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Forex is random

  • #381
  • Apr 8, 2020 8:29pm Apr 8, 2020 8:29pm
You have a piece of the puzzle. Trade management. But it is also very very important to have a directional bias when trading. You will learn if you choose too, or if you don't give up after losing.

Sometimes people choose to learn the hard way.

Good luck.
  • #382
  • Apr 8, 2020 8:31pm Apr 8, 2020 8:31pm
Next time when you have a question about the markets and want to learn. Maybe phrase it as a question rather than a statement or fact. You would have gotten a much better response if your thread was titled "is forex random?" Rather than stating something you do not understand.

Wise men know that they know nothing. It is best to choose to listen and learn at all times.
  • #383
  • Apr 8, 2020 9:30pm Apr 8, 2020 9:30pm
Quoting Rennaissance
{quote} Markets are unpredictable, because the future is unpredictable. Anyone developing some voodoo like way to predict the unpredictable is just fooling himself. Even if you make money consistently, it doesn't pair with forcastability. But probably trade management. Entry points are an illusion...
I would say if you see the market as random, you haven’t understood the PURPOSE OF THIS ACTION.
If you can’t understand its movements, perhaps that is the point.
What is the first thing a dog does when he exits a river.

Cheers Rick
Trading thin liquidity at the boundary of the charts
  • #384
  • Apr 9, 2020 1:02am Apr 9, 2020 1:02am
there is plenty of evidence that markets ARE predictable..

"Yet various styles of momentum investing continue to reward their investor practitioners with above-average returns."

"In fact, a 2013 study looked back 215 years and confirmed that the ability to earn premiums from momentum strategies existed not just in U.S. stocks but in foreign markets, bonds, currencies and commodities."

https://www.anderson.ucla.edu/facult...eview/momentum
  • #385
  • Apr 9, 2020 2:24am Apr 9, 2020 2:24am
Four charts, four pairs...................

If the markets are random, why do they look the same?....at specific times within the market.

Spot when the charts could present a trade...70% of the chart is just a washing machine.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Random AUDCAD.png Size: 48 KB
Click to Enlarge Name: Random AUDCHF.png Size: 45 KB
Click to Enlarge Name: Random AUDJPY.png Size: 46 KB
Click to Enlarge Name: Random AUDUSD.png Size: 45 KB
  • #386
  • Apr 9, 2020 2:31am Apr 9, 2020 2:31am
my problem was day trading.. that drove me crazy lol

Now I trade long term and I'm super relaxed... it fits my personality.


"Given the findings of little or no correlation in the short term and substantial correlation in the long term, it is interesting that so many technical analysts focus on predicting intraday or daily prices."

http://pages.stern.nyu.edu/~adamodar...cepatterns.htm
  • #387
  • Apr 9, 2020 7:52am Apr 9, 2020 7:52am
http://cs229.stanford.edu/proj2011/B...angeMarket.pdf
  • #388
  • Apr 9, 2020 8:04am Apr 9, 2020 8:04am
Quoting HeyYou
my problem was day trading.. that drove me crazy lol Now I trade long term and I'm super relaxed... it fits my personality. "Given the findings of little or no correlation in the short term and substantial correlation in the long term, it is interesting that so many technical analysts focus on predicting intraday or daily prices." http://pages.stern.nyu.edu/~adamodar...cepatterns.htm
This is so true. Right now I day trade, because it offers the fastest way to make a return. There is a price to pay for this though. I spend way to much time trading then I want, and my psychology suffers from this.

The goal eventually is to trade more longer term positions. Unfortunately without a big bank roll, I will not be able to hit my financial goals this way.
  • #389
  • Apr 9, 2020 8:26am Apr 9, 2020 8:26am
Quoting viptrading
{quote} This is so true. Right now I day trade, because it offers the fastest way to make a return. There is a price to pay for this though. I spend way to much time trading then I want, and my psychology suffers from this. The goal eventually is to trade more longer term positions. Unfortunately without a big bank roll, I will not be able to hit my financial goals this way.
Don't tell me.. it was devastating for me. I'm not saying it's a losers game but veeeeery, very hard, especially when you are a newbie with 500 leverage .

