Rationale for the existence of support lines - page 19
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(where's Mishek chillin' in the middle of the day...)
I am looking for mechanistic interpretations. With the detection of specific feedback loops.
I have my own "explanatory model". Arbitrage. In the broad sense of the term.
That is, not only intra-market arbitration works, but also 'macro arbitration' - through other markets, such as commodity markets.
This introduces delay lines* (and conditions for oscillation generation, respectively) into the system, and wide spreads** in the area of commodity markets.
// * Commodity arbitrage takes time to buy-deliver-sell.
// ** commodity arbitrage is much more costly than paper and electronic intra-market arbitrage.
--
I hope I have made myself clear.
I am looking for mechanistic interpretations. With the discovery of specific feedback loops.
I have my own 'explanatory model'. Magisterial. In the broad sense of the term.
I.e. not only intra-market arbitrage works, but also 'macro-arbitrage' - through other markets, e.g. commodity markets.
This introduces delay lines* (and conditions for the generation of fluctuations, respectively) into the system, and wide spreads** in the area of commodity markets.
// ** Commodity arbitrage takes time to buy-deliver-sell.
// ** commodity arbitrage is much more costly than paper-electronic intra-market arbitrage.
--
I hope I've made myself clear.
There was a discussion in a neighbouring thread before it was flooded :) - FOREX turnover up to several trillion dollars... a day. Meanwhile, the volume of world GDP is no more than $70 trillion a year. The amount of money in the world is not more than $35 trillion. A few years ago, officially it was written that more than 90% of FOREX transactions are speculative. The figures are in line with each other. From this I conclude that most of the price determinants are concentrated within FOREX itself and the financial system associated with it. So far I have no data on significant influence of other (external) factors.
In a nearby thread discussed before they flooded the thread :) - FOREX has a turnover of up to several trillion dollars... a day. Meanwhile, the volume of global GDP is not more than $70 trillion a year. The amount of money in the world is not more than $35 trillion. A few years ago, officially it was written that more than 90% of FOREX transactions are speculative . The figures are in line with each other. From this I conclude that most of the price determinants are concentrated within FOREX itself and the financial system associated with it. So far I have no data on significant influence of other (external) factors.
Well, that's a first approximation and you can assume that forex is 90% random. And you say there is no data...
:)
Well, that's a first approximation and you can assume that forex is 90% random. And you say there is no data...
:)
Heh heh. I didn't say that 90% of it was random.) That's the thing. Maybe there's something worth burying in there.
And here is the channel with a time span of more than a month:
The red vertical line corresponds to the date 1.10.2010, the time the channel was built.
The channel is so beautiful, you just have to open down GBPJPY on Monday.
Price channels do exist and not only in forex but also in the auction market. The problem with trading based on these channels is as follows. Three extremes (two lows and a high between them for an up channel, or two highs and a low between them for a down channel) are not enough to define a channel. That is, there will be a lot of false channels, trading inside of which will be losing. This is why we must use more than two reflections of price from the lower boundary of the up channel or the upper boundary of the down channel. But here, in my experience of channel trading, another problem arises. By the time we confirmed that the channel is real (3 reflections of price from the lower/upper border of the channel up/down), we increase the probability of channel break. That is, suppose we expect another (for example, the fourth) bounce from the upper limit of the channel downwards (resistance line) and trade on the price movement downwards, inside the channel according to the trend, and it breaks through the upper channel with the probability close to 50%. After long tortures of trading on price reflection inside the channel with the average zero profit, I came to a conclusion that it is better to wait for the breakdown of the channel. A channel, by my definition, is a channel only when price is reflected three times from its upper (if the channel is going down) or lower (if the channel is going up) boundary. After the third bounce we expect a breakout of the channel. After breaking through the channel, price tends to return to the broken boundary (for example, the channel resistance line downwards) and bounce back from it (like from a new support line) to the value equal to the channel width. Trading on such bounces equal to the width of the channel after it is broken through is more profitable. The price behaviour after breaking through the channel is poorly predictable. The price may start a new trend after a W or M pivot is formed, or go flat, which happens more often, especially after a long channel with lots of reflections from the borders. The price can also continue the previous trend and form a new channel parallel to the old one.
I forgot to add. Automated channel trading (i.e. unattended by an EA) is suicidal. You need to identify the channel with your eyes and trade manually. After a long time of such manual trading you will learn to identify different types of channels by the behavior of price inside the channel and predict the end of the channel with more accuracy.
Price channels do exist and not only in forex, but also in the auction exchange. ...
I forgot to add. Automated channel trading (i.e. by an EA without supervision) is suicidal. You need to identify the channel with your eyes and trade manually. After a long time of such manual trading you will learn to identify different types of channels by the behaviour of price inside the channel and predict the end of the channel with more accuracy...
All this is clear.
I would like to draw your attention to such a trick.
In the Elliott Wave Theory, price channels are built in a widely accepted way based on extrema, like this, for example:
It is assumed that the wave movement of the price is a universal law for any movement at any scale.
Thus, it turns out that price channels are the only form of any price movement, i.e,
Everywhere and everywhere you can and should look for the price channels for trading, these channels have a deep sense.
And here is the channel with a time span of more than a month:
The red vertical line corresponds to the date 1.10.2010, the time the channel was built.
The channel is so beautiful, you just have to open down GBPJPY on Monday.
Price channels do exist and not only in forex but also in the auction market. The problem with trading based on these channels is as follows. Three extremes (two lows and a high between them for an up channel, or two highs and a low between them for a down channel) are not enough to define a channel. That is, there will be a lot of false channels, trading inside of which will be losing. This is why we must use more than two reflections of price from the lower boundary of the up channel or the upper boundary of the down channel. But here, in my experience of channel trading, another problem arises. By the time we confirmed that the channel is real (3 reflections of price from the lower/upper limit of the channel up/down), we increase the probability of channel break. That is, suppose we expect another (for example, the fourth) bounce from the upper limit of the channel downwards (resistance line) and trade on the price movement downwards, inside the channel according to the trend, and it breaks through the upper channel with the probability close to 50%. After long tortures of trading on price reflection inside the channel with the average zero profit, I came to a conclusion that it is better to wait for the breakdown of the channel. A channel, by my definition, is a channel only when price is reflected three times from its upper (if the channel is going down) or lower (if the channel is going up) boundary. After the third bounce we expect a breakout of the channel. After breaking the channel, price tends to return to the broken boundary (for example, the channel resistance line downwards) and bounce back from it (like from a new support line) to the value equal to the channel width. Trading on such bounces equal to the width of the channel after it is broken through is more profitable. The price behaviour after breaking through the channel is poorly predictable. The price may start a new trend after a W or M pivot is formed, or it may go flat, which happens more often, especially after a long channel with lots of reflections from the borders. The price can also continue the previous trend and form a new channel parallel to the old one.
I forgot to add. Automated channel trading (i.e. unattended by an EA) is suicidal. You need to identify the channel with your eyes and trade manually. After a long time of such manual trading you will learn to identify the different types of channels by the behavior of price inside the channel and predict the end of the channel with more accuracy.
Very well said. I would like to ask if there is any indicator/script that determines the breakthrough of a channel and gives a signal after the breakthrough...I need it for a purely horizontal channel