Why are currencies more random than other instruments? | Forex Factory

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Why are currencies more random than other instruments?

  • #1
  • First Post: Aug 10, 2017 11:11am Aug 10, 2017 11:11am
I have been observing currencies, stocks, indices, commodities and cryptocurrencies and I find currencies to be more random than any other instrument. Am I wrong or is this true and why?
  • #2
  • Aug 10, 2017 11:56am Aug 10, 2017 11:56am
Quoting trickshady
I have been observing currencies, stocks, indices, commodities and cryptocurrencies and I find currencies to be more random than any other instrument. Am I wrong or is this true and why?
hey shady, what do you mean by more random ?
  • #3
  • Aug 10, 2017 12:45pm Aug 10, 2017 12:45pm
There is little to no random-- but there is much manipulation, on all trading instruments..... Manipulation = non random

some may call it fundamentals. Fundamentals = using manipulated excuses to move the markets... in most cases -- there are exceptions.
Live today like theres no tomorrow-- Prioritize like you will die today
  • #4
  • Aug 10, 2017 12:51pm Aug 10, 2017 12:51pm
Each trade, by definition, is a random event. No two trades are ever the same. The day is different, the names of the traders are different, the size of the trades are different. The stock market estimates $30B in transactions daily. The Forex market estimates $4.5T in transactions daily, or 150 times more than the stock market. Obviously with 150 times the volume, it will move more. It is the equivalent of the major leagues in sports, so just like in the majors of sports, you probably should be a professional if you want to succeed. Professionals are not concerned with observing "random". We normalize random with various forms of individual manipulation. What is random by definition is purposely converted into patterns that provide trading opportunities.
You cannot be extraordinary by being normal
  • #5
  • Aug 10, 2017 1:32pm Aug 10, 2017 1:32pm
Quoting trickshady
I have been observing currencies, stocks, indices, commodities and cryptocurrencies and I find currencies to be more random than any other instrument. Am I wrong or is this true and why?
You are just wrong.
I've traded and seen it all.
It's all the same.
  • #6
  • Aug 10, 2017 1:41pm Aug 10, 2017 1:41pm
Quoting trickshady
I have been observing currencies, stocks, indices, commodities and cryptocurrencies and I find currencies to be more random than any other instrument. Am I wrong or is this true and why?
You are wrong. While each and every tick is a random event, the forex, as a market, is not random. It is heavily manipulated by central banks, and when the central banks are done, it is heavily manipulated by the top tier banks. If you think it is random, you do not understand it; if you understand it, you know it is manipulated and directed.
  • #7
  • Aug 10, 2017 3:26pm Aug 10, 2017 3:26pm
I never said forex was random, I don't believe it is. I just feel like there is more randomness in it than other markets.
  • #8
  • Aug 10, 2017 4:45pm Aug 10, 2017 4:45pm
Quoting trickshady
I never said forex was random, I don't believe it is. I just feel like there is more randomness in it than other markets.
I'm confused. You believe that the forex is not random, but is more random than other markets? Does that mean you believe other markets (stocks, bonds, commodities) are more manipulated than the forex?
  • #9
  • Aug 10, 2017 5:03pm Aug 10, 2017 5:03pm
Yes, it makes sense for them to be more manipulated than forex because they are smaller and it takes less money to manipulate.
  • #10
  • Aug 10, 2017 5:23pm Aug 10, 2017 5:23pm
I made a random walk here. look at the result. 1000 million lost for clients.. silly me.
It's in fear when people show what they truly value.
  • #11
  • Aug 10, 2017 5:45pm Aug 10, 2017 5:45pm
By random do you mean harder to trade?

If so I kindly disagree. It is probably subjective. Each assets have their difficulty.
I look for value wherever it can be found
  • #12
  • Edited 6:29pm Aug 10, 2017 6:07pm | Edited 6:29pm
Quoting trickshady
I have been observing currencies, stocks, indices, commodities and cryptocurrencies and I find currencies to be more random than any other instrument. Am I wrong or is this true and why?
Best to check any assumption that may be victim of human bias through rigorous testing....and that relates to any assumption or mantra preached on a trading blog. Refer to some techniques such as Perry Kaufman's signal to noise ratio (efficiency ratio) which might assist you in resolving your query. It is a worthwhile exercise in that it builds your confidence to make your own informed decisions and also will allow you to discern what is noise and what is not in this forum.

