My new chaos findings implemented in forex trading

forex live trades, setups, charts

Moderator: moderators

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

The recognition of the state of affairs calls for 3 studies

Postby Paul&Paul » Fri Feb 03, 2012 10:05 pm

Three studies are needed to recognize the state of affairs.

Suppose you are conducting an observation of some persons (like a cop or a security guard).

What you need to know are:

1. their character
2. their topology
3. their behavior.

Ad.1 The character is something ellusive yet it is important whether a person is calm or aggressive, nice or rude.
Ad.2 The topology is how you actually recognize a face or a silhouette. Not the details but topology, more so when your observations are from a distance.
Ad.3 The behavior is dynamics. It is what a person is actually doing now and how he/she is doing it.

What does it have to do with the market?
Well, the character is what we call fundamentals.
The topology is what we call technical analysis.
The dynamics is actually the same word, yet for the markets it is described in a scientific way, for example with chaos tools.

Three studies are needed to observe people in the street and three essentially similar in their nature studies are needed on the markets to observe trading people.

You will agree that your report about a man under observation becomes much more valuable if it is a combination of those three studies.

My last story about GS shows a little bit of this problem. The picture becomes more spicy when there is a little bit of this, and a little bit of this, and a little bit of that. Just a little bit of one thing may not raise any interest at all and be completely ignored.
Just a little bit of study 2 (likeTA) may be absolutely leading us towards very wrong conclusions. Of study 1 (fundamentals) - likewise.
It seems that study 3 is more valuable singlehandedly than study 1 or study 2. You may not know the character, you may not recognize the face, but you will be able to predict the consequences from someone's behavior.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

EURUSD update as on 5.02

Postby Paul&Paul » Mon Feb 06, 2012 3:29 am

Failure at 1.3215 and then at 1.3189 doesn't bode well near term for EURUSD. It is a weakly trending pair now. It was till Friday's US data release and it is still quite flat. One might observe that the US fundamentals did not change the picture showing earlier. EURUSD was being sold from 1.3189 and it continues this direction on the first session of a new week.

There are two UPOs @ 1.3106 and 1.3146, our standard determinants of chaos.
The market is bound to return to them some time in the future.

Two hours before the US data the market looked very positive for the euro and negative for the dollar. We see a small trigger up expanding 9.1299 its size and the vector field orientation was pointing up.

The news was dollar positive but it wasn't after almost three hours later when a new trigger down occurred and changed the orientation marked with arrows.

Fundamentally the market reacted fine. Yet we are not to talk over fundamentals in the place reserved for chaos.

From the point of view of chaotic behavior EURUSD slumped on the news in a strange way raising some suspision that probably the action was an invention of some operators and in due course EURUSD will continue its way up.

How far did it go downwards? Not far and the lows are not randomly chosen lines. 1.3064/69 is there.

For EURUSD to pick up some steam we need firm closes above 1.3106 in the first place and probably a new trigger up. So far no good. The dollar looks pretty strong but not very strong comparing some chaos borders.
Attachments
eurusd5.02.gif
eurusd5.02.gif (40.96 KiB) Viewed 155 times

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

You believe you know what goes on in your mind

Postby Paul&Paul » Mon Feb 06, 2012 5:02 pm

but you are wrong. The mental work that produces impressions, intuitions and decisions goes on in silence in your mind.
A conscious thought from one thing to another... Not always true.
Analysts and traders alike deal with biases of intuition.
We normally allow ourselves to be guided by impressions and feelings. We are often confident even when we are wrong.

Chaos is counter-intuitive. On the surface of it it seems that chaotic tools remove biases of intuition. Be it true, there must be a price for it.
We need a richer and more precise language to discuss things. And the language needs to be understandable.

To understand errors of judgement and choice, in others and eventually in ourselves we need to know what others have to say. This forum is a permanent university.

People are good intuitive grammarians. That people have a similar intuitive feel for the basic principles of statistics is a qualified no. That people have an intuitive feel for the basic principles of chaos is a qualified no even more.

Yet intuition comes every time we make a decision. We take them no matter how small the sample is.

