Do The Markets Behave Like The Weather?

Trading Discussion
1

Hey people, today while browsing the Internet, I found a very nice comment about a Meteorologist known as “Blackberry”, concerning his professional specialty in the military.

And his comment goes as follows:

[B]I’m in the military, but I do meteorology in the military, and people seem to think we actually can predict the weather. We follow a system, and we know many of the factors that determine weather, but it’s not a black and white field like mathematics. Some parts of the atmosphere are still a mystery and we don’t know why patterns change randomly.[/B]

To give due credit to Blackberry, here goes the link from where I found his comment, and you might want to ask him a question or something =)

What are some common misconceptions about your job or career?

I have highlighted in blue the words that represent ideas, concepts and even emotions we feel while facing the International Currency Markets.

My challenge to you is simple, please choose a word, and in the context of this comment, please tell us how you feel about it =)

2

^ I do not understand this concept. It is not logical.

3

CheckDavid, I’m going to tell you something that may come as a great surprise to you, but it is the honest truth. This cannot be verified in this forum, because I am still relaitively new, but I have a blog where people have followed my forecasts for 4 years, and they know I’m telling you the truth.

I have a proprietary set of S&R’s. I do not use them as a standalone, but they are some of the very best in the business for determining reversal points and continuations. In order to prove their authenticity, I have used them on the weather to predict the weather. I can predict the weather on a monthly, weekly, and daily basis because of my S&R’s. Yes, even the weather is subject to mathematical patterns, which is why I have an infatuation with math the way I do.
No gambling–just sound mathematical principles what we also use as traders.

4

Maybe… maybe for you it’s a puzzle, but for me it’s pretty clear. I will not spoil the fun and let other people see what I could see by reading that comment.

5

because I am a code slinger I tend to be extremely logical, like a Star Trek vulcan. so the phrase ‘how do you feel about that’ seems like an alien concept sometimes. But that’s just me.

And anyone who says they can predict the weather accurately more than a week in the future other than generalizations like winter will be cold followed by warmer in the summer should contact NOAA. I’m sure they could use the expertise.

6

Cool man. I am already on your place waiting for you =)

7

Mike…err…Talon - I’m with you there man. Although I tend to be very intense and even emotionally expressive, it’s all a facade to cloak the truth. I’m really just a cold, hard logician. I found the way david phrased his question as difficult to understand exactly how to respond…so i’m gonna ask for clarification:

David, are you inquiring as to how we (traders) deal psychologically with the concepts encapsulated by the words/phrases in blue? or are you asking how we think about them in terms of agree or disagree…? Or are you intentionally leaving this open to interpretation?

But, to respond to your statement, I will respond as I see fit for now:

“predict” - prediction regarding the markets does not need perfection, or anything close. It simply needs to provide a set of rules to act as “controlled variables”, and the result of following those rules provides a positive expected return over a large enough sample size to be statistically valid. In other words… if i have 60% profitable trades, and my average winner is $200, and I have 40% unprofitable trades, that cost me on average $100 each… I can “predict” the market well enough to make a great income.

“System” - I personally don’t have one… I have a method. Some limited aspects of it are difficult to quantify…tho I speculate I could achieve some limited success in trading by quantifying every component of my method… of course, then i’d just have a computer trade for me. System = absolute rules. method = guidelines or principles with some measure of subjectivity.

“Mystery” - the paradigm from which I view the market not only makes this idea completely irrelevent (there is no mystery to my why price moves, in what magnitude, and where it turns from) and although I admit I only can find a relatively few instances per day where I feel I can predict a future price change accurately enough to bet my money on it, there is no mystery at all as to why price moved…ever. Furthermore, there is little mystery to me as to where price will move to, and even how quickly it will get there, and sometimes even how far it will retrace back when it does so. Yes, I make a good income trading.

