Why the sudden $0.30 rise?

[S3052]

it was destined to happen.  this is from one of my updates.  i drew this triangle for my subs back on 12/28/12 and had been recommending a buy.  see that green ascending arrow at the end of the triangle?  price started up to the day from there which was 1/3/13:

probably same with s3052 and other "analysts". The technical picture was clear... the robo-sheep act on it.
Thanks robo-sheep!

you are right. the underlying factor behind technical analysis is psychology = herding behavior. but it works...

I'd like to hear the psychological basis for a head and shoulders pattern. Can you link any relevant studies? I didn't think so.

"Both of these head and shoulders have a similar construction in that there are four main parts to the head-and-shoulder chart pattern: two shoulders, a head and a neckline. The patterns are confirmed when the neckline is broken, after the formation of the second shoulder.    The psychology of traders represented in the head and shoulders pattern is similar to that of the double top, in that bulls and bears struggle for supremacy at different price levels.  As with the double top volume and the price target play a large part in this struggle between the psychological mindset of buyers and sellers."
link: https://sites.google.com/site/tradingstrategiesschool/module-2-chart-pattern-analysis/head-shoulders-and-reverse-head-shoulders

 

and more in detail explanation in those books
http://www.elliottwave.com/books/ewp/default.aspx?code=ocomi

http://www.elliottwave.com/socionomics/default.aspx?code=ocomi

http://www.elliottwave.com/psishsb/default.aspx?code=ocomi

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[molecular]

it was destined to happen.  this is from one of my updates.  i drew this triangle for my subs back on 12/28/12 and had been recommending a buy.  see that green ascending arrow at the end of the triangle?  price started up to the day from there which was 1/3/13:

probably same with s3052 and other "analysts". The technical picture was clear... the robo-sheep act on it.
Thanks robo-sheep!

you are right. the underlying factor behind technical analysis is psychology = herding behavior. but it works...

I'd like to hear the psychological basis for a head and shoulders pattern. Can you link any relevant studies? I didn't think so.

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

[S3052]

it was destined to happen.  this is from one of my updates.  i drew this triangle for my subs back on 12/28/12 and had been recommending a buy.  see that green ascending arrow at the end of the triangle?  price started up to the day from there which was 1/3/13:

probably same with s3052 and other "analysts". The technical picture was clear... the robo-sheep act on it.
Thanks robo-sheep!

you are right. the underlying factor behind technical analysis is psychology = herding behavior. but it works...

I'd like to hear the psychological basis for a head and shoulders pattern. Can you link any relevant studies? I didn't think so.

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.

Well said.

[molecular]

since the OP specifically asked for speculation: I have noticed that the steepest rises (the surprises) always happened to me when I got up around 7:00 am CET. That would hint that the buying is occurring by asians and/or russians and maybe some arabs.

[odolvlobo]

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

That's a odd response. He is basically saying that it works because it is self-fulfilling prophecy, not because there is any psychological basis.

[molecular]

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

That's a odd response. He is basically saying that it works because it is self-fulfilling prophecy, not because there is any psychological basis.

The "psychology" is the "herding behaviour"

[odolvlobo]

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

That's a odd response. He is basically saying that it works because it is self-fulfilling prophecy, not because there is any psychological basis.

The "psychology" is the "herding behaviour"

In other words, you are saying that the patterns (as well as all the Elliott wave nonsense) are just arbitrary rules that work as long as everyone follows them as a herd. I don't disagree with that statement, but I think most TA "experts" would.

[S3052]

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

That's a odd response. He is basically saying that it works because it is self-fulfilling prophecy, not because there is any psychological basis.

The "psychology" is the "herding behaviour"

In other words, you are saying that the patterns (as well as all the Elliott wave nonsense) are just arbitrary rules that work as long as everyone follows them as a herd. I don't disagree with that statement, but I think most TA "experts" would.

my view is that psychology produces those chart patterns

[odolvlobo]

I'd like to hear the psychological basis for a head and shoulders pattern. Can you link any relevant studies? I didn't think so.

"Both of these head and shoulders have a similar construction in that there are four main parts to the head-and-shoulder chart pattern: two shoulders, a head and a neckline. The patterns are confirmed when the neckline is broken, after the formation of the second shoulder.    The psychology of traders represented in the head and shoulders pattern is similar to that of the double top, in that bulls and bears struggle for supremacy at different price levels.  As with the double top volume and the price target play a large part in this struggle between the psychological mindset of buyers and sellers."
link: https://sites.google.com/site/tradingstrategiesschool/module-2-chart-pattern-analysis/head-shoulders-and-reverse-head-shoulders

That's not describing the psychology, that's color commentary -- something you might hear watching a football game.

"bulls and bears struggle for supremacy" and "struggle between the psychological mindset of buyers and sellers." Give me a break.

And I doubt those Elliott Wave books have explanations that are any better.

[odolvlobo]

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

That's a odd response. He is basically saying that it works because it is self-fulfilling prophecy, not because there is any psychological basis.