Chaos is different than statistics. It deals with universal rules true in samples of adequate size. I would exaggerate that everything can be successfully replicated in small samples. It does not mean that small samples contain less chaos, however.

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

Would you accept a bet

Postby Paul&Paul » Mon Feb 06, 2012 5:32 pm

on the toss of a coin where you win $100 if it is heads and lose $90 if it is tails?

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

EURUSD updated on 5.02

Postby Paul&Paul » Mon Feb 06, 2012 5:39 pm

Two triggers up have introduced a change in the dynamics of the system. EURUSD is not far from taking 1.3146.
Attachments
eurusd5.02x.gif
eurusd5.02x.gif (41.5 KiB) Viewed 141 times

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

Intuitive heuristics

Postby Paul&Paul » Mon Feb 06, 2012 8:20 pm

The essence of intuitive heuristics is when we face with a difficult question, we often answer an easier one instead, usually without noticing the substitution.

We deal with intuitive heuristics all our time being on the market. Those substitutions are taking place more than one time in a particular case. When we fail to find an immediate substitution, we are trapped into deeper and longer and slower thinking.

Intuitive thinking constructs a picture of what is going on on the markets at any instant. It uses associative memory in an unconscious way.
Statistical thinking requires thinking about many things at once. The unconsciousness is not designed to do such tasks.
Chaotic thinking requires thinking about the determinants of the system and the dynamics of not one but many developments of the market at the same time.

The illusion of certainty prompted by intuition clouds the full extent of ignorance about the market's world.

In reality we are confronted with a battle between the feeling of certainty arising from intuition and the uncertainty arising from deeper thinking.
Intuitive thinking is easy and painless, deeper thinking is painful and long.
Deeper thinking involves the mind and the rest of the body as well.

Forex schools mostly teach that forex trading can be automatic and quick with little or no sense of voluntary control.
This where they fool their participants talking mostly about the intuitive thinking and ignoring the necessity of experience, effortful mental activities,
complex computations, and concentration and with making choices. They talk about just one side of the human behavior.

Indirectly they claim that everyone can do forex which is as true as saying that everyone can excel at school.

Some people will do better. Few people will do very well.

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

The problem of the subconsciousness is

Postby Paul&Paul » Mon Feb 06, 2012 9:40 pm

that it cannot be turned off. It has little understanding of logic and statistics. If you are shown a chart you will see it with the subconsciousness first. You will read what you already know, no more.
You will experience a conflict between a task you intended to do and the automatic response that interfered with it.

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

You must learn to mistrust your impressions

Postby Paul&Paul » Mon Feb 06, 2012 9:53 pm

and recall what you know about it.
Charts are optical illusions to your mind. You see what they seem not what they are.
You must resist the temptation to forget about those illusions. Some illusions are not visual at all.
When we are aware of them we are called suspicious.

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

It is easier to see other people's mistakes than ours.

Postby Paul&Paul » Mon Feb 06, 2012 10:00 pm

Constantly questioning our own thinking can be impractical and tedious.
Things become a lot easier when we asign some tasks to another person nearby, even much less fluent and knowledgeable than ourselves. A co-worker is a good idea by all means.
The problem is that few people want to perform certain tasks which they do not quite understand.

What is the point of introducing an idiot into a serious thing like forex? Well, there is a point. Even an idiot can be useful at hand because of some quirks of our minds.

Paul&Paul
rank: 1000+ posts
rank: 1000+ posts
Posts: 1210
Joined: Thu Dec 30, 2010 12:29 pm
Reputation: 0
Gender: None specified

Anything that occupies your working memory reduces

Postby Paul&Paul » Mon Feb 06, 2012 10:18 pm

your ability to think.
Notes, keep notes. Keep regular notes. Keep TA analysis on your charts. Then your efforts and acts of self-control will overcome intuition and impulses.
The response to mental effort is distinct from emotional arousel.

The dilation of your pupil can tell whether or when you gave up a problem. Also whether you know what to do on the market.

The dilation of your pupil can be a good signal of your future performance. It is like reading your soul.

Please add www.kreslik.com to your ad blocker white list.
Thank you for your support.


Return to “forex”