Let's talk about eliminating noise in the charts

Discussion in 'Technical Analysis' started by nooby_mcnoob, Nov 29, 2021.

Is this guy stupid

Poll closed Nov 30, 2021.
  1. No

    80.0%
  2. Absolutely not

    60.0%
Multiple votes are allowed.
  1. Sounds like you have some wisdom you are forgetting to share so I will ask you to elaborate on what you have learned!
     
    #31     Nov 29, 2021
  2. tomorton

    tomorton

    I use several EMA's to confirm trend before taking a trade, by verifying the position of price relative to the EMA's and the EMA's to each other.

    I also only mark up swing highs and lows on the D1 chart when two consecutive days have seen price push higher or lower.
     
    #32     Nov 29, 2021
  3. JSOP

    JSOP

    The answer is you can't. And the reason is because you will never know whether what you eliminated is noise or a legit part of a trend because nobody knows the future. No TA is precise enough; it can give you a clue but it's never 100% correct all the time. If it is, everybody will be walking trillionaires. Nobody will be working. It won't be the Great Resignation. It would be the Permanent and Complete Retirement. LOL

    From hindsight looking back, you can always see it clearly what was noise and what was actually the start of a new trend but when you were right there at the moment trading, you could never know. That tiny little ebb or speck that you see could be noise but it could very well be a start of a reversal for a new trend. If you treated it as noise when it was really a start of a new trend then you end up with a loss because you stop-lossed and reversed too late. But if you treated it as reversal when in fact it was really some random noise, then you end up reversing a perfectly good trend for nothing and cutting your profit short or suffering a loss still.

    There is no hard and fast rule for determining noise from a chart. The only most effective way that I find is through hedging. That way when you are wrong, you are protected. When you are right, you only give up a little bit of profit and you still end up with the majority of the windfall.
     
    #33     Nov 29, 2021
  4. As noted in Brooks price action a barb wire formation is not tradable, just go trade later or another day.

    As for smoothing out price action, there is an indicator that does that in that candles will respect the the line which is not straight which is created on the chart by that indicator, no I will not tell what it is. If the candles are not respecting the line or they break through this line, then get out or reverse.

    TA works but the problem especially for us that don't full time trade is to remember all of our rules before we get into a trade. Also, if you take 2 bad trades in a row, then maybe stop for awhile and then look back at the chart for a new perspective or you can just stop trading for the day if you hit your maximum stop loss amount.

    Finally, it never hurts to take a "limitless" pill, there are new stuff coming out all the time, so I keep trying the new ones to help with memory and sharpness.
     
    #34     Nov 29, 2021
  5. volpri

    volpri

    It is impossible to eliminate something that doesn’t exist. There is no distortion of the underlying trend. It is what it is. For instance, PB’s are not distortions of an existing bull trend. They are profit taking by bulls and/or reversal attempts by bears to make the bull trend fail. There is no noise about it. There is nothing to eliminate. It is what it is. As far as trading is concerned it is more useful to eliminate the “concept” of noise existing in the markets.
     
    Last edited: Nov 29, 2021
    #35     Nov 29, 2021
    NumberZ, comagnum and nooby_mcnoob like this.
  6. comagnum

    comagnum

    The noise inside a traders head is the real problem.
     
    Last edited: Nov 30, 2021
    #36     Nov 30, 2021
    damnpenguins, NumberZ, fan27 and 3 others like this.
  7. traider

    traider

    Fourier transform for noise filtering.
    Someone I met swears by wavelets, DSP methods.
     
    #37     Nov 30, 2021
    nooby_mcnoob likes this.
  8. SunTrader

    SunTrader

    Yeah of course. But same could be said about not going down for hours.

    That is a pretty large range if one was waiting for a breakout out the top as an entry point.
     
    #38     Nov 30, 2021
  9. SunTrader

    SunTrader

    #39     Nov 30, 2021
  10. tomorton

    tomorton

    I'm not convinced there is anything in our price charts that deserves to be called noise and airbrushed out. All price action shows something, even if it is simply that nothing big has been happening. But that can be useful to know too.

    All price action also suggests changes in the probability of subsequent immediate price action: its useful to know what are less probably the next price moves as well as which are more probable.
     
    #40     Nov 30, 2021
    NumberZ, volpri, Fonz and 1 other person like this.