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blankseplocked Experiment #01: RL finance analysis applied to EvE
 
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Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.12.30 08:40:00 - [241]
 

Edited by: Vaerah Vahrokha on 30/12/2010 08:44:21
Happy new trading year everyone!

I am quite busy with work at the moment so I can't post a new graph with funky lines or anything.
It also occurred to me (see last posts) to be confessed that when I produce my graphs, certain fat wallet individuals will try and play the counter-part (to play like a fisherman with the other traders) so I won't put out my latest findings on i.e. Robotics.

I will return to another aspect of the thread, not strictly TA related: the simple trading "signals" you may get by looking at graphs.

I am going to link a pair of RL trading threads where some people are applying similar tecniques since years and they work.

The first post says it all with the first picture:

Post linkage

Notice how the "circled" area shows the typical retracement in an ascending trend.
Depending on your risk propension you may buy exactly at the last shown bar in the moment it passes (retraces) the previous bars and goes above 1.47926 (a dotted line marks that level).

Of course in EvE we don't have that kind of OHLC bars, these show the Open, High, Low, Close. We can approximate them by considering the "yellow dot" as the Close, the previous graph yellow dot as Open and the very thin "barbs" above and below the yellow dot as the High and Low.

The above trading scenario, made for a day trader, involves people actually sitting at a monitor and follow in real time the market for when it hits the target price.

In EvE it's much simpler, you may usually check for such conditions by giving a look every 30 minutes, only rare cases of manipulation will produce very sudden motions (and you don't even want to be a puppet in the hands of a manipulator to begin with).

The next pictures show some RL examples of what I told about trends, supports and resistances.

Finally, there is a graph that is expecially significant: one of the last ones is marked with "source of the force".

Picture linkage

This is no obscure Jedi jargon, the guy is just talking about a consolidation (horizontal market) building momentum for the break out that comes right after.
Some of the older Readers will recall one of my first graphs talking about break outs, channels etc. In that picture the bar before the one marked as "fake" is exactly the brisk movement up that forms a channel with regards to the lower level consolidation.
The channel is the rectangular area delimiting that prior horizontal range in the up and down sides. The break out is the big bar going to break such sides upwards or downwards.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.12.30 09:00:00 - [242]
 

Edited by: Vaerah Vahrokha on 30/12/2010 09:01:21
Another nice thread and examples may be found at

Thread linkage


In particular, there's the precise examples of the typical entry points you may see without the need for a single indicator or other complex / expensive aid:

Picture linkage

All those red arrows show the same thing: entry points.

They also show how it's easy to lose money: someone DID buy in that downtrend, created those interruptions and then lost his trousers in the process.
The identical same losses happen in EvE. It just happens to be a slower process, therefore an EvE trader has hours if not days to do the best thing you can do:

"Cut your losses short and let your profits run"

This is easily the hardest part for a trader, both in RL and in EvE.

In fact the natural human behavior is to realize the profit and close the trade the very second it becomes profitable (i.e. way too short), usually because of FEAR and GREED (the two factors governing the markets, it's not "demand and offer" as the populace is (un)teached about).
In this case you'd kill your profits, and usually bite at your nails realizing you were seeing a tiny retracement and then the trend skyrocketed with you out of the market to enjoy it.

The opposite happens for a loss: losses are a painful experience (some studied it's about 2.5 times stronger feeling at the pain for a loss than joy for a win).
People will hold they decaying stock till it's totally worthless while they should just dump it once a clear "YOU WERE WRONG, BUD" signal has been given by the market.

This next post has also nicely commented graphs:

Post linkage

Plenty of examples of what we have covered in the past months.

There's also a concept we rarely discussed about: pin bars. If someone is interested I may expand about them, suffice to say a pin bar is a sort of small heads and shoulders (due to timescale, markets are fractally self-similar after all).

Lederstrumpf
Posted - 2010.12.30 11:59:00 - [243]
 

Edited by: Lederstrumpf on 23/05/2011 01:41:07
-

Hexxx
Minmatar
Posted - 2010.12.30 14:56:00 - [244]
 

Originally by: Lederstrumpf
Originally by: Vaerah Vahrokha
when I produce my graphs, certain fat wallet individuals will try and play the counter-part (to play like a fisherman with the other traders)


That's cudos to your graphs, yet proof that graphs on their own are useless. Attempts to guess trends without proper background information can really backfire if there's another major player in the game. And yes, some major players do educated guessing on trend graph inflicted behaviour of sheeple. To quote some lines:

== snip ==
the danger with ‘momentum investing’ is that it is all about timing and the ability to read into investor psychology. the trouble is that most average investors who lack these skills jump in too late (after all the professional funds have entered), when the stock price has already risen near its peak! Sure enough, they find that the stock prices start falling the day after. out of fear and panic, they sell the stock and end up with a loss. this is why the typical
investor always experiences their stock price falling soon after they have entered the market.

