move? Is this random? Is this noise? Isn't this psychological? Isn't this constant move that generate a pattern, the constant 1 point stop loss? Is this random? Well, some might say it is since 1 point is a random number, it could be 1.25 points. But 1 point is the minimum move multiplied by 4. It's $50, it's a round number, it's something that psychologically creates meaning in us, in the market.
I don't see as random or noise. I see it as psychology.
If I become half a percent smarter each year, I'll be a genius by the time I die
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Strictly speaking, random means indeterminate. But the markets are clearly not indeterminate. Each print (trade) is clearly determined by an agreement of buyer(s) and seller(s). So the markets are strictly deterministic.
Presumably, you want to ask if the markets are predictable.
They are, to the extent that mass behavior is.
"...the degree to which you think you know, assume you know, or in any way need to know what is going to happen next, is equal to the degree to which you will fail as a trader." - Mark Douglas
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I don't know, I'm not a mathematician, nor a roulette player. Give me 3 year's worth of this data, I'll put up my indicators on it, run some backtests and analysis, and I'll tell you. But in terms of trading, I feel comparing the markets to roulette, and coin tosses is a pure waste of time, so those ideas are best suited for trivia party games and not worth pondering seriously in my view. All I know is I've been trading very specific patterns in what most call market noise for the past 7 years. You've all seen my charts with all the 'noise' signals. If you want me to put up some cold hard charts, you know I will...
Last edited by monpere; April 10th, 2012 at 02:42 PM.
There is not need to be a mathematician in order to succeed in trading, however it is very important to understand basic concepts of odds and probabilities...
I give you a example, some people think that in trading you have 50%/50% of making money; Actually is less than that, the odds are 1:3 = 0.33333... or simply 33.33%, why? Because you can only Buy, Sell or do Nothing.
Only three possibilities:
If you Buy you have 33.33%
If you Sell you have 33.33%
If you do Nothing you have 33.33%
But if you do Nothing you will not making money anyway, so then you need to work on how to improve the odds, how to put and increase the odds in your favor...
I think about odds and probabilities all the time, I was a semi-professional poker player so my poker skills help me a lot, because I am not a programmer I do not even know how to code a simple moving average. Lol...
There is a video on You Tube where Mark Douglas says: "Trading is a odds game".
And believe him, it is.
Last edited by mrphr; April 10th, 2012 at 03:38 PM.
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Preaching to the choir, I'm all about the probabilities But as I've mentioned elsewhere on another thread, you cannot apply theoretical probability to the markets, it is a waste of time, you have to apply experimental probability using empirical sample data. But, let's not go down that rabbit hole agan here
Last edited by monpere; April 10th, 2012 at 03:50 PM.
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