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Proof That Forex is Random video

  • #41
  • Nov 14, 2017 2:43am Nov 14, 2017 2:43am
Quoting mollyellie
The point i was try to make was the market makers are unable to march the price around to suit their needs, but rather the market will naturally gravitate to its weaker side.
Agreed.
(below is an excerpt from an interview with Paul Tudor Jones in Market Wizards by Jack Schwager)
k

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  • #42
  • Nov 14, 2017 2:51am Nov 14, 2017 2:51am
In line with the subject of the thread, it may be interesting to watch the documentary “Trader” about Paul Tudor Jones and an interesting way his firm anticipated the 1987 stock market crash.

Inserted Video


Cheers,
k
  • #43
  • Nov 14, 2017 4:53am Nov 14, 2017 4:53am
Rarely - if ever - have I seen forum posts based on such fundamental misunderstandings and misinformation as yours, Goose.


Quoting goose4
70 percent of forex trades are done by bots in 2017.

That's in the interbank market. Members of this forum aren't even trading in that market at all, so it just isn't relevant.


Quoting goose4
99.8% of Hedge Funds Lose Money here is link https://agoraeconomics.com/2016/09/0...ds-lose-money/

Not only is that untrue, and wrong, but the article you're quoting from doesn't even say what you're quoting it as saying.

You've ignored the essential word "collectively" in your interpretation of the relevant sentence in the article: it says that 99.8 of hedge-funds collectively lose about $100B - it doesn't say that they're all losing money. And they're not.

And the content of the video with which you started off the thread is no more than the grotesquely deluded ramblings of an innumerate idiot who doesn't define his terms, and clearly doesn't have "logic" or "reasoning" in his skill-set. If you're going to be fooled by nonsense like that, trading isn't for you!


Quoting goose4
Statistically there are more lottery winners than forex millionaires (at retail level)

There will be, won't there? Because most forex millionaires aren't at "retail level", and most lottery winners win small prizes anyway. This point was technically true, but it doesn't signify what you think it signifies.

Apparently you have absolutely no critical thinking skills at all, and need to go back to high school.
  • #44
  • Nov 14, 2017 5:03am Nov 14, 2017 5:03am
People who say markets are random simply don't know how markets actually work.
  • #45
  • Nov 14, 2017 5:10am Nov 14, 2017 5:10am
The good thing is that the vast majority of traders suck.
  • #46
  • Nov 14, 2017 5:12am Nov 14, 2017 5:12am
Quoting forexalien
{quote} My take on this is: Forex is mostly Random controlled by fear, greed, news, time zones, people awake or sleeping, holidays, trade ideas constantly changing, business trade, country trade, and inflation and trade balance between countries, etc. ..
if I understood correctly you said that market is not random but trader's emotions, interpretation of news , habits and any other effect on trader is random which overall makes trading random....Yes , with this I agree.

Quoting hanover
....I do try to use math and logic wherever possible.
I am not sure about math but i am certain that logic is behind trading...so no room for randomness.
NO MATTER THE SITUATION,NEVER LET YOUR EMOTIONS OVERPOWER YOUR INTELLIGENCE
  • #47
  • Nov 14, 2017 8:07am Nov 14, 2017 8:07am
Quoting dkrock
{quote} The trades that move the market are mostly pending orders. They are visible on Level II platforms. Market makers are not necessarily hunting stops so much as activating pending orders in both directions. A pending order to close a trade is a stop, so if you are in the neighborhood, it will affect you too. Those orders are normally tied to the "business" of banking, not speculation, so they need to be filled so the world can continue to spin. Consider altering your method of selecting stop loss points, or figure out how to trade more effectively...
DKRock,

"Those orders are normally tied to the "business" of banking, not speculation, so they need to be filled so the world can continue to spin."

Could you please elaborate more on why should be filled at all costs?

Thanks
  • #48
  • Edited 9:33am Nov 14, 2017 8:16am | Edited 9:33am
Quoting Quickly
Rarely - if ever - have I seen forum posts based on such fundamental misunderstandings and misinformation as yours, Goose. {quote} That's in the interbank market. Members of this forum aren't even trading in that market at all, so it just isn't relevant. {quote} Not only is that untrue, and wrong, but the article you're quoting from doesn't even say what you're quoting it as saying. You've ignored the essential word "collectively" in your interpretation of the relevant sentence in the article: it says that 99.8 of hedge-funds collectively lose about...
I apologize about poor information, just trying to get a nice conversation. It has been proven technical analysis does not work. I make a living having a portfolio of stocks and the earnings is my salary,and I buy looking for good value companies. I'm trying to see how Retail forex traders earn a living. As random charts look the same to me.It looks like a casino. People do make huge money with forex,but they generally works for banks and have a salary.

