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Thread: There is no "noise" in the market

  1. #1
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    There is no "noise" in the market

    Hi there!

    We hear very often from technical analysts or from signal gurus, that we should avoid «noise» while trading.
    When something doesn’t suit our interpretation, we refer to that as «noise». Peter Steidlmayer, creator of Market Auction Theory, once said, that «market has no noise, and every movement on the market occurs to satisfy some market conditions»

    There are two ways to analyze the market:


    1. Filtering and «smoothing» information (you do it when apply moving average to your chart). Doing so, you expect to capture «real trend». You don’t want to over-complicate the process of trading and cut off some of the data. But also you cut off some nuances and anomalies that may tell you a different story.

    2. Trading like nuances are everything, greeting them. Athletes know that inches make difference between failure and success. If you don’t want to cut off nuances and anomalies, then probably you will need to use naked price chart or market profile (which is not indicator – it is data organization principle) in your trading.


    Here are some examples of how nuances can completely reverse your understanding of scenario.

    Here we have obvious sell signal for EURGBP according to simple trend-following system:

    Attachment 1382

    But if pay some attention to nuances, we will see that buyers are in control – sellers have very weak participation in this market - we’ve seen anomalies in volatility near highs (sellers are surprisingly passive near highs). This situation indicates some imbalance in the marketplace – we have no big (institutional) supply here, therefore buyers will be able to move this market up soon. It allows me to fade this meltdown, going long:

    Attachment 1383

    I had just a few nuances that have completely changed the picture. I've captured quick profit here and now may decide whether to close it or let it run.

    Attachment 1384

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  2. #11
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    That's true that many things affect forex market mostly its depend upon the news when there is big affect of news to any country there is always a very good chance of high movement in any market so we can see that if there is no big news or no news any day then there is less movement in the market and high news also give high movements in the market so we can say that fundamental analysis is an important part of forex market

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  3. #12
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    Quote Originally Posted by Value trader View Post
    Hi there!

    We hear very often from technical analysts or from signal gurus, that we should avoid «noise» while trading.
    When something doesn’t suit our interpretation, we refer to that as «noise». Peter Steidlmayer, creator of Market Auction Theory, once said, that «market has no noise, and every movement on the market occurs to satisfy some market conditions»

    There are two ways to analyze the market:


    1. Filtering and «smoothing» information (you do it when apply moving average to your chart). Doing so, you expect to capture «real trend». You don’t want to over-complicate the process of trading and cut off some of the data. But also you cut off some nuances and anomalies that may tell you a different story.

    2. Trading like nuances are everything, greeting them. Athletes know that inches make difference between failure and success. If you don’t want to cut off nuances and anomalies, then probably you will need to use naked price chart or market profile (which is not indicator – it is data organization principle) in your trading.


    Here are some examples of how nuances can completely reverse your understanding of scenario.

    Here we have obvious sell signal for EURGBP according to simple trend-following system:

    Attachment 1382

    But if pay some attention to nuances, we will see that buyers are in control – sellers have very weak participation in this market - we’ve seen anomalies in volatility near highs (sellers are surprisingly passive near highs). This situation indicates some imbalance in the marketplace – we have no big (institutional) supply here, therefore buyers will be able to move this market up soon. It allows me to fade this meltdown, going long:

    Attachment 1383

    I had just a few nuances that have completely changed the picture. I've captured quick profit here and now may decide whether to close it or let it run.

    Attachment 1384
    I still confused with this method. So how we determine the best action for market movement? I still don't understand the logic behind this strategy. So basically it's only using candle as the sign of market direction?

    I already seeing attachment 1382 and 1383, from that I can only seeing the probability about next market movement but I still don't know how you do it.

