Why is the normal distribution not normal? - page 30
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If the price indices are constructed (using the correct procedure), a noticeable correlation between them can be seen. This observed fact cannot be explained by a speculative pricing model. We must consider the stabilizing role of financial institutions like the central bank. What then, from your point of view, Jura, determines a "fair" price? That is, there is no market mechanism for regulating prices in this scheme (like shares on the stock market) and it seems to me that the very notion of a "fair price" needs to be clarified.
Firstly, there is no such thing as "fair value". I mean that some people use it boldly. Secondly, fair price is the price that reflects value. However, because value is in flux, so is price. The problem is that the real value of value is unknown. Therefore, everyone has some subjective estimate of it, depending on what information people have and how the gears in their heads are clicking. The collision of these subjective assessments in the market leads to some objective price, which ideally reflects the value.
The speculative mechanism is just one component of the market. Central banks are another, and not the most important. Then there are export-import flows, investment-financial flows, credit relations, interest rates and other factors. And then there are the large and very large financial players who, because the market cannot provide them with sufficient liquidity commensurate with their greater opportunities and because they are better informed, play by completely different rules.
So the price does not really have to reflect the value locally at all, but only in the long term and possibly in the medium term. This is why the FA works.
Price, in the classical sense, aggregates the totality of knowledge about an instrument on the part of speculators. The mechanism is clear and transparent - the crowd is always right and cannot be very much mistaken. This principle is the basis of all neural networks - all neurons participating in the analysis are questioned taking into account the "authority" of each one. But when the crowd has no knowledge about the true situation of the tool, it is difficult to expect an adequate estimate. And we come to a conclusion that the price sold to us (for the spread) by brokerage companies is the most fair in the world. It turns out that we cannot trade with it.
The price first of all aggregates the objective distribution of financial flows. Since exchange rates have been free, this law has been implemented quite well. And the knowledge you are talking about is precisely the knowledge of the real situation in finance. So first the real processes and then the consciousness of the speculators.
The crowd is sometimes right and sometimes wrong. This is the task of those big financial market players who determine the local state of processes. They must completely disorient the crowd. Not in the sense of the current situation, but in the general approach to trading. That is why we do not have a common opinion here whether there is a pattern in the market or not, whether it is a random process or not, whether the FA/TA works or both in the basket.
However, I would not say that forex is manipulative. There are too many divergent forces colliding on it. With no exchange as an institution to guide the process, and given its global scale, it would be very difficult to bend it to anyone's will. Therefore, big players have very interesting task: having information and understanding of unfolding fundamental processes to rip off the crowd, and even those, who also have the same information and understanding.
Therefore, it is difficult to argue about the fairness of the price, generally speaking. For example, everybody in the world already knows that the dollar is paper, that the U.S. problems are only getting worse, that it somehow still exists only at the expense of issuing unsecured dollars, and nevertheless the dollar is still worth something and there are always those who want to buy it.
Getch, you just haven't said much of anything interesting. The theoretical maximum return and how it is "achieved" is known to the direct participants of the discussion at least since Pastukhov's thesis (if I am not mistaken :) ). Nothing specific was said about analysis of price series without time. What do you mean - collecting statistics on all sorts of zigzags?
By the way, this "criterion" can be applied to any series, including a really random one. That is, the fact that there is an "optimum return" is not an indication of the existence of a real return.
What is the point of time analysis? I may be very much mistaken. Give me an example.
The difference is in the logic of the expert. If the Expert Advisor is geared up for a movement, its direction, then the time of movement is not important. If it is geared to signals using a lot of timeframes, then it is important.
What's the point of doing a time analysis? I may be very much mistaken. Give me an example.
Let's say you are an outstanding interpreter of market shapes. You know that the rate will move there. You would still be thinking, "Yeah, this week the rate is going to move to that point. Buy!". This is the inevitable use of time in the assessment of the current situation. Without the use of time, the analysis of market conditions would be like the predictions of a famous figure constructor.
I'm probably not articulating it well enough that I don't find my thoughts understood by others. I will try to give an example of my own and end with this.
Imagine that the price goes up (without a pullback) by 10 pips for a minute. You have managed to take that 10 pips as a profit.
Now imagine that the price then went the same 10 pips for an hour instead of a minute. You have managed to take the same 10 points as a profit.
In both cases you took the same profit and it didn't matter how long the price moved that 10 pips (with no pullback at all).
So why take time into account? If the price doesn't change for a few minutes, why should it affect the decision of how many pips and where the price will go. Not when it passes, but exactly how many points and where.
So why take time into account? If the price doesn't change for a few minutes, why should it affect the decision of how many points and where the price will pass. Not when it will pass but how many pips and where.
Firstly, the "no kickbacks" requirement is unclear.
Secondly, let's assume that I don't care how long it takes for my profit to equal 10 pips. It could be a few seconds, or it could be a few hours. I'm curious about another thing: why do you think that the absence of a time factor in the final result (my profit) does not suggest that it should be used in intermediate calculations?
If I want to kill a flying duck and shoot it, ultimately I don't care how long the bullet that kills it flies. My result should be a carcass that doesn't say how long I got it in. But in my initial calculations I will certainly try to take into account at least the speed of the duck itself, i.e. thereby also the time.
Your insistence on convincing others that time need not be taken into account is only consistent with your own system. In my system, astronomical time is a necessary thing.
What's the point of doing a time analysis? I may be very much mistaken. Give me an example.
You mean the absence of time as an argument of a price series function?
I may admit that it is possible for some systems.
But time, as one of the parameters, is almost always present.
At least as an observation interval or estimation of an admissible time of forecast fulfillment.