On the other hand, value investors like Warren Buffett take a Contrarian approach. They go against the market psychology and trend. They buy the stock of a good company when nobody else wants it. this is when the stock price is extremely low and attractive. They then wait patiently for the stock to come into favour again. when optimism returns and the crowd starts to push the shares of the company higher and higher, the value investor will then sell his shares at a nice profit.
== snip == (from http://www.superstockblog.com/how-warren-buffett-beats-the-financial-experts/)



Graphs are just one thing out of many you can use to make a decision. In that sense, VV has produced a set of very compelling graphs that people use in one way or another.

No more, no less.


Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2010.12.30 20:54:00 - [245]
 

@Lederstrumpf

You bring in some good points, which I will address:

1) Graphs meausure "emotions put in money", it's expected to be hard to guess the next move, since they are the vectorial sum of the feelings of a whole population. The big peaks happen when a majority suddenly start thinking about the same about the next price move.

Notice that group thinking and herd thinking are played by capable manipulators who often have the financial backup to also be market makers.

This is what human psychology leads to, technical analysis is nothing but a key to read snapshots of these collective situations.

After TA, trading strategies (i.e. something NOT in the very topic of this thread) will use these snapshots often believing snapshots are a continuum with some inertia, the momentum trader will try and take profit while such inertia keeps the market moving in the same direction.


2) Warrent Buffet is a market maker. He CAN buy a cheap company and make it a zillionaire exactly like some EvE tychoon can buy out a whole market and relist. Everyone will go "ooooh, aaaaah Warrent Buffet bought these shares, it HAS to be the century business!" and flock in his net.

TA instead is usually used by regular, not market making traders. They have to play exactly like suckerfish: they sit near a market maker belly and try follow their moves as quick as possible.


3) Warren Buffet can do many nice things almost no one else can, including buying during the first Elliot wave. As he says, he buys if he feels good at keeping that stock for the next 3 years, while 99% of traders could not hold on anything but leveraged equity for more than 4 hours. They ride the 3rd (hopefully not the 5th) Elliot wave, with vastly much risk and less reward. That's all they can do.


Basically I did not write the "get rich quick" e-guide for just $99.95 but I am trying to use graphs as an alphabet to tell other people what are some causes and signs that move the markets, that's it.


4) The super simple "buy on retracement" tecnique I exposed here (out of a dozen I know and thousands that exist) is a sort of contrarian approach, in fact you enter the market as it seems to invert its trend.

5) There are also other strategies that are not contrarian but also not traditional and don't even attempt predicting a trend. I.e. I tried some grid trading with an high rate of success.

vonDuck
Gallente
Knights Templar ordre de eve brethren mmx
Black Thorne Alliance
Posted - 2011.01.02 05:14:00 - [246]
 

I don't know if it was mentioned, but EvE markets are commodity markets and not capital markets. Technical Analysis is more applicable to these rather than value investing, for example. Thanks for the all the work VV. I'm going to apply my market scanners to my EvE database and see what comes of it. This could be fun!

Liberty Eternal
Posted - 2011.01.09 17:07:00 - [247]
 

I've given this whole thread a very close reading but am still far from extracting all the useful information it contains.

Just want to say a big thanks to VV for all the work involved in this, and to all the other posters who have contributed to this thread.

This thread is without doubt one of the most intelligent discussions I've read on any forum anywhere for months. It's so good to see the rare exceptions of the people who "get it". Anyone who is interested in markets, capitalism or just reality in general should put this thread on their reading list.


Thanks a million VV, great job Very HappyVery HappyVery Happy

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.02.14 12:01:00 - [248]
 

Since I keep being asked about the same questions I am going to post a little update:


1) Yes, I'll resume with new examples. I had some bad RL events lately that got most of my time. Hopefully this might improve in the future.

2) I am sorry to those who I promised to show graphs about their business, I will do as time lets me.

3) I deeply regret that people keep asking me "where did the pictures go", but it's not my fault.

There's people who relentlessy report my threads to make them cut and ruined. This does not make exception. Actually this is the most affected.

Whenever I put up something, stay sure in 1-2 days it'll be removed.

It's why I am slowly abandoning the EvE forums for these kinds of "courses" and switching over to Vahrokh.com. Over there I may post all the pictures I want and (try to, in my most humblest attempts) teach the little bits I learned.

