Time frames

[Arbitrager_on_Acid]

Great discussion! however, I think it got skewed from my original question. My question was not when, it was how long. For instance Obviously I don’t think that there will be a valley every day at say 3 pm sharp, but there is a lot of instances based from my personal observations that a peak and a valley usually terminates around 2-3 hrs on the 1m chart, again, from my personal observations. Has anyone else made similar observations? or is that still in the randomness area in which trader joe is?

 If you see a peak at 3:07, and then another peak at 5:27 (2-3 hours later), and then another peak at 8:02 (2-3 hours later), and then another peak at 10:15 (2-3 hours later), and then another peak at 12:46 (2-3 hours later).  This means that market participants caused those peaks to occur at those intervals by entering orders in an uncoordinated nonscheduled series.  It is possible (not probable) that their uncoordinated activities could produce such a string of peaks, but will they do so 3 times?  4? 10?  There can be no predicting this because the participants causing the peaks are not coordinated; they are not patterned.

 The apparent pattern is nothing but randomness said to appear patterned by an organism (the human trader) that evolved for millions of years to not only find patterns in everything but to be biologically biased toward a [type 1 error](http://en.wikipedia.org/wiki/Type_I_and_type_II_errors) (an incorrect rejection of a true null hypothesis).  This bias is detectable in many species.  

 Michael Shermer explains [here](http://www.ted.com/talks/michael_shermer_the_pattern_behind_self_deception) ([B]watch that whole video[/B]).  At about 4:30 he explains why animals (and human traders) are prone to type 1 errors.  It is because that proneness has been biologically advantageous and we have inherited that tendency in the make up of our neurology.

[Master_Tang]

While we know that a sudden move in a certain direction at a certain time on the five minute chart means somebody hit the market with an order, this information gives us no indication whatsoever about what will happen to the price of that pair at any given time in the future. Are you saying you can literally demonstrate a pattern wherein peaks and valleys cycle at x hours?

Peaks and valleys are their own creations. Where they occur often happens with regularity along the times of various market opens and closes. What London did all night can turn on a dime the second NY opens. Those are the times I personally look for.

And yes, I can demonstrate a highly successful pattern over multiple time frames based on what happens at peaks or valleys no matter what time they occur.

[Arbitrager_on_Acid]

Peaks and valleys are their own creations.

You don’t really mean that do you? Prices make themselves? Are they not the result of human actions?

Where they occur often happens with regularity along the times of various market opens and closes. What London did all night can turn on a dime the second NY opens. Those are the times I personally look for.

And yes, I can demonstrate a highly successful pattern over multiple time frames based on what happens at peaks or valleys no matter what time they occur.

Predicting the time of the opening of the market is easy. That IS a scheduled event. What market participants will do at the open and how that will effect price is not.

If you can see a pattern, let us test your predictions. Give us the peaks and valleys we should expect in a pair. Not only should we test this pattern. But please explain how it came into existence. Why are market participants placing orders in this pattern?

I understand cascading stops can make interesting slopes on a 5-min chart, but that is very different from a pattern of cyclical peaks and valleys.

[cyguy]

I watched the ted presentation, I guess I better come up with a large sample size to make sure the null hypothesis is less than 0.05% before I can prove its more than just a type 1 error… haha jk, with that in mind though, whats your style of trading, do you feel that most patterns are irrelevant to the price fluctuations?

[Arbitrager_on_Acid]

I watched the ted presentation, I guess I better come up with a large sample size to make sure the null hypothesis is less than 0.05% before I can prove its more than just a type 1 error… haha jk, with that in mind though, whats your style of trading, do you feel that most patterns are irrelevant to the price fluctuations?

I look to benefit from the overall bias in the marketplace. My strategy is a trend following strategy. An arbitrager on acid uses DMT.

That said, I agree with Jack Schwager that “there are a million ways to make money in financial markets”. It is possible to profitably trade chaos. Van Tharp says dudes trade astrological signals profitably because of position sizing (PSILOCYBIN). I don’t doubt it.

None of that however means market participants coordinate order entry either by accident or by design to manifest cyclical peaks and valleys on 5-min charts.

Now there is a social process of price discovery. And that process does manifest itself as something like a series of peaks and valleys on a chart, but the frequency of the peaks or valleys is random. Specifically: the peaks do not occur at consistent intervals of time, nor do they rise to consistant price levels. Rather, they occur in chaotic time intervals to random price levels that in larger quantities over many trading sessions manifest a bias among market participants toward higher or lower prices.

[Master_Tang]

You don’t really mean that do you? Prices make themselves? Are they not the result of human actions?

Oh jeeze dude… Could you be any more pedantic? I look at price. Who cares who is doing what that moves it?

Predicting the time of the opening of the market is easy. That IS a scheduled event. What market participants will do at the open and how that will effect price is not.

If you can see a pattern, let us test your predictions. Give us the peaks and valleys we should expect in a pair. Not only should we test this pattern. But please explain how it came into existence. Why are market participants placing orders in this pattern?

I understand cascading stops can make interesting slopes on a 5-min chart, but that is very different from a pattern of cyclical peaks and valleys.

[Arbitrager_on_Acid]

Oh jeeze dude… Could you be any more pedantic? I look at price. Who cares who is doing what that moves it?

that's not how any of this works

Sorry if I hurt your feelings bro. Cheers.

[Master_Tang]

Sorry if I hurt your feelings bro. Cheers.

No feelings hurt. This is teh internetz. I have thicker skin than that.

[Master_Tang]

Predicting the time of the opening of the market is easy. That IS a scheduled event. What market participants will do at the open and how that will effect price is not.

If you can see a pattern, let us test your predictions. Give us the peaks and valleys we should expect in a pair. Not only should we test this pattern. But please explain how it came into existence. Why are market participants placing orders in this pattern?

WAY WAY WAY too much work. This is a free internet forum, not a college doctorate course. You pick a pair. ANY pair, and we’ll see if you can make money during certain times of the day or not.

[Rambo35]

Sometimes people try to look hard enough to find a pattern that they do and trade based on that which leads them to profitability. There are some crazy things out there, crazy to me, but those who trade according to it are profitable and in the end I think that making profits as a trader consistently is what matters.

[Arbitrager_on_Acid]

Sometimes people try to look hard enough to find a pattern that they do and trade based on that which leads them to profitability. There are some crazy things out there, crazy to me, but those who trade according to it are profitable and in the end I think that making profits as a trader consistently is what matters.

Exactly. Chaos can be profitably traded.