The "psychology" is the "herding behaviour"

In other words, you are saying that the patterns (as well as all the Elliott wave nonsense) are just arbitrary rules that work as long as everyone follows them as a herd. I don't disagree with that statement, but I think most TA "experts" would.

my view is that psychology produces those chart patterns

I understand your view, but it is not rational if it is not based on facts, evidence, and verifiable research.

[S3052]

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

i
That's a odd response. He is basically saying that it works because it is self-fulfilling prophecy, not because there is any psychological basis.

The "psychology" is the "herding behaviour"

In other words, you are saying that the patterns (as well as all the Elliott wave nonsense) are just arbitrary rules that work as long as everyone follows them as a herd. I don't disagree with that statement, but I think most TA "experts" would.

my view is that psychology produces those chart patterns

I understand your view, but it is not rational if it is not based on facts, evidence, and verifiable research.

This is exactly the point.
Markets are NOT rational and fact based but purely psychological and thus is why you get irrational exuberance bubbles and crashes.

And because most people do not know about this or don't believe it, most people sell right at the bottom and buy at or close to the took
And only those who are " rational about the irrationality of markets" are in the right side...

[myself]

irrational exuberance

i will like to add that is quite a good book   http://www.amazon.com/Irrational-Exuberance-Robert-J-Shiller/dp/0767923634

[odolvlobo]

And only those who are " rational about the irrationality of markets" are in the right side...

My point is that Technical Analysis is not rational.

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

my view is that psychology produces those chart patterns

I would like to point out that molecular wrote that "The particularities of the patterns are irrelevant" and you wrote "Well said" -- basically agreeing that your statement "my view is that psychology produces those chart patterns" is irrelevant.

[molecular]

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

That's a odd response. He is basically saying that it works because it is self-fulfilling prophecy, not because there is any psychological basis.

The "psychology" is the "herding behaviour"

In other words, you are saying that the patterns (as well as all the Elliott wave nonsense) are just arbitrary rules that work as long as everyone follows them as a herd. I don't disagree with that statement, but I think most TA "experts" would.

Yes, for the most part I think these patterns are arbitrary and any other set of patterns if accepted by the majority would work just as well.

I'm aware some technical experts will disagree, maybe most of them. But if you read the blue text here you will notice that at least one expert agrees with this.

[molecular]

And only those who are " rational about the irrationality of markets" are in the right side...

My point is that Technical Analysis is not rational.

The particularities of the patterns are irrelevant for this to work. As long as enough traders "use them" in their analysis they work. That's why simple patterns are usually more predictive than complex ones that are used less widely.

+1.
Well said.

my view is that psychology produces those chart patterns

I would like to point out that molecular wrote that "The particularities of the patterns are irrelevant" and you wrote "Well said" -- basically agreeing that your statement "my view is that psychology produces those chart patterns" is irrelevant.

I don't think that necessarily follows. The patterns could have emerged from psychology a long time ago just like the use of gold as money has emerged a long time ago (see regression theorem) and now it's just herd behaviour to value it highly.

[phatsphere]

one of the fun things you can try to do is to look at random-walk charts (generated by a very simple random walk function) and real world charts. i can assure you, experienced traders will almost instantly tell you which ones are real and which ones are only random.

and it's also true that many traders don't know about all those TA tools, and even if they know, they interpret it differently. so, the logical conclusion, that it is self fulfilling because everyone sees the patterns -- and the same patterns -- is wrong. hence it must be that the entire collective of all traders is making these patterns.

[ElectricMucus]

one of the fun things you can try to do is to look at random-walk charts (generated by a very simple random walk function) and real world charts. i can assure you, experienced traders will almost instantly tell you which ones are real and which ones are only random.

Not if I measure the probability distribution of both the magnitude and frequency domain and make my random walk match it. It'll be still essentially random but I am willing to bet you guys couldn't tell the difference.
Now how do you suggest we test that hypothesis?

[notme]

one of the fun things you can try to do is to look at random-walk charts (generated by a very simple random walk function) and real world charts. i can assure you, experienced traders will almost instantly tell you which ones are real and which ones are only random.

Not if I measure the probability distribution of both the magnitude and frequency domain and make my random walk match it. It'll be still essentially random but I am willing to bet you guys couldn't tell the difference.
Now how do you suggest we test that hypothesis?

Generate some graphs and get some real graphs.  See who can tell the difference.

[ElectricMucus]

one of the fun things you can try to do is to look at random-walk charts (generated by a very simple random walk function) and real world charts. i can assure you, experienced traders will almost instantly tell you which ones are real and which ones are only random.

Not if I measure the probability distribution of both the magnitude and frequency domain and make my random walk match it. It'll be still essentially random but I am willing to bet you guys couldn't tell the difference.
Now how do you suggest we test that hypothesis?

Generate some graphs and get some real graphs.  See who can tell the difference.

Yes problem is pll will remember a pattern they have seen already, even if it is random. So if I use mtgox data it would be possible to "cheat"
Is there any way to get chart data from stocks/forex/etc?

[phatsphere]

Is there any way to get chart data from stocks/forex/etc?

what i meant, to be precise, a "simple" random walk, not a high-level random pattern generator. that might be too hard, but maybe worth a try.

you can get data from yahoo finance and google finance i think ... 2-3 years CSV data and such things.