Caldariftw123
Posted - 2011.02.20 21:37:00 - [249]
 

IT DRAWS SOME MORE GRAPHS OR IT GETS THE HOSE AGAIN!

<3 ;)

Verus Potestas
Caldari
SP4RTANS
Tactical Narcotics Team
Posted - 2011.02.20 23:35:00 - [250]
 

I just want to thank you for this thread; I've never looked at any kind of real market analysis and everything in here was fascinating. I'm going to read that entire babypips site now, so thanks!

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.10 21:27:00 - [251]
 

The next days I should have some time to post some new articles. The stuff is going to be thick and juicy.


But first a teaser, to see if you got complacent and rusty or are still well ready.

N.B.
By popular request, for those who don't want to log in, "Linkage" points to the same graph that is shown below it.


1) Look at the graph below: Linkage


Please visit your user settings to re-enable images.

a) What does the left-to-center part of the graph tell us, with its position and shape?

b) At the right of the graph, would you buy, sell or wait? Why?

c) What kind of motion is the market doing in the rightmost part of the graph?




2) Look at the graph below: Linkage


Please visit your user settings to re-enable images.

a) From the left of the graph, price rises, peaks, drops to a certain level then kind of flattens (center of graph) and rises a bit. Could you have predicted it'd rise a bit after it flattened?

b) Would it have been useful to know the result of a)

c) What would you do at the rightmost part of the graph if you were not in the market (read: not bought anything yet)? Buy, sell or wait?

d) What would you do at the rightmost part of the graph if you were in the market (read: you had a good deal of stock)? Buy, sell or wait?


Let's see if anyone is up to a challenge. The answers are in the articles posted in the previous pages.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.10 23:53:00 - [252]
 

Well, I hoped in some form of interest on this, at least someone who asked for the "solutions". I'll let the thread die, then. Crying or Very sad

Caldariftw123
Posted - 2011.03.10 23:56:00 - [253]
 

Originally by: Vaerah Vahrokha
Well, I hoped in some form of interest on this, at least someone who asked for the "solutions". I'll let the thread die, then. Crying or Very sad


Nonense! We're all just waiting for the answers so we can go "I knew that!" ;) Shy, you see ..

Candy Oshea
Amarr
Techfree Investment Group
Posted - 2011.03.10 23:56:00 - [254]
 

i might read the thread this weekend.

don't let it die ! Crying or Very sad

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.11 00:24:00 - [255]
 

Edited by: Vaerah Vahrokha on 11/03/2011 00:26:29
Originally by: Caldariftw123
Originally by: Vaerah Vahrokha
Well, I hoped in some form of interest on this, at least someone who asked for the "solutions". I'll let the thread die, then. Crying or Very sad


Nonense! We're all just waiting for the answers so we can go "I knew that!" ;) Shy, you see ..


Well, I'll tell you what I'd planned to post if anyone still cares to learn some stuff that is also used in RL trading. It's a fairly large amount of things.

Article 1: Teaser (the one above)

Article 2: Second teaser but with 3-4 graphs (the number depends on if anyone will reply to the above).

Article 3: It brings light on why 2 was posted and shows something "obvious" that every EvE and RL trader must know.

Article 4: Starting by 3, it explains why imho it's time to unload stock of the commodity talked about in 3. Of course due to lack of MDers interest this article could come too late, I realized about 1B today out of it but by Monday it could be down by 10%+

Article 5: Beginning of a new trading system that evolves from the very simple one I posted in this thread and gives "safer" entries. That trading system is still very simple (like all the systems based on price action) but it's used for actual RL trading even as of 2011.

Article 6: more stuff on 5 and more comparation and pictures of RL markets acting exactly like EvE does.

Considering I have about 1 hour of free time per day this would really cost me a lot of effort to pull, it's why I am only going to do it if people shows some interest.

----------------------


As for the post above:

1)
a) The graph shows a typical "end of distribution" cycle, that is when wholesale big traders / alliances dumped tons of stuff or a new patch made a commodity a lot cheaper / common. It even shows a familiar and feared "W shaped double dip", that is what economists feared could happen to RL world economy. Technically it's just a bounce over a bottom, in practice it's millions of jobs lost.

What comes after a distribution? The cycle restarts with accumulation. Wholesale traders and institutions (banks IRL) who dumped their stock on small / retail traders and caused the prices crash now rebuy the stock off those same retail traders at super-cheap price.
This causes a steady increase of price itself since demand off wholesale exceeds retail's capabilities to sell their own stuff. The end result is a series of uprising waves (some accountant even studied them, see Elliot Waves). These waves represent the struggle of traders buying up stuff, getting scared (cycle of greed and fear), and micro-dumping causing the price to zig zag, then buying again. These cycles are autosimilar, i.e. they are like fractal numbers. Zooming in them, it's possible to see smaller sub-zig zags that in turn resolve in nano zig zags and so on. Zooming out, it's possible to see how they were part of other larger and long time zig zags, that in turn make up for a small part of even larger zig zags.