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  4. #13
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    Quote Originally Posted by Dheeraj View Post
    That's true that many things affect forex market mostly its depend upon the news when there is big affect of news to any country there is always a very good chance of high movement in any market so we can see that if there is no big news or no news any day then there is less movement in the market and high news also give high movements in the market so we can say that fundamental analysis is an important part of forex market
    I agree with you that the news is indeed profound influence in forex trading, but we also have to look at what's in the news release because sometimes in the news release that it does not affect the movement of a currency, so we also have to understand about the fundamentals if you want to continue to grow in forex trading

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  5. #14
    Trader dkarev's Avatar
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    the noise in Forex trading is based on the lower time frame,though some trader like to trade this noise as well but long term trader dont,they only open position on the market and wait weeks for the market to reach their target,any trading from the 1H can be regard as the noise trading because the trend of the market is always changing.

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  6. #15
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    Quote Originally Posted by dkarev View Post
    the noise in Forex trading is based on the lower time frame,though some trader like to trade this noise as well but long term trader dont,they only open position on the market and wait weeks for the market to reach their target,any trading from the 1H can be regard as the noise trading because the trend of the market is always changing.
    That could be very true the smaller the time frame the more random and chaotic it is,if you open the daily chart and make a technical and fundamental analysis in it you will see that it is movement is logical and it makes sense and consistent with the actual fundamental and economical trend of a certain currency or pair.

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    Bend your view to the charts, not the charts to your view

  7. #16
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    Avoiding the noise during trading van be tied to the economical balance and imbalance of a given currency,let's say when traders say that there's so much noise in the market means when speculators are trying to forecast the result of an up coming economical event or indicator,during such time you might see much volatility and prices swinging from buy to sell suddenly,there's this saying that traders normally say "buy the rumor and sell the fact" basically I would say aviod the rumor and wait for the fact.

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  8. #17
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    Quote Originally Posted by Nizar View Post
    the controversy of whether currency market is dominated by chaos or by well defined patterns is a continuous one,in my opinion i think the market is random and there is not certain factor that control it and all we have to do is to know how to deal with this randomness and employ it to our favor.
    I am also agree with you. Forex trading market ant be controlled by one county or person. Forex market is random and there is anything could be happened at anytime. Like you said all e have to do is to transform this random conditions into our benefits and use them for our goods.

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  9. #18
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    Quote Originally Posted by uchexxx View Post
    Avoiding the noise during trading van be tied to the economical balance and imbalance of a given currency,let's say when traders say that there's so much noise in the market means when speculators are trying to forecast the result of an up coming economical event or indicator,during such time you might see much volatility and prices swinging from buy to sell suddenly,there's this saying that traders normally say "buy the rumor and sell the fact" basically I would say aviod the rumor and wait for the fact.
    this is certainly very true, forex traders must always wait for facts especially when news is about to be released before they begin to buy or sell any currency pair. A lot of forex traders make the mistake of reacting to rumours or to the noise in smaller timeframes and they get dissapointed. Traders must wait to confirm news release before they trade to make only right decisions.

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  10. #19
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    Quote Originally Posted by jonking View Post
    this is certainly very true, forex traders must always wait for facts especially when news is about to be released before they begin to buy or sell any currency pair. A lot of forex traders make the mistake of reacting to rumours or to the noise in smaller timeframes and they get dissapointed. Traders must wait to confirm news release before they trade to make only right decisions.
    When there is no big news released in forex market and when there are some news who do not effect on forex market,then forex market become too much silent and there is no good movement in this market,new play compulsory part in market movement and many traders always waiting for long time for some big news to release which totally change the forex market trend..

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  11. #20
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    Quote Originally Posted by mark48 View Post
    When there is no big news released in forex market and when there are some news who do not effect on forex market,then forex market become too much silent and there is no good movement in this market,new play compulsory part in market movement and many traders always waiting for long time for some big news to release which totally change the forex market trend..
    well, sometimes even small news might bring volatilities to the other market depend on their relationship. As such, when you found the import in the china to be good, you might not see any changes in the yuan exchange rate but the australian dollar will fly higher.

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