Also have a look at the results of your ratios when applied to emerging markets (eg cryptocurrencies) or new ETF's etc. versus the ratio's produced in mature highly liquid markets. T'is interesting stuff and may (used loosely) be attributed to varying participant mixes across the life cycle of a market.

Hint: You are more likely to find a mis-priced item at a garage sale than a mature retail market.
  • #13
  • Aug 10, 2017 7:22pm Aug 10, 2017 7:22pm
Let me throw in my 2 cents. I don't think they are more random, but I do think they trade less orderly than equities do. I've traded both and I can say that currencies spike around a lot more than stocks do. In other words they play more games around support and resistance levels than stocks. That much I can say. I can use much tighter stop losses with stock than I can with currencies. I attribute that to the fact that there are much more players in the FX game than in equities. It's just a much larger market.
  • #14
  • Aug 10, 2017 7:25pm Aug 10, 2017 7:25pm
Quoting trickshady
Yes, it makes sense for them to be more manipulated than forex because they are smaller and it takes less money to manipulate.
OK, then what you are saying is, there is little randomness in all markets, and instead, everything is manipulated to some degree. So the question is: is the forex less manipulated than other markets? I have traded bonds, stocks and a few commodities, and have no idea about the level of manipulation in those markets.
  • #15
  • Aug 10, 2017 8:36pm Aug 10, 2017 8:36pm
markets ARE manipulated.. how do you think a big bank/mutual fund or whatever can fill a HUGE order?? they need to create liquidity FIRST, thats where false breakout and stuff like that happens all the time

or you think the markets its just a rollercoaster with infinite amount of money in every price bracket?? reallyˇ?? think about it for a second
  • #16
  • Aug 10, 2017 11:31pm Aug 10, 2017 11:31pm
Quoting Madinvestor
Let me throw in my 2 cents. I don't think they are more random, but I do think they trade less orderly than equities do. I've traded both and I can say that currencies spike around a lot more than stocks do. In other words they play more games around support and resistance levels than stocks. That much I can say. I can use much tighter stop losses with stock than I can with currencies. I attribute that to the fact that there are much more players in the FX game than in equities. It's just a much larger market.
Yes that's exactly what I mean. They spike like crazy all the time. Way more often than any other market I have observed.
  • #17
  • Aug 11, 2017 6:35am Aug 11, 2017 6:35am
Quoting trickshady
They spike like crazy all the time. Way more often than any other market I have observed.

Is that what you mean by "random"?

Might that be because you're not comparing like with like: the other markets with which you're comparing the price structures with those of the spot forex market are perhaps more objective and universal, whereas in the case of spot forex prices, you're not looking at anything objective and universal but at an independent market-maker's own prices, which they're free to manipulate however they wish to?
  • #18
  • Aug 11, 2017 7:11am Aug 11, 2017 7:11am
Quickly, can you expand more on that? Are you saying forex is the most manipulated market of them all? It's the largest one and it requires significantly more money to manipulate. Or because it has no regulation are you saying these random spikes are nothing but a button punch to change the price with very little to no transactions in them? Kinda like the way banks give loans by punching a button to create money out of thin air.
  • #19
  • Aug 12, 2017 1:28pm Aug 12, 2017 1:28pm
Quoting trickshady
Quickly, can you expand more on that? Are you saying forex is the most manipulated market of them all? It's the largest one and it requires significantly more money to manipulate. Or because it has no regulation are you saying these random spikes are nothing but a button punch to change the price with very little to no transactions in them? Kinda like the way banks give loans by punching a button to create money out of thin air.
but can you expand more on why you do think those spikes in the forex market are random ? Were you able to trade them, would you still find them random ? Thanks.
  • #20
  • Aug 12, 2017 5:38pm Aug 12, 2017 5:38pm
I think they are random because they seem to happen very suddenly for no obvious reason. Now that few people have mentioned about manipulation maybe these random moves are pure manipulation. I have also not seen that kind of activity with such an incredible frequency in other markets.

My explanation for these spikes is because of random orders that come into the market with the purpose of acquiring certain currency for non speculative purposes. Isn't forex used the least as an investment instrument because most trading institutions don't bother with it. They mostly trade stocks, futures, bonds, commodities, etf's...not forex. That only leaves banks involved in forex and do they mainly speculate for profits or just process orders?
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