you need to read this. " Only 0.6% — you read that right, 0.6% — showed any true skill at beating the market consistently, “statistically indistinguishable from zero,” the three researchers concluded."

https://www.marketwatch.com/story/al...3-10-25?page=1
  • #49
  • Nov 14, 2017 8:25am Nov 14, 2017 8:25am
There is an element of randomness in the market. When I open up my charts in the morning I have no idea in the world when the market makers are going to appear. Sure, I have some pointers, London open, news etc etc, but that's all these things are - pointers - there are no guarantees. Once the market makers have shown their hand, however, the game changes and is anything but a random walk. Sure, there are still no guarantees, but that's where an understanding of market structure and risk management comes into play.
  • #50
  • Nov 14, 2017 8:29am Nov 14, 2017 8:29am
Quoting kprsa
In line with the subject of the thread, it may be interesting to watch the documentary “Trader” about Paul Tudor Jones and an interesting way his firm anticipated the 1987 stock market crash. https://youtu.be/FuMRmARLw0g Cheers, k


Yeah paul is great.

He only uses a 200 day moving average as a indicator just to show him the direction.

I stole that from him. It's the only thing I use.
  • #51
  • Nov 14, 2017 8:35am Nov 14, 2017 8:35am
Adding fuel to the fire ... https://www.forexfactory.com/showthread.php?p=3073571
  • #52
  • Nov 14, 2017 8:38am Nov 14, 2017 8:38am
Quoting alphaomega
Adding fuel to the fire ... https://www.forexfactory.com/showthread.php?p=3073571
Thank you I will check it out.

Since your adding fuel to the fire. What is your notion on this my friend ?
  • #53
  • Nov 14, 2017 8:47am Nov 14, 2017 8:47am
Quoting dkrock
{quote} The trades that move the market are mostly pending orders. They are visible on Level II platforms. Market makers are not necessarily hunting stops so much as activating pending orders in both directions. A pending order to close a trade is a stop, so if you are in the neighborhood, it will affect you too. Those orders are normally tied to the "business" of banking, not speculation, so they need to be filled so the world can continue to spin.

It is probably miraculous that those pending orders find themselves in the area most stops are.
k
  • #54
  • Edited 9:21am Nov 14, 2017 8:52am | Edited 9:21am
Quoting alphaomega
Adding fuel to the fire ... https://www.forexfactory.com/showthread.php?p=3073571

Thanks for that a cool guy called ex petra made a interesting post. On that thread. I agree with him. He said "Again, I never said you could not make a lot of money in forex, only that you cannot predict short term price movements often enough to overcome negative expectancy. I wish the best to everyone."







Long Term Winning in a Negative Expectancy Game



***** Caveat***** Many will disagree with what I am about to write. If you cannot accept mathematical certainty, please do not waste your time reading this.


The vast majority of retail traders will never accept that the market is random. Period. Double period. This notion does not match up with their hopes, beliefs, and dreams so it is discounted. There are several sound mathematical arguments that point toward randomness (short term) and NO mathematical arguments that refute them. However, nobody really even likes math so traders dismiss these agruments and continue to cling to their comfortable belief system. Short term randomness is also evident by simple deductive logic. Logic is a close cousin to mathematics, so let that be dammend as well. My point is that what people believe is a very, very hard thing to change. With regards to forex, most will not change their minds until they reach a pain threshold that is high enough to make that change happen.

Trading retail forex is a negative expectancy activity. I hope all readers understand what negative expectancy is….but I will give a very brief description. Every trade taken opens with a negative in the profit/loss column because of the spread. This spread must be overcome on any trade before profit can be posted. If there were no spread, forex would be a game of neutral expectancy, meaning that overtime random entries could be made with equidistant profit and stop loss points. Over a large number of trades you would expect to break even. However, the spread makes that profit and stop loss points non-equidistant and puts forex trading in the realm of negative expectancy. If you go long E/U with a 2 pip spread, you must go a full 10 pips higher for a 10 pip gain, but you need only 8 pips lower for a full 10 pip loss. I hope that everyone can see that, from a probability standpoint, forex is negative expectancy.

So, how to overcome this negative expectancy? You must have a system that correctly predicts the direction of a currency pair at a rate of greater than 52% (give a 2 pip spread) while keeping profit and loss points equidistant. You may manipulate your system up or down this scale. For instance, you may decrease your win %, but you must proportionally adjust your profit point away from equidistant to compensate for the lower win rate.