Edit: it's too late in the night for me to fill in other replies, I'll see tomorrow. But please try posting your opinions, I'd really like to see someone who really learned something out of this.

Caldariftw123
Posted - 2011.03.11 01:05:00 - [256]
 

Originally by: Vaerah Vahrokha
snipsnip


No idea what other people's interest is, but I am interested. I've been diving deep into J16 and forex, it's opened up a whole new (and more profitable) type of trading for me :D

Mini Tee
Posted - 2011.03.11 06:28:00 - [257]
 

Edited by: Mini Tee on 11/03/2011 06:33:30
Edited by: Mini Tee on 11/03/2011 06:31:36
Originally by: Vaerah Vahrokha

Please visit your user settings to re-enable images.

a) What does the left-to-center part of the graph tell us, with its position and shape?
b) At the right of the graph, would you buy, sell or wait? Why?
c) What kind of motion is the market doing in the rightmost part of the graph?

2) Look at the graph below: Linkage

Please visit your user settings to re-enable images.

a) From the left of the graph, price rises, peaks, drops to a certain level then kind of flattens (center of graph) and rises a bit. Could you have predicted it'd rise a bit after it flattened?
b) Would it have been useful to know the result of a)
c) What would you do at the rightmost part of the graph if you were not in the market (read: not bought anything yet)? Buy, sell or wait?
d) What would you do at the rightmost part of the graph if you were in the market (read: you had a good deal of stock)? Buy, sell or wait?



Don't care about the right answers found in this thread but here is my take on it:
1.
a) Don't care, price consolidating, then breaking out to the upside, cool.
b) I'd sell, it's consolidating. Preferably I'd look to the left of the chart and see if there was prior resistance there. But without that info: Sell. Otherwise I'd maybe move up my stoploss.
c) Consolidating.

2.
a) Well odds are that the trend continues after a retracement, so yeah, it's more likely to continue than not, would I have bought there? Probably not.
b) Yeah. Because it would have given you a sure fire way to make money lol.
c) Looks like retracement is done, you could draw a little downsloping trendline there that got broken. Looks like a decent buy.
d) Wait. My stoploss being under the new mini lows.

Sorry if I'm coming off as ****ish or arrogant, I can't help it when discussing with other traders. I think most people overcomplicate stuff so it's a defense for keeping myself go nuts. Being overwhelmed with info and options to choose from.

Originally by: Caldariftw123
Originally by: Vaerah Vahrokha
snipsnip


No idea what other people's interest is, but I am interested. I've been diving deep into J16 and forex, it's opened up a whole new (and more profitable) type of trading for me :D

What is J16? Shocked

Caldariftw123
Posted - 2011.03.11 12:06:00 - [258]
 

Originally by: Mini Tee

What is J16? Shocked


J16 a thread, group of traders.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.11 18:00:00 - [259]
 

Edited by: Vaerah Vahrokha on 11/03/2011 18:10:24
Edited by: Vaerah Vahrokha on 11/03/2011 18:09:57
Originally by: Mini Tee

Don't care about the right answers found in this thread but here is my take on it:
1.
a) Don't care, price consolidating, then breaking out to the upside, cool



Your replies give me an opportunity to talk about several concepts. It will take more than one post to show them all so bear with me.
Too bad others did not try, I am sure more stuff would come out.

Anyway, your reply to:

1.
a) It's good enough. Since EvE markets are so easy to "read" all it's necessary to see a W bottom is to glance at the graph.

Originally by: Mini Tee

b) I'd sell, it's consolidating. Preferably I'd look to the left of the chart and see if there was prior resistance there. But without that info: Sell. Otherwise I'd maybe move up my stoploss.



The item the chart snippets refers to, is Robotics. As you probably know with former NPC goods, the item kept rising so there's no prior resistance.

Now for the reply: selling is a viable option indeed. You possibly have bought the stuff two graph price "table rows" below, so you are in for some good profit.

Selling high, expecially when in doubt, is always good.

The worst enemy of the trader is to be caught by greed, hold on stock and have the price go up, up, up and... then suddenly tank and eat all the profit and turn into a loss.

This in RL trading may happen all the time.


In this specific case, though, I'd have looked at the graph closer and noticed:

Linkage


Please visit your user settings to re-enable images.



