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snip
> C: "...we cannot predict the future as we can only review the
past..."
> Almost every trader follows certain rules, some rules are followed
by many
> traders and become market anomalies, almost every trader creates
rules to
> exploit anomalies. Round and round we go.
Since price action is not truly random, it is the non-randomness
that can be exploited, the detection of this non-random action
can be the basis of our trading systems.
>
> C:"...The history of profitable trading is the proper
determination of
> future value..."
> The proper determination of future value might still have value
for long
> term investors, but not for active traders. The winds have
changed...
This is the basis of my comment on predictive and reactive
systems. Reactive systems are ones who react to past data and
predictive systems try to project into the future. They do have
one thing in common is that they both use past data. An analogy
would like driving your car by looking in the rear view mirror,
it works fine as long as you go in the straight line, but when you
come to a corner you are in trouble. The secret being to be able
to detect the corner before we get there. The corner starts slowly
so it will tell us something is changing, in order to not crash
we must react to this input. With our systems we must be able to
react to the little clues to keep from crashing(so to speak),
the littel clues are more important than the bigger ones because if
we react to the little clues we can avoid the big ones.
>
> C: "...The point being, that price action is only a small of the
picture we
> are trying to paint."
> Small price actions are the result of non-related factors (order
placements,
> etc.) and are mostly Random, price patterns have by definition some
> predictive value and are the result of trader behavior,
This is something we can exploit, it we can detect the trader
behavior.
>long term price
> movements are driven by external market forces (economy etc).
There are many
> time-frames from which to view the market, all are legit, however
for best
> results we must know which one we are working.
>
> Herman
>
snip
We can use patterns to detect trader actions, if the traders reveal
their actions. The detection of these actions is our objective,
otherwise we are just guessing and wishing for a profit. Sure
sometimes we can be lucky, but in the long run guessing is not
profitable.
Cliff s
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