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Why it is possible to predict price movement?

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  • First Post: May 1, 2012 9:22am May 1, 2012 9:22am
This sounds a simple question, but it is not indeed. There are a lot of trading methods claim working. Nevertheless, I wonder in general what logic these methods based on in predicting price movement.

Can anyone give me a good answer?

Thanks,
kk007
Quoting kk007
This sounds a simple question, but it is not indeed. There are a lot of trading methods claim working. Nevertheless, I wonder in general what logic these methods based on in predicting price movement.

Can anyone give me a good answer?

Thanks,
kk007
it is not possible to predict price movements. If it was, then wallstreet wouldn't have lost during the burst of the housing bubble. And they are supposed to be professionals with endless amounts of resources.
I think it is possible to predict price movement, but only half of the time. In the rest it goes in your opposite direction. I posted a few weeks ago the results of trades taken by FXCM professionals in April. It was a disaster, they were losing hundreds of pips. In my opinion, speculators are moving the markets to make max money out of it and this means most people will lose money. If the markets were not controlled by the few, if they were moving naturally then it would be possible to predict price movement.
Quoting kk007

I wonder in general what logic these methods based on in predicting price movement.
Predicting price movement?

Do you mean some kind of volatility indicator or do you mean predicting the direction price will go?

If the latter (direction) then nothing, trading is based on a (higher) probability of one thing happening more than another, that's it, that's the best we have. As far as predicting price direction nothing is a certainty and anyone who tells you otherwise is either a total novice or is trying to sell you something, either way avoid both!
Fifty-fifty, it's called a coin toss.

I would ask the original question with different punctuation -

Why, is it possible to predict price movement?

Quoting Lanes110
I think it is possible to predict price movement, but only half of the time. In the rest it goes in your opposite direction.
forget about tomorrow, just steal away into the night
Sometimes it is possible to predict price movement to the pip, but only sometimes. Although there are traders on this community that can and do predict price levels, they are not always able to do it under all circumstances.

Understanding why and when price becomes predictible is an interesting topic. A better understanding of when a market might turn will allow a better estimation of price. Here I have shown a low to low swing on the eurusd on the weekly chart, you can see that the low to low swing was perfectly timed on an 84 week basis. Now I added daily trendlines, so using simple cycles and trendlines I was able to identify an area where the EURUSD might turn not only in price but also in time.

So potential turns can be anticipated in both price and time. You will not know they will definately work, but using a knowledge of cycles pricing the market becomes easier.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd weekly.gif Size: 49 KB
Click to Enlarge Name: eurusd daily.gif Size: 52 KB
Quoting Mike Haran
Sometimes it is possible to predict price movement to the pip, but only sometimes. Although there are traders on this community that can and do predict price levels, they are not always able to do it under all circumstances.

Understanding why and when price becomes predictible is an interesting topic. A better understanding of when a market might turn will allow a better estimation of price. Here I have shown a low to low swing on the eurusd on the weekly chart, you can see that the low to low swing was perfectly timed on an 84 week basis. Now...
hocus pocus, if you ask me.
Quoting Mike Haran

.....low to low swing on the eurusd on the weekly chart, you can see that the low to low swing was perfectly timed on an 84 week basis. Now I added daily trendlines......

So potential turns can be anticipated in both price and time. You will not know they will definately work
So they offer nothing more than anything else, a probability.

Focussing and expending energy on finding tools, systems, or strategies to predict price direction to the exclusion of everything else is one sure way to lose money!
What a lot of new traders don't get is the idea of probability. No one knows what tommorrow will bring, all you can do is deal in probability. If you are good your probability will be high that you make a winning trade. Using risk control you can give yourself an edge and make money trading.

I love the people that say its not possible, they can scorn all they want. I think I will post a couple of before the fact trades up just to show them how its done. I do love a troll!


Mike Haran
price movement is Random but the randomness creates some sort of order.

