Discussion of article "Technical Analysis. What Do We Analyze?" - page 3
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Have you ever thought about this fact (Fig.4). Let me explain by example, many traders use candlestick analysis. And let's say there was a "fact" candlestick closed and if it is a hammer, then according to the methodology you should sell (or buy, it doesn't matter). Look again at Fig.4 and just imagine that the bar started to build a little bit at the wrong moment of time, but shifted, the beginning is shifted to the left or right.
And what happens? tick history has not changed, but the bar can perfectly turn from a hammer into some "cloud veil" and according to the methodology it is necessary not to sell, but to buy...my opinion, candlestick analysis (with its many combinations) is nothing but an attempt to extract information about the "character of ticks movement" that the candle has hidden.
Have you ever thought about this fact (Fig.4). Let me explain by example, many traders use candlestick analysis. And let's say there was a "fact" candlestick closed and if it is a hammer, then according to the methodology you should sell (or buy, it doesn't matter). Look again at Fig.4 and just imagine that the bar started to be built a little bit at the wrong moment of time, but shifted, the beginning is shifted to the left or right.
And what happens ? the tick history has not changed, but the bar can perfectly turn from a hammer, into some "cloud veil" and according to the methodology it is necessary not to sell, but to buy...my opinion, candlestick analysis (with its many combinations) is nothing but an attempt to extract information about the "character of ticks movement" that the candle has hidden.
in my opinion, a candlestick perfectly gives 5 parameters, sometimes even 6 :)
but before making a decision on a formed signal (let it be a hammer) we should wait for its exact transformation into a hammer, not into something else :) It is here that we "fail", when we try to make a decision on a deal on the current bar (hammer). Although, if we take a strict approach, we must skip this bar and make a decision only after the next minimum :).
Quite often, the situation of "fake" stars and hammers occurs after the weekend, when DC starts/ends trading a little earlier/later, and that's when a trader, who didn't pay attention to time zones before, catches himself thinking: "did I make a mistake in the figure?" :).
Good luck to everyone.
Have you ever thought about this fact (Fig.4). Let me explain by example, many traders use candlestick analysis. And let's say there was a "fact" candlestick closed and if it is a hammer, then according to the methodology you should sell (or buy, it doesn't matter). Look again at Fig.4 and just imagine that the bar started to be built a little bit at the wrong moment of time, but shifted, the beginning is shifted to the left or right.
And what happens ? the tick history has not changed, but the bar can perfectly turn from a hammer, into some "cloud veil" and according to the methodology it is necessary not to sell, but to buy...my opinion, candlestick analysis (with its many combinations) is nothing but an attempt to extract information about the "character of ticks movement" that the candle has hidden.
This is where you begin to understand the POWER of ticks and the DIFFERENCE OF TIMES OF DIFFERENT DTs.
in my opinion, a candlestick gives 5 parameters perfectly, sometimes even 6 :)
but before making a decision on a formed signal (let it be a hammer) you need to wait for its exact transformation into a hammer, not into something else :). It is here that we "fail", when we try to make a decision on a deal on the current bar (hammer). Although, if we take a strict approach, we must skip this bar and make a decision only after the next minimum :).
Quite often, the situation of "fake" stars and hammers occurs after the weekend, when DC starts/ends trading a little earlier/later, and that's when a trader who didn't pay attention to time zones before catches himself thinking: "did I make a mistake in the figure?" :).
Good luck to all.
Prival, as I understand, meant something else.
Two traders trading on different brokerage companies can see "different" charts, analysing the market at the same time. This is due to the difference in the start and end times of trading on these brokerage centres.
In a situation when the opening and closing times of bars are different, the closed and formed candlesticks MAY be TOTALLY DIFFERENT. Candlesticks can differ not only in shape but also in colour.
When Munehiso Homma created his candlestick charts, he had no idea what spectra, DSP, expectation and other modern tools were. He needed candlesticks for the convenience of visual perception. For analysis and interpretation he used completely different models and images from everyday life.We can say with certainty that candlesticks were created, in fact, not for computer modelling at all. The situation was exactly the same in chess quite recently - read the comments of chess analysts ..... But we do not have another one yet and no one has quantified the degree of its inefficiency.
Representation of quotes in the form of candlesticks is in itself a way of discretisation by time with a "built-in" discriminator by amplitude, and a VLF. Looking at a candlestick, we see the result of some converter-algorithm for processing tick history (data array) at a certain time interval into a visual image.I admit that this algorithm has some shortcomings from the point of view of a mathematician and programmer. It is possible that we lose some information. But here we are all equal, as we see the result of the same algorithm. And distortions and losses caused by the Homma method are the same for everyone. Another thing is distortions introduced (willingly or unwillingly!) by a particular DC.
