DislikedConsidering that a trader deals with stats and probability, it's a question for a trader as well. I can't imagine a good trader without a decent grasp of the underlying maths.
We are talking about applying knowledge not discussing the mere possibility of random numbers.
No it isn't. The difference is only a shuffling of numbers. Same principle. The fact that traders can manipulate winrate, that events are correlated etc is irrelevant.
[i][b]The fact that is the same principle is not an issue here. The issue is how to deal with this...Ignored
Making general statements about the definition of randomness shows that you are well acquainted with recent works like black swan and randomness theory applied to social constructs. But it doesn t show that you have logically or empirically proved that martingale is a poor strategy. I will be more convinced by actual figures based on real price movements and back test of real price action , different entry points, money management and stop losses.
I don t trade with simple martingale but i do my homework. and i have seen on several currency pairs that the randomness you mention does not affect the positive outcome (i.e winning trades) with some time frames. Of course previous price action is not necessarily useful
to predict future price action. However you should proceed like this :
take your account size, say 50,000 $. Define a maximum acceptable loss, say 20,000$. Then go backwards on all pairs and see what is your best initial lot entry, when you should invest randomly and double it and observe the results. I don t even suppose that the trader should have any particular knowledge - fundamentals or news - and for the purpose of applying pure randomness to trading, let s say that all entry points are predictible, say you double at every 200 pips loss. or something similar. All exit points should be when on profit . If you do this little exercise you will find surprising results...like you will not see any curve steep enough to wipe out your account.
Yes, every tick can be counted as a random even but you are not going to bet on evey small tick but on higher tf and see that randomness on currencies is pretty well contained in defined swings (series). But of course if you have 20,000 $ account and start trading 50,000 $ lots with 500 $ initial margin deposit and double it immediately you will get wiped out in a down trend like the recent euro $ - december - february rout -
Andreyou