Originally posted at forexfactory on August 9, 2011:
As a trader, I am not in the business of explaining/rationalizing why the price moved that way or that way and not that way. I really, really do not care at all about the WHY (which is the fundamental approach), it is a complete and total waste of time and energy.To be successful, the trader only needs to do one thing and one thing only : find a statistical trading edge (through numerous backtesting) and exploit that edge with discipline and strict money management, day after day, week after week, year after year.That’s it,…
Thank You for your response Mr Breakout.
Na, I am not talking about fundamental analysis. I am not going to try to defend that.
If everything is reflected in the price, then I assume that some statistical edge can be found analyzing the USD/JPY prices of the past using some sort of technical indicators/chart patterns/price patterns/robot/programming, etc in order to “predict” the Bank of Japan intervention.
I do not know of any technical indicator, chart pattern, or price pattern that can predict that with any statistical edge.
There are various ways to help you know and predict such events, but they usually have to do with information outside of the chart, and thus do not show up in the price data.
I have no idea how someone would attempt to back test such news and central bank intervention. You can’t back test it with price data alone, because price data is not the only useful information about the market.
If your system that you so diligently back tested happened to be short USD/JPY during that time and had it’s stop loss anywhere between 77.20 – 80.00 then it got smoked. In other words that trade would of had a much lower probability of success than your system indicated because a system that only looks at price data does not take into account the information that does not appear on the chart.
Now I obviously do not know your system and do not know if your system would of been short or how you manage your stops, etc.
Just my two cents. That’s it, the rest is just conversation.
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