Notice how many little bits of information is possible to squeeze out of a postcard size graph and how their sum could bring up a different reply:

- The cyan arrows show those nice peaks in volume traded. It's quite easy to notice how those peaks happen during an uptrend (i.e. prices rise up, sometimes skyrocket up).
This may also happen in downtrends but usually not in such a sudden way.

As confirmation of the above, price "yellow dots" corresponding to those bars are prices going up.

Finally - and this is what directly applies to reply b), the rigthmost price dot is higher than the ones close to it and has such volume bar.

Telltale sign #1: This could imply that the next move could be a further price increase.

- The white lines to the right show two things: the lower one is an upwards trendline. This trendline worked quite good as dynamic support, prices steadily stayed on or above it.

Telltale sign #2: The last price dot is higher than such trendline, therefore it is not certain the price will drop. It might go up.

- The higher white line delimiting the price daily highs (the hard to see red "barbs") shows that - along with the lower white line - we are seeing a so called "triangle formation".
A triangle compresses price till it has to explode, upwards or downwards. This is also called "break out" (all these concepts were explained in the old articles).

Telltale sign #3: The last price dot is above the triangle, it's very possible this is an upwards break out.

- The green line shows how we are near a pivot point, a "Round Number" (RN) or an even more powerful "Big Round Number" (BRN). Example of RN would be 15k, a BRN would be 20k (more zeroes = bigger round number).

Telltale sign #4: The last price dot is close to an upper (B)RN, therefore caution MUST be exercised.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.11 18:13:00 - [260]
 

Edited by: Vaerah Vahrokha on 11/03/2011 18:20:59
Possible decisions taken with the above telltale signs in mind:

- If we were not in the market (no stock), try buying stock above that close RN. It'd be foolish to buy stock just to be halted a couple k ISK above.

- If we had stock already, partially unload it, wait and see if the next day the next dot is going up or down. If up, then buy more stuff once price went above the close RN. If just a bit down, wait for a more strong signal. If it falls to the lower third of the current graph table "row" then dump.


As reference, here is the Robotics table where these snippets come from: Linkage

Notice how the uptrend is THE textbook trend you want to see in a steadly rising market. The "bumps" are just a way for price to consolidate prior to continuing its run up.

Caldariftw123
Posted - 2011.03.11 18:40:00 - [261]
 

Originally by: Vaerah Vahrokha

Notice how the uptrend is THE textbook trend you want to see in a steadly rising market. The "bumps" are just a way for price to consolidate prior to continuing its run up.



So very true. People are always looking for something to retrace. It's like a deep seated human psychological trait, we cannot hold on to winners as long as we can losers as you have said before. Fear takes a hold, and people are always looking for ways call out "It's going to drop again!" well it's not a drop until it's a drop, at the moment it's consolidation and the trend is still UP!

Stop looking for reasons for a price to reverse, look for reasons to stay in on the trend instead - the trend+technical+fundamental analysis all acting together will strengthen your investment and keep you on the right side of a trade a lot more than "any minute now the price will drop!" ever will.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.11 19:18:00 - [262]
 

Originally by: Mini Tee

Don't care about the right answers found in this thread but here is my take on it:
1.
a) Don't care, price consolidating, then breaking out to the upside, cool





Continuing the reply:

Originally by: Mini Tee

c) Consolidating.



Yes it is consolidating before running up again. The fact the price dot is higher than the ones to its left is not enough to conclude we are in a trend. Waiting for price to break the upward nearby RN is a first "insurance" that price could rise more.


Originally by: Mini Tee

2.
a) Well odds are that the trend continues after a retracement, so yeah, it's more likely to continue than not, would I have bought there? Probably not



Your decision would have been wise. Price peaked at that point, never to return so high again.


Originally by: Mini Tee

b) Yeah. Because it would have given you a sure fire way to make money lol.



You don't need to know about the result of a).

As you may see in this edited graph: Linkage


Please visit your user settings to re-enable images.


I have drawn the two typical "head and shoulders" lines. Head and shoulder like the above and below concepts were all covered in previous articles.

The cyan line is the "neckline". As you may see, head and shoulders need not to develop in horizontal, diagonal is just fine and sometimes used as possible trend continuation pattern.

The white line is the shoulders line. This second line tells us what happens: all the subsequent price dots touch it or stay below it. This is a sign of consolidation or bearish market, therefore buying is out of question.


Originally by: Mini Tee

c) Looks like retracement is done, you could draw a little downsloping trendline there that got broken. Looks like a decent buy.



I am afraid you'd get burned.

NEVER EVER buy when the 20 SMA is flexing down or is horizontal.
Experimental tests (done by a lot of traders, the tecnique still works after 30 years) suggest that a tangent of the slowest SMA should be inclined by 20° or more.
In practice anything from 20° to 60° works, 45° is the "gold pot" and incidentally 45° the guy who discovered it (W.D. Gann) has born in 1878...


