Formalising common approaches to trading - page 13
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Not again, but again. Note that I, like many others, did not interfere in a leisurely conversation until the final phrase: "you want to know why the price moves - look in the glass", and only after this phrase, I realized that "A, Boo and Vedi" is finished and the topic with such a boisterous title is essentially exhausted, so why such a boisterous title of the topic? A simpler title would have been "Where do prices grow from, glass and all ....".
Obviously, the total purchase volume is equal to the total sales volume. B = S
About trading in general: In a trade yes, in a time-based relationship no. Rossfuture. Pay attention to the Transaction column.
Which of these is in forex - questions. For those who do not have it, I have not seen the forex one, so please excuse me.
Noise. Did you hear it? I did not. If we are talking about real quotes, then all that is on the higher frames also on the lower ones, but with its peculiarities. Ants do not walk on their own two feet and do not drive a car, but they bite sometimes, so what is it - noise? How it is in forex - who knows, maybe "ants" are "simulated" )))).
I will try to describe how you can begin to divide the approaches to trading - what is at the root and what are the first branches.
There is a pricing process - this is everything that influences price changes. It is so complex and multifactorial that there is no way to consider it as a whole in order to be consistent with it. Therefore, it is natural to try to decompose the process into its components and consider only part of them. The rest will be a source of randomness for us, as well as inaccurate description of the processes in question. We may call the result of their action "price noise" ;)
The question here is how to conveniently begin to divide. And it has been done for a long time:
1. Processes whose states change only on the basis of previous transactions. They are based on actions of market participants when they take into account only past quotes. They are also called endogenous processes. Most TA methods use these processes.
2. Processes developed due to external factors - the arrival of new money to the market, development of the economy, industry, company, etc. Exogenous processes. The FA mainly deals with them.
In general, it is possible and necessary to continue the division of processes (especially item 1). The main thing is to find a process whose conditions can be determined fairly accurately with the help of the information we have and whose influence on the entire process of pricing at some interval of time will be so significant that the influence of other (unconsidered) processes will be less significant. The signal would be stronger than the noise
. Such may be processes based on similar actions by a large number of market participants. Similarity is stereotyping. A significant number in terms of money invested in this stereotype compared to other money involved in trading at these discrete moments.
You can start to build a tree like this:
Basically, it's a division essentially from different sources of profit.
Speculation is taking money from other participants (other speculators or investors). The source of earnings determines both the methods - anticipating their buying/selling. And the methods - analysing the history of quotes, and in fact the past transactions of their "opponents". More abstruse and correct - looking at endogenous processes in order to match them.
Investments are investments in more prospective economies, industries and companies. Money comes from less promising ones.)) This defines and methods - macroeconomic analysis, analysis of company performance, news, insider information, etc.
P.S. Further it is worthwhile to develop only the speculation branch and talk only about systematic approaches. Speculation is difficult to systematise and can consist of a combustible mix of different TA and FA methods :)
About trading in general: In a trade yes, in a time-bound no. Rossfuture. Pay attention to the Transaction column.
After thinking about it))) I realised that it would be better to expand the scheme. "Trading Methods' is a subsection that brings together participants who earn from price differences - temporal arbitrage (earning from price differences at different points in time). Probably, it would be useful to extend the scheme to include other participants that do not earn from this type of activity: hedgers, issuers, strategic investors, market makers, specialists, intermediaries like banks or brokerage companies that bring aggregate positions to the market. This extension of the scheme can be useful, because different methods of speculation can be correlated with the participants who are their targets, so the picture of participants can be complete. It's like when listing the types of hunting you need to mention the target :) For a start, you can label them all with a single square. Like:
What is further interesting is that almost any new branch will cause a new branch to be added to TA speculation, even when added to TA speculation itself. Such is the recursion :) I.e. the speculators themselves are the targets of the speculators' hunt. Theoretically for each method of earning there may be a method for its expropriation))), but practically for this there is not always enough information based only on the time series. Yes and the method speculated on would be very common - should itself become stereotypical.
For example, the main method of FA investment is to compare assets in order to find undervalued ones. Often analysts and investors alike argue along the lines of: based on valuation and comparison with similar companies.... Or gold is overvalued compared to other precious metals. This is not just informalised analytics - there are many methods of valuing an asset based on the prices of other assets. Existing correlations between assets are based on just this way of investing.
Because of this, there is a huge layer of arbitrage strategies with subspecies such as spread trading, etc. Speculators try to figure out which assets investors consider to be correlated and under which conditions they start to actively buy an undervalued asset and try to enter until that moment and not just one but both (or more, if investors take into account several), and to exit when the spread between the assets being compared shrinks. They take liquidity away from investors, worsening their entry price. But spread traders themselves can also be the target of the hunt.
There will be beatings. Get ready.)
ok, i'll stock up on beers)
Constructive criticism is very appropriate, as are options for a different division. This division is all relative. The only criterion is usefulness. And for some people this topic will reveal nothing new, but it may systematise the approaches to the gear in their heads. It saves time when searching for new strategies. That's why I signed up for it myself))).
Z.I. Actually, I'm leaving tomorrow and I'm unlikely to get to a computer in the next couple of weeks. So criticism may not get a quick response :).
... Anyway, I'm going away tomorrow and I'm unlikely to get to the computer in the next couple of weeks. So criticism may not get a prompt reply :)
There you go, we're just getting the hang of it ))))
...we're starting to have thoughts of our own...
Ok, I'll stock up on beer).
Constructive criticism is very appropriate, as are options for a different division. This division is all relative. The only criterion is usefulness. And for some people this topic will not reveal anything new, but it may systematise the approaches to the gear in their heads. It saves time when searching for new strategies. That's why I signed up for it myself))).
Z.I. Actually, I'm leaving tomorrow and I'm unlikely to get to a computer in the next couple of weeks. So criticism can remain without a quick response :).