“we don’t know why patterns change randomly” - we do know why price changes…and there’s not much random about it. Exactly to what degree, and more specifically, when… now this IS sometime impossible to predict…but even then… it is predictable enough, precisely enough, often enough, to make great money with a very high success rate (say, 70% accuracy with an average trade result of profitable trades make double what unprofitable trades lose)

Now excuse me david while I hijack your thread :stuck_out_tongue: If you would prefer I carry on future dialoge regarding the post that 4X made somewhere else, please do so, and I will respect that request.

4X… I’m curious about this proprietary S&R concept… obviously, your not gonna share the whole enchilada, but if you could give a very generalized idea of what you are using to determine S/R such as: Harmonic wave concepts, or possibly the rate of change of price over a set time period? I get a funny feeling that anything proprietary in S/R concepts would likely include a measurement of time in some way, as classical S/R concepts do very little to incorporate time in determining strong S/R levels. I know of a guy who tracks large barrier option positions and uses these to determine likely turning points in the market as expiration day rolls around… If you don’t want to give more info, can u post up your blog URL? And weather patterns too? I must admit, the factors behind the motion of markets is completely independent of the factors behind weather change…

Don’t take this the wrong way, but I would almost be willing to bet that your sample size for testing either weather or S/R is either too small or too generalized to be of much real use in either. Per your own confession to an “infatuation with math”, I am very skeptical that any tool that could be robust enough AND precise enough to determine specific future price changes AND future weather changes in any “useful manner”, as in…

"when price reaches this point, there is a 65%+ probability that it will turn the opposite way for 40 pips, and a 35% probability that it will exceed this point by 20 pips before turning down 40 pips)

AND…being able to use the same system to determine:

“On the coming September 13th - 17th of 2011, I will carry my umbrella with me each day, because I know there is a 50% or greater probability that it will rain each day, and a 75% probability that at least ONE of those days will receive enough rain that people will want an umbrella when they go outside” (3 drops of rain at 2:00 am doesn’t count as “useful manner”

Hell…develop a way to predict even ONE of those two examples with any certainty…and you will live a very comfortable life (either as a trader, or as a metorologist)

But a single system that is specific and precise enough to be useful in application for both…? You can understand my skepticism here I hope. If you could provide any insight as to how exactly you’ve tested your hypothesis, I would actually love to be proven wrong here… so feel free to do so! I want to be impressed… please oblige if your don’t mind.

8

I see that the confusion was created by just that word… “feel”

Anyway, you did well, and did exactly what this thread intended it’s posters to do.

Anyway, you can grab, snatch hijack or whatever man =)

9

I’m not sure if he’ll answer since his own thread states he’s leaving on holidays, and it sounds like he’s not coming back after that…???.

Anyways, here’s a post he posted a little bit about his s&R 301 Moved Permanently, and here’s his blog 4xpipcounter

10

Thanks Sweet. I checked the blog, still not seeing actionable profitable information being published…but oh well. Anyway enough of this off the topic stuff… i won’t comment or ask anymore on this thread david…continue with your thread :slight_smile:

Jay

11

Short answer no. The weather is driven by the sun. The markets are driven by humans and algos. Long answer I won’t come up with, lol. :stuck_out_tongue:

12

I always thought the markets drove the weather!!!

13

This is not a yes or no question.

If you would have read the thread, the similarities are only in the mindset of the weather “analyst”. Not in the techniques per se.

But I have speculated about another thing… if the weather was affected by humans… the weather would be even more chaotic than it already is.

14

Al Gore says it IS… And he invented the internet, so he must know what he’s talking about.

:smiley:

15

Oh, then Buckscoder clearly isn’t aware about Al Gore’s revelations lool

16

What I always think is worth noting though that, sometimes the weather is much more predictable, e.g. nice sunny weather means settled high pressure, making for easy forecasting, the same goes for trading, sometimes the market is one heck of a lot more predictable, making for easier trading.

17

Can you give examples of those time periods for when the market is more predictable?

What I think is that they might be more predictable to YOU, and not to other people.

18

19

Hard

Easy

20

Yeah, as I said, it’s easier for you, not to other people. Unless you mean more people make money in the second chart than the first one.

That would be funny.