If someone comes up with a new efficient way to display quotes and more suitable for matmodelling - that person will have a place in history next to Homma:).
As for the loss of individual ticks or price gaps - they can be catastrophic on small TFs, introducing additional chaos into the already existing one. When moving to older TFs, these losses become less noticeable or vanishingly small.
This is where you begin to understand the POWER OF TICKETS and the TIME DIFFERENCE between different DCs.
Prival, as I understand, meant something else.
Two traders trading on different brokerage companies can see "different" charts, analysing the market at the same time. This is due to the difference in the start and end times of trading on these brokerage centres.
In a situation when the opening and closing times of bars are different, the closed and formed candlesticks MAY be TOTALLY DIFFERENT. Candlesticks can differ not only in shape but also in colour.
This is where you begin to understand the POWER OF TICKETS and the DIFFERENCE OF TIMES OF DIFFERENT DTs.
Prival, as I understand, meant something else.
Two traders trading on different brokerage companies can see "different" charts, analysing the market at the same time. This is due to the difference in the start and end times of trading on these brokerage centres.
In a situation when the opening and closing times of bars are different, the closed and formed candlesticks MAY be TOTALLY DIFFERENT. Candlesticks can differ not only in shape but also in colour.
Sometimes there are opinions among traders in the network that within the framework of one brokerage centre, trading is carried out among themselves, which allegedly introduces its own distortions in the formation of candlesticks. ?????.
I don't think that trading operations performed within one brokerage centre (not the exchange, but exactly the brokerage centre) have any influence on candlestick formation.
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Discussion of article "Technical Analysis: How Do We Analyze?"
newdigital, 2014.06.13 19:28
Learning to Read Forex Charts
Technical analysis is considered one of the easiest ways to analyze the foreign exchange market. It involves the analysis of charts and graphs to ascertain future currency price movements, and differs massively from fundamental analysis in that it does not require the analysis of forex news, reports or other economic releases to establish future price movements.
Becoming a Technical Analyst
The first step in becoming a successful technical analyst is to learn how to read forex charts. Outlined below are some simple steps that every trader should take when first starting out with technical analysis:
When analyzing a currency pair you will need to look out for a prevailing trend. Start off with charts that provide long-term data (for example days, weeks and months) and go back over the course of a number of years. Such charts contain an exhaustive amount of data, thus providing a much clearer picture of exactly what the currency pair is doing than if using short-term charts (5 minutes, 15 minutes, 30 minutes or one hour). This extra data also makes the technical indicators much more steadfast and reliable.
How to Identify a Trend
To identify a trend simply look at the graph presented before you and decide whether it is rising more than it is falling, or vice versa. Trends can be shallow or sharp, weeks short or years long. Practice identifying trends and locating the moment where the trends change direction.
Even if you are a short-term scalper or day trader who wishes to place a trade for no longer than an hour, it is still important to identify trends. Identifying a trend is one of the best steps a trader can take in executing more accurate, profitable trades.
Upon identifying a trend in a long-term chart you will then be able to compare that trend with the one that you have found in the short-term charts. Within the path set by the prevailing trend you will discover that there are a variety of short-term and intermediate-term trends. Overall the pattern on the graph will follow a particular path as set by the longest-term trend.
Identifying Support and Resistance Levels
After this point you will then need to locate the support and resistance levels. In technical analysis these are regarded as the ‘floor’ and ‘ceiling’ points on a graph and are key locations on a chart where the price continually refuses to break through. The price will reach a peak or a valley, after which point it will not go any further, but will instead alter its direction. The more frequently this occurs, the stronger the support and resistance levels are.
Draw a straight line as you pass through most of the support points. Draw another line as you pass through most of the resistance points. This provides you with a lucid picture of the price channel, or the path that the currency pair’s trend is following. This is a highly powerful yet incredibly simply tool for determining a currency’s future pathway.
What is a Range- Bound?
In the event that ‘range bound’ occurs, this simply means that the support and resistance levels are so strong that the graph’s movements appear to ‘bounce’ in a sideways pattern. Nevertheless this generally occurs 80% of the time and many traders prefer to trade within the channels.
Breaking out of a Price Channel
In the event that a currency pair becomes released from a price channel, in some instances it falls back into the channel, and in others it gains momentum and continues to move. The latter movement is better known as a ‘momentum market’, and is an alternative way to trade the range: by setting an entry order for the price to break out, either below or above the channel.