It is impossible to predict what one corporation will do, when they will get paid and change for home currency.

it is impossible to predict when and if a large or small spec will buy or sell.

but when you get a crowd of MILLIONS of different people doing seemingly random things then you can GAUGE A TENDENCY.

then you add to that the current macro economic environment, and the EXPECTATION of future environment, and again seemingly random individual transactions start to have a TENDENCY.

that is why it is impossible to predict, you CAN have an idea like pipmutt said of the most possible direction and variance according to historical data and your analysis of the prevailing disposition in transactions but no more.
AVT INVENIAM VIAM AVT FACIAM
Quoting Mike Haran
What a lot of new traders don't get is the idea of probability. No one knows what tommorrow will bring, all you can do is deal in probability. If you are good your probability will be high that you make a winning trade. Using risk control you can give yourself an edge and make money trading.

I love the people that say its not possible, they can scorn all they want. I think I will post a couple of before the fact trades up just to show them how its done. I do love a troll!


Mike Haran
"troll" seems to be the word of 2012 in this forum. And no, risk control by itself doesn't give an edge.
Quoting Mike Haran

I love the people that say its not possible
No one said it wasn't possible, it's just not possible with any certainty, only probability. Ergo, it really don't mean diddly in the scheme of things, it's not what should be the first and only consideration!
Quoting Mike Haran
Sometimes it is possible to predict price movement to the pip, but only sometimes. Although there are traders on this community that can and do predict price levels, they are not always able to do it under all circumstances.

Understanding why and when price becomes predictible is an interesting topic. A better understanding of when a market might turn will allow a better estimation of price. Here I have shown a low to low swing on the eurusd on the weekly chart, you can see that the low to low swing was perfectly timed on an 84 week basis. Now...
Mike, I see your points....

but sense of seasonality/cycles within FX is unknown for me, I see the logic and reasons behind equity movements and business cycles (heating, growing, pullback) but in FX it is much more complex because actually when trading FX market you are doing sth like relative value trading like within equities(long short hedge) because you have 2 assets(eur and usd) so you should examine the correlation between economic cycles lets say in EU and US, which can be very random (also the much more variables affect the exchange rate not only economic cycles, and they are changing by time)

but I am not saying it cant be done and if you are doing so my hat off for you!

when somebody without fx experience like friends family asks me about the direction of eurusd i always tell them that only prediction i do have is maximaly for next 2-3 days....for longer term its very random from my opinion, especially the most watched/traded pairs.....currencies like PLN,HUF,NOK can be predicted with better probability

with regards,
Mike
Ideally I have marked an area where I would be interested in buying the eurusd in the time zone marked. Should we exceed this in time ie a longer move down then, its telling me that I should maybe be looking for sell trades.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd ideal buy zone.gif Size: 46 KB
Quoting Mike Haran

Ideally I have marked an area where I would be interested in buying the eurusd........
Sorry, are you lost? The trading journals section is this way >>>>>>, or trading systems this way >>>>>>>

Hope that helps.
short term, price is completely random......however long term I believe price does become predictable
Quoting Custos
it is not possible to predict price movements. If it was, then wallstreet wouldn't have lost during the burst of the housing bubble. And they are supposed to be professionals with endless amounts of resources.
Oh, I am not talking about prediction with 100% certainty. What I have tried to mean is similar to saying that observatory can predict weather, but we know they are not 100%.

Someone might have escaped from the harm of housing bubble, while greed might be in control of some others.
Quoting pipmutt
Predicting price movement?

Do you mean some kind of volatility indicator or do you mean predicting the direction price will go?

If the latter (direction) then nothing, trading is based on a (higher) probability of one thing happening more than another, that's it, that's the best we have. As far as predicting price direction nothing is a certainty and anyone who tells you otherwise is either a total novice or is trying to sell you something, either way avoid both!
Yes, I am talking about the later.
Why higher probability prediction is possible? Would you elaborate?
Quoting the redlion
price movement is Random but the randomness creates some sort of order.

It is impossible to predict what one corporation will do, when they will get paid and change for home currency.

it is impossible to predict when and if a large or small spec will buy or sell.

but when you get a crowd of MILLIONS of different people doing seemingly random things then you can GAUGE A TENDENCY.

then you add to that the current macro economic environment, and the EXPECTATION of future environment, and again seemingly random individual transactions start to have...
TENDENCY? Do you simply mean trend (or the inertia of movement)?
Quoting Custos
"troll" seems to be the word of 2012 in this forum. And no, risk control by itself doesn't give an edge.
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