Is the market random or not ? | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Is random really random? 231 replies

Why do indicators not work/work? Why is Forex not truly random? 129 replies

Market Random and Predictable Parts 26 replies

Pro Traders in a Random Market 60 replies

Random Market vs Set Expectancy 8 replies

Attachments: Is the market random or not ?
Exit Attachments

Is the market random or not ?

  • #41
  • Apr 11, 2008 12:52pm Apr 11, 2008 12:52pm
To be fair i think most of the differences in opinion stem from the quantification of the randomness.The original post did say "Short term trading is completely random" and i would say the "completely" is incorrect but the market is still RANDOM.There is no way of escaping this truth.There are patterns within the randomness and it is not "TOTALLY or COMPLETELY" random but it is random never the less because there is not a or a person or computer complex enough to process every input that generates the end result PRICE
  • #42
  • Apr 11, 2008 1:08pm Apr 11, 2008 1:08pm
Quoting Pavlov's Dog
To be fair i think most of the differences in opinion stem from the quantification of the randomness.The original post did say "Short term trading is completely random" and i would say the "completely" is incorrect but the market is still RANDOM.There is no way of escaping this truth.There are patterns within the randomness and it is not "TOTALLY or COMPLETELY" random but it is random never the less because there is not a or a person or computer complex enough to process every input that generates the end result PRICE

Excellent. Wave function of a particle is not random. But the position of particle is random. I always see the market that way.
  • #43
  • Apr 11, 2008 2:26pm Apr 11, 2008 2:26pm
Quoting Piitb
Maybe you havent been paying attention to the world for the last 150 years but predicting human behavior patterns in groups is EXACTLY what we have learned how to do. Do you watch media??? Why do you think that companies that sell crap continue to do so. Because they have learned that humans have predictable patterns.

People are killing me with this nonsense about how random the market it. Just because you cant have a good girlfriend doesnt mean that women are completely unpredictable either. Complicated. YES!

Does anyone in here even know how foreign exchange rates are set? What is the connection between PPP( price power parity ) and GDP. How can Income per capita and interest rates change that?

If not quit looking at freakin GANN cylcles. And pretending you have any idea what that means. LOL. Go do some research and learn about how this market works.

KNOWING YOUR INDICATORS DOESNT MEAN YOU KNOW THIS MARKET.


A bit harsh. So far every participant have given their point of view in a mature way.
Measure twice, cut once
  • #44
  • Apr 11, 2008 2:33pm Apr 11, 2008 2:33pm
Quoting aediaz1
My brain fail to verify other statements than this. I wonder how its possible for me to understand that market is random ?

How can you make profit from randomness ? In my point of view you hit the nail here.

Spreads are considered a disadvantage or a handicap for retail level, at all levels of the playing field a certain disadvantage exist, be it market makers, fund managers etc. As does advantage for a retail player do exist.


I have come to appreciate that random movements takes the stress out of trading. ( contrary to what most people experience ).

LOL, I am having difficulty, explaining my thoughts. It is like random movements must exist in order for profit to exist. Market "randomity" provides the opportunity to profit.

Once a trade is undertaken, the trader is presented with a series of paper wins and losses. It is how you manage the "randomity" that determines your bottom line, and as most people would know, one way is through money management.

"Randomness" in market is an advantage, it allows you to "escape" when you are wrong. "Randomity" is your opportunity to capitalize on the somewhat irrational behaviour of the market.

Notice that emphasis on psychology and money management is often placed above the trading system itself ?

Could it be due the the fact that both the market behaviour and the method of analysis themselves are so unreliable and unpredictable ?

Why are traders generally taught to protect themselves from "unexpected event" ?


mARK

presenting this point across is more difficult than I think :
  • #45
  • Apr 11, 2008 2:35pm Apr 11, 2008 2:35pm
Quoting aediaz1
A bit harsh. So far every participant have given their point of view in a mature way.

Agree...
  • #46
  • Apr 11, 2008 2:53pm Apr 11, 2008 2:53pm
I agree with others about the lack of respect you have shown me, but I'm an easy going guy.

Quoting Piitb
Maybe you havent been paying attention to the world for the last 150 years but predicting human behavior patterns in groups is EXACTLY what we have learned how to do. Do you watch media??? Why do you think that companies that sell crap continue to do so. Because they have learned that humans have predictable patterns.


This is an irrelevant example IMO. Deciding whether someone is going to buy a mop is different than deciding which country will perform better than another. Can you predict 9/11? Can you predict company scandals? Oil spills, glacier melting, hurricanes, wars....etc. These are all events that affect currency prices.

Quote
Does anyone in here even know how foreign exchange rates are set? What is the connection between PPP( price power parity ) and GDP. How can Income per capita and interest rates change that?

If not quit looking at freakin GANN cylcles. And pretending you have any idea what that means. LOL. Go do some research and learn about how this market works.

With due respect, you can be more knowledgeable than me, but it does not make you smarter than me. If your wonderful knowledge of PPP and GDP has made you the forseer of future, I'd love to see your perfect, ever-increasing account balance statement. The reality is that there is more than one way to skin a cat and to trade forex. So have fun trying to confuse people with information that doesn't account for randomness. You do your way, I'll do mine, which relies on probabilities and accounts for randomness.
  • #47
  • Apr 11, 2008 3:01pm Apr 11, 2008 3:01pm
The definition of random is subtle and depends upon your point of view.