Originally by: Mini Tee

d) Wait. My stoploss being under the new mini lows.



Good choice.


Originally by: Mini Tee

Sorry if I'm coming off as ****ish or arrogant, I can't help it when discussing with other traders. I think most people overcomplicate stuff so it's a defense for keeping myself go nuts. Being overwhelmed with info and options to choose from.



To be honest, I'd sign to have many more people like you on MD any time.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.11 22:49:00 - [263]
 

Another and last teaser that will end up meshing with the above one

This is easy. I am going to link four markets:

Market 1

Market 2

Market 3

Market 4


1) Why these markets?

2) What does usually happen in these markets?

3) What would you do if you had stock in the first two markets

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.12 22:05:00 - [264]
 

Edited by: Vaerah Vahrokha on 12/03/2011 22:06:36
Markets interdependence / related / complimentary markets

I'll start with RL finance and finish with EvE.


RL finance

In RL finance, a significant perk is given to those traders who know that many important markets are somewhat tied.

It's usually related items or securities that have something in common. When one goes up, so goes the other. Often there is a little lag in such response and it's possible to get tips about what the late market is going to do.
Example: when the ES - Standard & Poor index goes up, so goes the YM - Mini Dow.

Other times, we see complimentary markets. When the $DX - dollar goes up, the 6E - EUR / USD future goes down. This is quite obvious.
When the dollar goes up, gold (usually) goes down. Again, there are quite evident links between the two.
ZB - 30 years US treasury bonds too react to dollar.
T.A. platforms are often setup to show those markets in the same window.

Other times, these market relations are even more articulated.
One market might be related to another but not in a 1:1 fashion.
I.e. ZB - 30 years US treasury bonds move down when ES - S & P moves up and vice versa, but ZB moves slowly while ES moves like twice as fast (and YM even more so).

There is a last consideration: when there are related markets, we may notice how one of them tends to be the "leader", the other markets move with it but with a little lag.
Sometimes this relation is dynamic. It's not rare to see ZB dominate on ES and even influence gold and crude oil but sometimes ES takes the control and then ZB follows like a puppy.
In the last days, crude oil took importance and would impose its weight on the others.
It's a matter of where the traders and investors put their money in, that market becomes the week's hero.


To show what's been said above with a picture, here's a screnshot of how the securities I talked about appear next to each other:

Thumbnail (for the full picture with all the markets click this link).

Please visit your user settings to re-enable images.

Fred Barbossa
Free Mineral Collective
Posted - 2011.03.12 22:13:00 - [265]
 

Originally by: Vaerah Vahrokha


1) Why these markets?

2) What does usually happen in these markets?

3) What would you do if you had stock in the first two markets


1. Pos fuel/ice materials
2. Bots get banned causing a spike every once and a while which is made worse by speculation about it. Hulkageddon is also pretty awesome but changes are more speculation focused then bot bannings.
3. Nitrogen is at a high point compared to previous prices, sell. Even if it is in some dive before rallying its much safer to sell. Robotics gets held, its harder to justify this decision based only on the graph. The huge donchian channel growth and the volume traded drops to almost historic lows at the end of the chart along side a price increase. It looks like the market is holding its breath before rallying and people are pulling stock. The none graph reasons for holding are simpler. Related items are spiking.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.12 22:39:00 - [266]
 

(... Continued from above)


EvE finance

Having seen how RL works, what about EvE?

In the post above I linked these markets:


1) Robotics

2) Nitrogen Isotopes

3) Liquid Ozone

4) Heavy water


Now, these are quite easy to figure out and look... a surprising match with how RL markets work!

We have Robotics market as complimentary to the Nitrogen Isotopes market.
It's quite known that when Robotics rise, the deriving higher price to upkeep POSes makes people close them down and thus cause the isotopes prices to tank.

The opposite is true as well, when Robotics go down, Nitrogen Isotopes begin to push and lead.

Nitrogen Isotopes, on the other hand, are dominant on Liquid Ozone and Heavy water. Furthermore the latter markets move at a much faster pace than Nitrogen Isotopes.

Basically it's like Robotics are ZB - 30 years US treasury bonds, Nitrogen Isotopes are like ES - Standard & Poor and the other two are like YM - Mini Dow, i.e. smaller and thus moving quicker.


Make this stuff work for a profit

Ok, the above concepts are nice and fun, but where's the cash?

The cash comes in the form of anticipated knowledge about what is possibly going to happen next.

