Forums General Discussions Trading like Newton?!

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  • #11372
    Anti
    Participant

      Over the weekend I read many interesting posts of the (former) FF member CrucialPoint (CP). Here are the most interesting posts of him/her:

      Although I’d like to hear your opinions on all of these points, I’d start with Newtons laws as CP mentioned it more than once.

      I have especially a problem with the statement that price would stay in a uniform movement (up or down) as long as another influence forces it to stop/reverse/continue with another state. My understanding of the markets is that price will only move due to a disequilibrium between buyers and sellers. The more sellers there are (in comparison to buyers) price has to drop to find a state where an equal number of buyers and sellers agree to sell/buy. But when these trades have been finished and no buyers/sellers are left, price shouldn’t move anymore. Thus, I can’t agree CPs statements.

      Is my understanding of the market wrong? Is CP right? What’s your view on this and the other topics mentioned above?

      • This topic was modified 8 years, 5 months ago by Anti.
      • This topic was modified 8 years, 5 months ago by Anti.
      #11374
      simplex
      Moderator

        I fully agree to your doubts.

        Using analogies between price dynamics and mechanical dynamics of physical bodies is always dangerous. It’s ok to use a certain word, e.g. ‘momentum’, to describe some effects in both worlds. But it’s dangerous nonsense to believe that if you use one word for two different things the math behind is the same in both cases.

        Most people pretend to understand the basic dynamics of a car following a road or a ball kicked over a lawn (besides: I doubt they really do). So it’s appealing to use those physical forces as an analogy to describe price dynamics. CP did not post any detailed math, but many of his posts are implying that there’s similar math in both models – at least to readers who are less judicial than you are.

        If you can calculate the velocity of an apple hitting Newton’s head while he’s sitting under the apple tree in autumn, would you use the same formula to describe why EURUSD dropped under certain market conditions? I doubt that.

        Mathematics provides the common language to describe both physics and price dynamics. The square root of 2 should lead to the same result in both models, but that does not mean that the same models do apply to both worlds.

        In the end, did CP provide anything that looks at least similar to a mathematical model? I did not find anything while scanning his posts quickly. So what is the value of his posts? Reading behind the lines of some of his posts, a little glimpse of statistics is shining through. Anyone remembering TZ vs. RZ discussion now? If there’s one valuable hint CP gave, statistics is certainly the path to follow.

        s.

        A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

        #11375
        Anti
        Participant

          Thank you, simplex. No, you are right. There’s not a single mathematical model in his posts. As far as I understood CP he never applied some statistics as his opinion is that historical prices means nothing and only the recent candle contains all relevant info (there’s all info within recent CS – here I see an analogy to theory of EURUSDDs TZs).

          Well, I remember the TZ/RZ discussions. EURUSDD gave more maths and explained its application after some painful discussions. However, I believe that CP uses a successful strategy, too. But as he never shared enough hints (for most of us), we are under constraint to guess his methods.

          What’s your opinion on this “95 % of time price closes higher or lower than the open” thing?

          • This reply was modified 8 years, 5 months ago by Anti.
          • This reply was modified 8 years, 5 months ago by Anti.
          #11377
          simplex
          Moderator

            What’s your opinion on this “95 % of time prize closes higher or lower than the open” thing?

            I would consider that statement as rather trivial, at least when taken literally. What’s its value?

            Why take the open price of a certain candle into account? We already discussed that somewhere. It’s just an arbitrary choice because we need some point in time to start an analytic interval. And if it’s arbitrary, it might be discussed to choose a different point in time instead.

            For the sake of simplification, let’s consider the open price of a candle is really a remarkable point in our time-price coordinate system. Then his statement implies one strategy:

            Open both a buy stop and a sell stop (or buy limit and sell limit?) at a price limit that statistically makes sense above and below the open price, and delete the remaining stop order once one of them is triggered.

            Instead of doing this at a candle open, it might make more sense do look for a state (using whatever tools) where bulls and bears seem to have found some equilibrium, and then open those two pending trades above and below that price of temporary equilibrium. This at least would appear less arbitrary to me. That temporary equilibrium could be either a reversal or a retracement, and our pending trades should react to both possibilities.

            I think that this will be hard to analyze, though. So maybe choosing the open price is a simple and natural ‘Plan B’.

            Sounds simple, but I think what defines the point where it becomes a challenge is the part of ‘a price limit that statistically makes sense’. It could well be that in many cases once our orders are triggered the underlying swing is already exhausted.