Interesting posts from you mate.. I have no idea why you were on my ignore list lmao

I'm sorry.
  • #390
  • Apr 9, 2020 8:30am Apr 9, 2020 8:30am
Quoting HeyYou
{quote} Don't tell me.. it was devastating for me. I'm not saying it's a losers game but veeeeery, very hard, especially when you are a newbie with 500 leverage . Interesting posts from you mate.. I have no idea why you were on my ignore list lmao I'm sorry.
The problem with day trading is managing your psychology. You have to be able to manage trades for more hours and put in more work and this can result in making bad decisions or becoming emotional more easily. It's not that day trading is harder to do because of the market, it's because of the limitation of the human brain.
  • #391
  • Apr 9, 2020 9:00am Apr 9, 2020 9:00am
Quoting viptrading
{quote} The problem with day trading is managing your psychology. You have to be able to manage trades for more hours and put in more work and this can result in making bad decisions or becoming emotional more easily. It's not that day trading is harder to do because of the market, it's because of the limitation of the human brain.
yeah... anyways I don't regret anything... I enjoy my silly mistakes..


I believe that what doesn't kill you makes you stronger / wiser
  • #392
  • Apr 9, 2020 9:02am Apr 9, 2020 9:02am
Quoting Rennaissance
Does that mean I dont believe in technical analysis? May be. May be there might be 1 in 10000 technician out there actually making their money from charting. I personally have not been successful at it. For me the chart is just random. I have also never seen anay successful chartist, it is logical for me to believe technical analysis is vodoo.
Respectfully:

I think you may need to spend a little more time with charts and test out some well known chart patterns. (please don't look for head and shoulders it's a newby blunder most of the time).

I am giving you a link to some simple charts I have put up recently before the fact. Note I did not suggest a trade - trade management is another skill, which you seem to have.

https://www.forexfactory.com/search?searchid=24954102

These are not technical analysis, they are simple lines and set ups to trade out of. They offer a higher probability than a coin toss. Trade management is essential. You can show someone a chart and tell them what to do, but they will still f... it up.
Gone to a better place
  • #393
  • Edited 3:46am Apr 11, 2020 3:25am | Edited 3:46am
Quoting viptrading
{quote} "".
"The map is not the territory"
The territory is not the map. You create your own map. Maps.

==> Yes, the territory is not the map also. You have this right. Having a map is useless. The territory will change, the map will be useless. So many people with maps here (:
What’s real is the territory, no map needed.

"Even though I do agree that it is possible to extract some money from the retail forex market on occasion, it is not sustainable long term."
Your opinion is irrelevant when speaking on facts. Your ability to personally extract profits from this market have nothing to do with whether or not it is possible to succeed long term for someone else.

==> At any given time someone is succeeding long term and someone is failing miserably. A simple Law of Averages will make it possible. Simple statistics. Perhaps you know this tried and true scammer trick. You have 1000 subscribers to your newsletter, you send out 500 letters, in this letter you state that the market will go up, in the other 500 letters: you state that the market will go down. It turns out the market goes up, so you play the same trick on the 500 “winners” and so on.. in the end it’s guaranteed that one of your subscribers will be a super super winner! Now replace “newsletter” by “Your ability to personally extract profits from this market” while keeping in mind the first sentence: "At any given time someone is succeeding long term and someone is failing miserably"

"if asset prices in the short term show an identifiable pattern, speculators will find this pattern and exploit it, thereby eliminating it.."
This one is my favorite. Speculators cannot change the way the market moves, it is literally impossible. This statement is also not backed by any facts, and it simply another negative way of looking at things.

==> Yes, speculators can change the way the market moves! For instance, those textbook TA patterns fail more often than they used to, Why? because the trading herd has been taught to trade them! The market will move in the direction that causes the greatest financial damage to the largest number of positions.

"1) it is a less than zero sum game due to transaction cost. In that respect, it's worse than a casino. that is a fact."
Forex is NOT a zero sum game. Transaction cost has nothing to do with it. Forex is not a "game" its a market. Learn the difference. I will be posting more on this in another response.