I.e. some days ago I noticed this maximum on Isotopes: Linkage

The green line is a support, BRN 300 ISK pu. Price will fight to stay above it.

The cyan lines draw a triangle. As you might recall from few posts ago, triangles are particular and important patterns where price literally gets compressed (consolidation) like a coil till it explodes (break out), upwards or downwards.

The graph shows a break out to below the triangle tip. This is a bearish signal therefore I dumped about 1B worth of isotopes. Sell signal #1.
Robotics are on the rise. Sell signal #2.
Smaller related markets of Liquid Ozone and Heavy Water are going down and (as usual) with a larger motion than Isotopes. Sell signal #3.

So here are 3 sell signals and 2 of them come from comparing related markets.


Conclusions

The graph is of 2.5 days ago. If you go check today's price, there's a market drop down. Some guy panicked as well and dumped 20M isotopes himself.
Now, I don't know if price will rise again, but - also considering we are done with the "fat cows" period of Christmas and going to crappy subs season (read: less POSes => less demand), it was prudent to exit the position there.

Maybe it'll rise again, in that case buying stock is an option. But for now, the money is safe in the wallet.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.13 07:59:00 - [267]
 

I have been made aware that a sensible manipulation has been made on Mercury and some got burned.

If you want to know how you got burned, why, when and what to do now, I will post all of that later today, at about 8-10pm EvE time.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.13 22:50:00 - [268]
 

Mercury manipulation

As the post above says, earlier today I have read on SCC-Lounge about someone having done a nifty manipulation.

This has given me the opportunity to look at that market and see what it has to tell.

At first sight the graph looks like this: Linkage.

Not a lot to see, except for those suspicious "peaks" at the end.


Now, let's look at the graph as I see it, what story it wants to tell: Linkage.

I have numbered the various important bits I have spotted in 1 minute:


1) There is a very, very long term pivot line. Actually it's a FTZ (For Trouble Zone, a concept covered in past articles) anchored at BRN 4000 but with some outliers going to 4.2-4.3k.

It acted as resistance before February, then as support afterwards. Price stayed below or above it. At the moment we are well above it and rising. This means the market is overall bull-ish (i.e. favoring buyers).


2) Near the end of January there has been a price upwards breakout, powerful enough to pierce thru the pivot line. This is the start of a slow, steady rise. One of the kind that (ie like for Robotics) are made to be ridden by buy and hold speculators.

3) I have drawn a white trend line to show how the price is showing medium term higher lows, a typical sign of market on the rise. That trend line is acting as dynamic support.

4) I have also drawn a channel formed by 3) and an upper resistance line in yellow. Notice how the channel is slowly shrinking. If this is not just due to pricing irregularities (there are parallel boundaries channels), these lines would converge to the final price.

5) This line shows the middle or median of the channel in a way not much dissimilar from the indicator called "Andrew's Pitchfork".

At the end of this line, where 3) and 4) would finally converge, there could be the final price, i.e. the price of equilibrium and where the market will start doing little more than ranging and idling.



What does all of the above say?

- That indeed the market was trending up. Therefore a speculation would succeed, the best speculations are those which just amplify something brewing up already.

- That it's quite possible to see 1 or 2 more of those high peaks in the future. The general motion would still stay bull-ish even with these highs and lows.

- That it's even possible that this was not a manipulation or that the manipulator did just the beginning of it. The sheer slope of the peaks suggests that a pin bar formed on top of something being already manipulated.

Pin bars or Pinocchio Bars (bars that lie) are an interesting pattern, mostly caused by over-excited traders who self augment in their belief that price will rise more and more, with such a feedback that the price does a spasm to the high (or low). At a certain point, the groupthink of the traders wakes up at the same time and all panick and dump.

This is also a bull / bear trap (depending on where it happens, all these terms are classic in RL trading literature) as it royally screws up those who were stuck in these positions.


Basically what happened is that a butterfly flapped its wings at the bottom of the peak and then stuff self amplified with butterfly / snowball effect up till it crumbled on its very actors.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.14 22:58:00 - [269]
 

Zydrine

There have been some people rumoring about Zydrine.
It had a recent price dip, some went to buy it.

This market is very, very rich of technical juice so I am going to expose my findings.

First of all, let's "unlock" the graph, since the usual manipulator put a very high price order to make the graph zoom out and disappear.

Here's the cleansed graph.

To get a cleansed graph all you need to do is to right click on it, then "hide Donchian Channel" and "hide min / max".