            A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

            #11380
            Anti
            Participant

              I would consider that statement as rather trivial, at least when taken literally. What’s its value? Why take the open price of a certain candle into account? We already discussed that somewhere. It’s just an arbitrary choice because we need some point in time to start an analytic interval. And if it’s arbitrary, it might be discussed to choose a different point in time instead. For the sake of simplification, let’s consider the open price of a candle is really a remarkable point in our time-price coordinate system. Then his statement implies one strategy: Open both a buy stop and a sell stop (or buy limit and sell limit?) at a price limit that statistically makes sense above and below the open price, and delete the remaining stop order once one of them is triggered.

              That was what I’ve thought first. But as CP mentioned that he mostly trade tick charts and M1, I can’t really see that this would be profitable. Indeed, it should if one uses H1 or higher timeframes and hedges positions (i.e. opening another position in opposite direction with doubled lot size). But to trade this strategy on smaller TFs you need further info.

              Instead of doing this at a candle open, it might make more sense do look for a state (using whatever tools) where bulls and bears seem to have found some equilibrium, and then open those two pending trades above and below that price of temporary equilibrium. This at least would appear less arbitrary to me. That temporary equilibrium could be either a reversal or a retracement, and our pending trades should react to both possibilities. I think that this will be hard to analyze, though. So maybe choosing the open price is a simple and natural ‘Plan B’. Sounds simple, but I think what defines the point where it becomes a challenge is the part of ‘a price limit that statistically makes sense’. It could well be that in many cases once our orders are triggered the underlying swing is already exhausted.

              I absolutely agree.

              • This reply was modified 8 years, 5 months ago by Anti.
              #11382
              limprobable
              Participant

                Hello here,

                The most interessant thing i had never read on ff is that 97 % prices are recurrent.

                I used it every day in my trading. When i enter a trade, i am quite sure that price will come back to my enter. What does it means? When i am in wrong trend, price will come back and i’m out at BE, when i am in good trend, two possibilities, i am out rapidily to take my profit, or soon or later pric will come back to my enter and moslty have a DD before going again on right trend.

                I dont know if 97 % is right i dont have done the maths, but i saw some scientist french, that saying approximativly the same thing. If you write a line on a chart, price will come back to that price. And often more than one time. Sometimes quickly sometimes after a long time.

                sorry for my english, its frustating not to tell more and explain better.

                green pips

                • This reply was modified 8 years, 5 months ago by limprobable.
                #11384
                Anti
                Participant

                  @limprobable: So you use RZs?! How exactly are you doing? Maybe you could share some trades.

                  #11385
                  simplex
                  Moderator

                    I dont know if 97 % is right i dont have done the maths, but i saw some scientist french, that saying approximativly the same thing.

                    The probability depends on the input parameters chosen, see my post over here and the following posts. You can achieve 97 % under any market condition if you’re willing to wait long enough.

                    A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

                    #11386
                    ZARtrader
                    Participant

                      I dont know if 97 % is right i dont have done the maths, but i saw some scientist french, that saying approximativly the same thing.

                      The probability depends on the input parameters chosen, see my post over here and the following posts. You can achieve 97 % under any market condition if you’re willing to wait long enough.

                      LOL this is so true as this is exactly what MTH is doing, well from my minimal understanding

                      #11387
                      Anti
                      Participant

                        Yes. But that’s also the problem. It’s not my attitude to wait that long … You may always risk too big drawdown.

                        #11388
                        limprobable
                        Participant

                          Yes, thats right if you are using PTZ. Now if you dont use PTZ, but filter some datas with another indicator, maybe results will be differents.  If you are using only a few hours of one day maybe results will be differents. If you include this fact in your trading: look where your indicator fo exemple tell you when to enter, and look if price will come back to that price, maybe results will be differents.

                          I dont use any PTZ indicator in my trading. I only use the idea than in most case, when i have a signal, price will be back to my entry, thats it.

                           

                          Green pips

                          • This reply was modified 8 years, 5 months ago by limprobable.
                          #11390
                          gg53
                          Participant

                            Yeah, sure… RZ is working with high accuracy.

                            Just look at the EURCHF weekly chart from last year till today.

                            It went down from the 1.20 peg for ~11,000 pips, and 57 weeks later (more than a year…) it’s marching back, slooowly.

                            Will it be back to 1.20? I’m sure it will, sometime… so hang on to that position and DD, Brokers went broke, but I’m sure you can afford it…

                            Actually, I’m 97% sure it will…

                             

                            G.

                            #11391
                            simplex
                            Moderator

                              Actually, I’m 97% sure it will…

                              :good:

                              A good trader is a realist who wants to grab a chunk from the body of a trend, leaving top- and bottom-fishing to people on an ego trip. (Dr. Alexander Elder)

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