Is there a system that can produce positive expectancy with equidistant profit/ loss points? I do not believe there is such a system available to small retail traders. I have seen many claims of such systems, but none that I have reviewed hold up to long term scrutiny. Please do not buy a retail forex system. If any of these systems could produce a positive expectancy, even a small one, the developer would be rich beyond their wildest dreams and not interested trying to get you to send them your money.

I have a winning system—how long until I am rich? Maybe you have access to inside information and can predict currency direction at a winning rate. You are still not home free. You must overcome randomness in the market and manage your money so as to not let randomness and volitility wipe you out. Consider the following: You have a system that produces 60% win rate given equidistant profit loss points. How many trades must I enter to be 99.9% certain of a win? N= log(1-.999)/ log(1-.60). This yields N=7.5. This number tells us that every 1000 trades you will hit at least 1 stretch of at least 7 or 8 losers in a row--- even with an incredibly high win rate of 60%. Don’t be surprised when these losses happen, they will happen to a mathematical certainly of 99.9%.

Some people make big money in forex. Absolutely some do. Some take accounts of $500 and turn that into $20,000 in a month. Some blackjack players take $500 and turn it into $20,000 in a few hours. Same for craps, roulette, etc. All these people are experiencing short term volatility in a positive way. It cannot be sustained and if they continue to trade or play for an extended period of time their account balance will be zero.

Conclusion. Please do not take this to mean I am a kill joy! I have traded forex for quite a few years and have had periods of great success, along with great disaster. I still trade from time to time, but I do it for fun, somewhat akin to casino gambling. If you are trading retail for any other reason that this, you will be disappointed. You may be successful for a few months or even years, but in the end if you trade long enough you will be wiped out.
  • #55
  • Nov 14, 2017 8:52am Nov 14, 2017 8:52am
Quoting goose4
{quote} Yeah paul is great. He only uses a 200 day moving average as a indicator just to show him the direction. I stole that from him. It's the only thing I use.
Actually, for the purpose of predicting the 1987 crash his firm constructed a technical model that essentially comes from W.D. Gann’s cookbook - looking at the 60-year cycle. They calculated correlations between the 1920s stock market data and the late eighties, the correlation was better than 90%. This is both in the linked documentary and in Market wizards.
k
  • #56
  • Nov 14, 2017 8:53am Nov 14, 2017 8:53am
Quoting Loone7
sorry i'm newbie i just want to ask you this, if a guy from europe get paid a one million us dollar and he want to convert that million usd to euro, do that will effect the strength of the euro even if will effected by 0.(hunders of zeros)1 ? because as he convert the million usd to euro he's just buying the eurusd, is that right or not, cheers
1 million is nothing here (I mean to change the market trend)! But, your logic is correct!
  • #57
  • Nov 14, 2017 9:06am Nov 14, 2017 9:06am
Quoting hanover
{quote} Back in August I paid to attend a workshop presented by a trader with 25+ years institutional experience.
Could you give the traders or workshop name
  • #58
  • Nov 14, 2017 9:44am Nov 14, 2017 9:44am
Quoting goose4
{quote} Thank you I will check it out. Since your adding fuel to the fire. What is your notion on this my friend ?
The less you know - the more random the market will be!
If you know nothing - the market will be 100% random for you.

Example:

01010100011010000110010100100000011011010110000101110010011010110110010101110100001000000110100101110011001000000110111001101111011101000010000001110010011000010110111001100100011011110110110100100001

Random sequence of 1 and 0 ???
It's up to you to find out.

I believe that by using the historical prices and reverse engineering techniques we can recreate the "lost" information about the total exposure for all market participants above and below the current price.
With this information we can make relatively accurate guess about the location of pending limit orders and stop clusters.

And by knowing the fact that the price always moves against the majority in the direction of their stops, we have a solid base for the creation of profitable strategies.
  • #59
  • Nov 14, 2017 9:44am Nov 14, 2017 9:44am
It is a possibility that the markets are not random , but... i don´t think there is someone in the entire world that knows for sure if the price goes in a certain way when it hits a certain "resistance / support" .

The only way to make Money is to have a system that covers all the possibilities . The problem is that when you cover one end , you uncover the other end ...
  • #60
  • Nov 14, 2017 10:57am Nov 14, 2017 10:57am
if market is random then it would be chaos among all financial vehicles.
NO MATTER THE SITUATION,NEVER LET YOUR EMOTIONS OVERPOWER YOUR INTELLIGENCE
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