Premise

1) When trading - expecially this kind of trading - we have to be conscious of the risk of loss. There WILL be times when we royally screw up but it's possible to try minimize those chances.
The grand total of wins has to be greater than the grand total of losses. Losses in RL trading may happen up to 60% of the trades.
It'll be discipline and money management that cause such a strategy to become a winner. On the contrary a 85% winning strategy will make you bankrupt without proper discipline and money management.
Just because today you win due to luck, does not mean tomorrow you'll still do.

2) A base T.A. principle says: "price discounts everything". This includes errors, exploits and patches effects - exactly like in RL it discounts errors, insider trading, earthquakes, death and famine.

Now the rest of this post will be about showing off the concept that it is not prudent to buy "right today" like some did. It will possibly end up well but not because of having done the right thing.


The Zydrine market

I have prepared an extensively intricate (!) analysis of Zydrine price in the last year.

The graph is available at this link.
You are really encouraged looking at it and keeping it in some other tab.
I'll use numbering matching to the related elements on the graph with the same numbers.

1) By examining it, we may notice how a massively huge white trend line has been drawn across the whole graph.
It's (at least) one year that price is falling down. The white trend line is acting as strong resistance.

2) At the same time, Zydrine seems to have strong ties with the 1,100 ISK pu price level. A corresponding green line (called pivot line) has been drawn to show such price level.
In the beginning it acted as support, then after the very large price rise at the beginning of the past year, Zydrine tanked and pierced below it, making it a price resistance level.

3) Another purple line has been drawn to the left of the graph. It works in tandem with the white trend line 1), delimiting what's called "channel", a dynamic price boundary holding both the top and the bottom of the price range.

4) Right past this first half, there's a pretty long consolidation, then an inversion and then price starts rising. A white "trend up" line appears below the price. The trend line has been drawn considering the direction of the pattern sitting on top of it, a so called "double top" (something like an head and shoulders, including a neckline sitting parallel to our trend line).

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2011.03.14 23:05:00 - [270]
 

5) To help us further with the analysis, I also added several arrows pointing to volume lines. Volume increases a lot during up trend "buy peaks", decreases during "do nothing" horizontal runs and increases again when people dump stock (less than in the buy phase).

What we may see are indeed the several peaks right before the large prices increases.

6) But wait, a warning sign: the sensible price dip started about 1 week ago is not showing particular signs. We may see a "stock dump" volume increase about 1 week ago but nothing tangible showing that someone is purchasing lots of stock again. Therefore there is no guarantee that the dip was at its lowest nor that in the upcoming days, price is bound to rise a lot again.

7) Above the recent price highs there are two cyan lines, one solid and one dotted. They are not proper trend lines (they delimit a channel) because to be a trend line it has:

- to sit below a rising price,
- to sit above a falling price.

Even if they are not trend lines, channel boundaries like the cyan ones are quite useful as they visually show price behavior oscillating within a rising or falling range.
In this specific case, the solid cyan line shows how price is experiencing "higher highs" and thus it's generally increasing.
The dotted line is matching the "outliers", that is those extreme price attempts to go higher than the channel it'd belong to. Projecting the solid line into the future, we may see possible new highs yet to happen, the dotted line would show possible new peaks maximums.

Given this "price is rising" information, you'll probably wonder why I say that it was not prudent to buy.
It was not prudent because there's no guarantee that price will go up within a reasonable amount of time.
Since we are heading into the summer, demand will drop, liquidity will drop and even weak-ish resistances will show a strong effect.

The price dip is not following some particular pattern, strategy or anything. People just chose it because "it looks like the lowest dip, price has to increase after that".

There is no real retracement yet, no pullback, no upwards breakout. T.A. cannot help but suggest to stay out for now.

8) In order to potentially push me into a buy, I'd want to see price rising up again (yellow S shaped line all to the right of the graph).

9) Adding to 8), I'd also want to see a retracement. Retracements are a good thing, they are often a sign of an healthy trend (price takes "a breather") and not just someone playing the market and making price rise to over 9000 and dump 60 zillions of stuff ASAP and in my face.

Such retracement would happen at a RN, I have drawn a possible one (grey segment) as prosecution of the 1050 price line.

10) The retracement described above would make the price bounce to the 4) white ascending trend line before returning up. Depending on the trading preferences, this would also be the buy signal (as soon as the price has bounced and the first "price yellow dot" appears above the white trend line) or the attention trigger for a later buy decision. I.e. a very conservative approach would cause to wait till the rebounce up passed the grey segment.

11) At this point price would not encounter any serious obstacle rising to the 2) green 1100 level pivot line. Once at that level, a further analysis would be required to refine the range of possible outcomes.


Conclusion

I could not find a compelling reason to believe the price dip created the Big Good Deal. On the contrary, someone felt like messing the graph up so that others would not see what's going on, this prompts me asking why.


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