I would also like to add this, Godzilla, that you will continue to get vague answers until you will finally commit, in your posts, to giving context to a chart: how can a chart in itself provide an answer? Also, what is the context of your interest: short-term, medium-term, or long-term?
One point that Lexy mentioned was probability, and I agree with her, going even further by adding that while anything is POSSIBLE in the markets, some things have better PROBABILITY, and calculating the best probability set-ups is at the core of trading, of having thay edge that Lexy was mentioning.
Bounce. However, the longer the range remains intact, the more stops that will accumulate beyond the S/R. When the S/R level does eventually break, the breakout will likely be violent. That’s been my observation anyway.
With all due respect Lexy, I personally feel expectations of probabiltiy gets you into trouble. If a Low broke the last low, is it probable that it will continue down? Yes AND No, right? So which way do you look? Like the scare crow in Wizard of Oz, “That Way”…
You have to make assumptions based on other things, and not probability reasons. You’ll start to develop false probability instances in your mind bank, then you’ll PROBABLY be wrong more often then not.
As to why I said he needs to list the pair, because there is more to the story.
Edge? An edge is something the majority of traders dont have, or dont see. Something YOU can use to your advantage and see a bit into the future. Because after all, the future is what pays your ticket, no?
Otherwise we may as well point with our eyes shut at a list of commodities/currencies/stocks and trade a chart at random…
Surely the knowledge we have of a chart is indivisibly part of our trading plan? Having bias is not a ‘bad’ thing per se: the S&P500 bulls who rode that trend for six consecutive years all had a ‘bias’ based on the trend’s strength… Even looking at an unnamed chart and seeing a pattern (for example, a trend) is already an act of subjective judgment… therefore, ‘bias’ is exactly what makes us trade.
When we mistake ‘bias’ for ‘hope’, against all evidence before us, now THAT is a negative force… I will agree with that…
Probability stretched further and further, will soon create an equal Librium, its just how it is. So, with that said, probability should be the last variable to make an assumption.
Thinking thru probability got me in trouble several times. As to why I shake the hot poker at it, lol…
at the end of the day, folks, its really not worth getting into a hissy about.
Nevertheless, probability is still a subset of trading methodology. Beneficial or not still depends on how you apply that skill set. Its just a matter of perception and preference. As long as it is useful for you. Just continue using it.
" Regardless whether it is a white cat or black cat, a cat that can catch mice is a GOOD cat! "
Actual applications of probability theories in forex is an interesting topic to me. I see the underpinnings in some of the technical indicators but not a terrible amount of discussion on it (at least on-line). I also see here that there seem to be mixed feelings about probability.
I’m no expert on the subject but I found a recent article which discusses using Bayesian statistics to set dynamic stop losses. (I’d post the link but I’m not allowed to apparently)
perhaps this is closer to the discussion you are looking for OP?
As an addition to the discussion I have noticed that establishing risk/reward seems to be from the perspective of actual price ratio with no probabilities suggested. For example if you see a trading event is about to occur and you use some sort of analysis to establish a TP and similarly an SL, then the ratio of these two are your risk/reward? I feel this assumes a 50/50 chance of you being right which cannot be an accurate assumption, otherwise technical analysis is pointless. Does anyone employ risk/reward weights to their assessments? Or am I missing something here?
Surely if it was a definitive “break or bounce” answer that you were wanting without all the random discussions on the subject skewing things then creating a thread that was a poll would have been the better option?
I was trying to make a joke in response to the intended word “equilibrium” having been mistyped as (or autocorrected to) “equal Librium”, because Librium happens to be a tranquilliser. They’re not so funny when you have to explain them - sorry.