==> It's a less than zero sum game in which ALL customer funds eventually get eaten away by transaction cost.
Retail forex brokers are now obligated to post such statement as “76% lose money in forex”. Well great, 24% are profitable!

In fact, the situation is a lot worse. Here is why:
If all the retail forex accounts funds are added up at the beginning of any period and added up at the end of any period (not including new accounts); this "aggregate fund" shows zero profit!
Moreover, period after period the "aggregated customer funds" :
1) does not increase in value and
2) are eaten away by transaction costs.
Indeed, the total amount of all retail forex customer funds will be down by the amount of the transaction cost for the period.
Therefore, over time this aggregate retail forex account gets eaten up 100% by transaction costs.


"2) It is a random walk when you consider that price is the result of an action / reaction (for every buyer, there must be a seller ..), the real orders are the input, price is the output."
Honestly, this makes 0 sense. The fact that there are people behind transactions, for example investors or holders of a specific currency. Proves that the resulted price is not due to a random walk. It is the result of perceived value, or lack of value that causes the price to move. That is not random, and that is a fact.

==> The perceived value is always changing, do you really think the perceived value really matters? You can find a million reasons why the price is changing (always on hindsight of course). And since you have a million reason for a transaction, the price move might as well be random. In fact, what really matters is that it does move..


"The buyer believes in a probable rise, without which he would not buy, but if he buys, there is someone who sells to him and this seller believes a fall to be probable. From this it follows that the market taken as a whole considers the mathematical expectation of all transactions and all combinations of transactions to be null."
No. That is not how this works. You are not understanding the differences in opinion that traders and investors may have which allows freedom of position for oneself. You are not bound to any time frame in which you must hold your position, so because of this, both traders on either side of a trade may win depending on what their personal goals are for that trade. That is not a zero sum game. This is a market. When you go to the grocery store and buy an apple from them is that a zero sum game because you took one apple and they lost that apple? No. Its a fucking market, not a roulette table.

==> Yes, I agree both traders on either side of a trade may win. But considering the industry facts on the matter (winners vs losers) and using simple logic one can conclude the following:
When new retail forex traders come into the game:
1) they lose and quit
2) they lose at first and then become winners
3) they keep on losing and don't quit

if 1) then there are no winners in this game long term
if 2) then the game contains a high percentage of winners long term
if 3) then the game is made up of a high percentage of losers long term

Since 2) is clearly not an actual fact, then only 1) and 3) can be true.
  • #394
  • Apr 11, 2020 4:02am Apr 11, 2020 4:02am
Quoting Mingary
{quote} No. Its a fucking market, not a roulette table. ==> .
You are wasting a lot of space here. I have highlighted the only true thing you managed. Now I have read your history I understand why you are such a bitch. I would love to hear the back story. Whose £200,000 was it you lost in trading? Did you not know anything about risk management? Do you know that to have burning regrets can be harmful? Let it go...
Gone to a better place
  • #395
  • Edited Apr 12, 2020 3:58am Apr 11, 2020 4:46am | Edited Apr 12, 2020 3:58am
Quoting smikester
{quote} You are wasting a lot of space here. I have highlighted the only true thing you managed. Now I have read your history I understand why you are such a bitch. I would love to hear the back story. Whose £200,000 was it you lost in trading? Did you not know anything about risk management? Do you know that to have burning regrets can be harmful? Let it go...
https://en.wikipedia.org/wiki/Ad_hominem

Not that easy I think.... Keep up with the debate (if you can) or skedaddle (:

BTW not my statement: "Its a fucking market, not a roulette table."
Mine is more like: "Retail forex is like a glorified casino" (without the F word, some people have no manners)
  • #396
  • Apr 11, 2020 4:51am Apr 11, 2020 4:51am
Quoting smikester
{quote} Mine doesn't. I accept, also, there is a fee for trading, providing a service and the administration and risk involved. They are allowed to profit from their work. Some may be sneaky little devils, as you so spitefully put it. These boards and threads are where we can swap ideas with other traders. From the evidence you have provided so far it is clear to me you have a very mixed up approach to this business. I would like to know are you some sort of religious evangelist, puritan perhaps? Tell me more. How much did you lose? What...
You must be very naive or have a vested interest in perpetuating all the lies if you believe that retail forex brokers don't come up with many schemes seven days to sunday to extract more money from their customer accounts.
  • #397
  • Apr 11, 2020 12:22pm Apr 11, 2020 12:22pm
Quoting Rennaissance
I don't believe in all these conspiracy theories. The idea of market efficiency or random walk hypothesis is more believable. The reason most people can't make money from the market is because the market is damn efficient. I want to forward an idea here that doesn't originate with me. Someone talked about sweet spot earlier on. I don't think there is a particular spot that is sweet. But I believe the market goes through two phases of movement. Hot and cold. Emotional and rational. Identifying the present mood of the market might be the key that...
You have touched the heart of the problem.

Although the market is not as efficient as we think.the problem is identifying its inefficiencies.

Rick m has some good posts relating to this .

i look at efficiency as random
Inefficiencies as non random.

Without going into cause for this moment
a number of things help us to recognise the change of market state.velocity and volatility and the angle of the slope are signs of non random or I would prefer to say inefficient market behaviour. Very few are able to capture this initial move but we can trade the corrective moves as the market needs and will return to efficiency

The probabilities change quite dramatically during this state.

The structure of this market is as wonderful as everything else in this world.it has boundaries and is governed as is everything around us.

Efficient = random
Inefficient = non random.breaks its parameters
  • #398
  • Apr 12, 2020 2:13am Apr 12, 2020 2:13am
Quoting diceman555
{quote} You have touched the heart of the problem. Although the market is not as efficient as we think.the problem is identifying its inefficiencies. Rick m has some good posts relating to this . i look at efficiency as random Inefficiencies as non random. Without going into cause for this moment a number of things help us to recognise the change of market state.velocity and volatility and the angle of the slope are signs of non random or I would prefer to say inefficient market behaviour. Very few are able to capture this initial move but we can...
Diceman said -

"Very few are able to capture this initial move but we can trade the corrective moves as the market needs and will return to efficiency "
"The structure of this market is as wonderful as everything else in this world.it has boundaries"
Attached Image
Trading thin liquidity at the boundary of the charts
  • #399
  • Apr 12, 2020 5:55am Apr 12, 2020 5:55am
Quoting Mingary
{quote} https://en.wikipedia.org/wiki/Ad_hominem Not that easy I think.... Keep up with the debate (if you can) or skedaddle (: BTW not my statement: "Its a fucking market, not a roulette table." Mine is more like: "Retail forex is like a glorified casino" (without the F word, some people have no manners)
While we are being didactic I should probably point out that we say "off topic" in the 21st century, not Latin, like some failed expectations privately educated whiner.

So, totally on topic, then, given the fact you managed to blow 200 grand and now can't even answer a simple question about money management, but choose instead to lash out at brokers, some of whom I agree are contemptible, and your almost complete lack of understanding of how markets work.

So I am keeping up with the debate. It's you who can not comprehend the reality and by the way, calling it terrain and maps does offer quite a good analogy. If you are lost, try looking at a map. It offers some help nless- u you don't believe them or think your direction will always be random.

Let it go Mingary. You will feel better. Hating brokers and market trading is displacement behaviour.
Gone to a better place
  • #400
  • Apr 12, 2020 6:57am Apr 12, 2020 6:57am
Let's take the insurance business... all operating on probabilities in random scope. People get sick, break cars or burn houses randomly. Insurance companies use mathematic (statistics) science to calculate probabilities, risks, premiums etc The same in forex. It is called quantitative analysis.

Is forex random? Yes the same as people get sick, broke cars and burn houses all by "accident". All accidents have causes. So many that we can't see them all. But what we can do? We see the statistic that those who drive drunk get more accidents. So we set up rules. The insurance company uses those rules. The same in forex.
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