For example, I can write a computer program to generate random numbers, to any bystander these number would be utterly random, but these numbers are actually completely deterministic in nature, it's actually very hard to get a computer to be properly random.

In the same way we need to differentiate between 'my Fibonacci pin bar ma spazz isn't working anymore' and the market being truly random.

What we must remember is the market is dynamic, patterns come and go, something as simple as a trend is a pattern and also an edge, trends come and go, big and small, the problem is that as humans we want to apply the same rule over and over, and when it stops working we throw our hands in the air and say 'the market is random!'

I don't think the market is completely random, but it is very dynamic.
The breaking of a wave cannot explain the whole sea.
  • #48
  • Apr 11, 2008 3:21pm Apr 11, 2008 3:21pm
Quoting Piitb
Maybe you havent been paying attention to the world for the last 150 years but predicting human behavior patterns in groups is EXACTLY what we have learned how to do. Do you watch media??? Why do you think that companies that sell crap continue to do so. Because they have learned that humans have predictable patterns.

Erm how do you verify that ? Statistics has shown that most businesses fail, regardless of what they sell. The consumer market is that of an evolving one, hardly predictable

People are killing me with this nonsense about how random the market it. Just because you cant have a good girlfriend doesnt mean that women are completely unpredictable either. Complicated. YES!

Gosh, women needs to be understood, not predicted.

Does anyone in here even know how foreign exchange rates are set? What is the connection between PPP( price power parity ) and GDP. How can Income per capita and interest rates change that?

I am sure many people here do know. But if you have a point of view that deviates from standard academic reasoning, do share.
If not quit looking at freakin GANN cylcles. And pretending you have any idea what that means. LOL. Go do some research and learn about how this market works.

Thats the whole idea, we want to learn, no pretending here just sharing.

KNOWING YOUR INDICATORS DOESNT MEAN YOU KNOW THIS MARKET.

Knowing this market does not mean you know how to profit from this market.




mARK
  • #49
  • Apr 11, 2008 3:40pm Apr 11, 2008 3:40pm
Quoting 30XTCi
Random or not random, the Markets are always right.

Maybe a better question would be

Is my trading random?




Roy

Just unequivocal unconditional THANK YOU!

that is all
  • #50
  • Apr 11, 2008 3:47pm Apr 11, 2008 3:47pm
Originally Posted by Piitb http://forexfactory.com/images/buttons/viewpost.gif
Maybe you havent been paying attention to the world for the last 150 years but predicting human behavior patterns in groups is EXACTLY what we have learned how to do. Do you watch media??? Why do you think that companies that sell crap continue to do so. Because they have learned that humans have predictable patterns.

Erm how do you verify that ? Statistics has shown that most businesses fail, regardless of what they sell. The consumer market is that of an evolving one, hardly predictable


take the fed for example. Why can they lend out on fractional reserve. 10x the money that they have on reserve? Because whereas one person my withdraw their money. People in large numbers work in a way that lets banks know( from as far back as gold was stamped as a commodity currency) that people only withdraw in pattern. Ever wonder why the Biggest corps in the world can bank on 3rd quarter profits based on projections of disposable income????

anyways aiyamarkalah in response to the other thing that you asked

Knowing this market does not mean you know how to profit from this market.



So what? That is not the point of the thread. The question is IS THE MARKET RANDOM.

I dont mean to sound like an ass. Cause i think what i am saying is funny. Im my head it is harmless sarcasm.

No offense lol
  • #51
  • Apr 11, 2008 4:14pm Apr 11, 2008 4:14pm
Quoting Piitb
Originally Posted by Piitb http://forexfactory.com/images/buttons/viewpost.gif
Maybe you havent been paying attention to the world for the last 150 years but predicting human behavior patterns in groups is EXACTLY what we have learned how to do. Do you watch media??? Why do you think that companies that sell crap continue to do so. Because they have learned that humans have predictable patterns.

Erm how do you verify that ? Statistics has shown that most businesses fail, regardless of what they sell. The consumer market is that of an evolving one, hardly predictable


take the fed for example. Why can they lend out on fractional reserve. 10x the money that they have on reserve? Because whereas one person my withdraw their money. People in large numbers work in a way that lets banks know( from as far back as gold was stamped as a commodity currency) that people only withdraw in pattern. Ever wonder why the Biggest corps in the world can bank on 3rd quarter profits based on projections of disposable income????

anyways aiyamarkalah in response to the other thing that you asked

Knowing this market does not mean you know how to profit from this market.



So what? That is not the point of the thread. The question is IS THE MARKET RANDOM.

I dont mean to sound like an ass. Cause i think what i am saying is funny. Im my head it is harmless sarcasm.

No offense lol
  • #52
  • Apr 11, 2008 4:15pm Apr 11, 2008 4:15pm
Quoting kharvell
I agree with others about the lack of respect you have shown me, but I'm an easy going guy.



This is an irrelevant example IMO. Deciding whether someone is going to buy a mop is different than deciding which country will perform better than another. Can you predict 9/11? Can you predict company scandals? Oil spills, glacier melting, hurricanes, wars....etc. These are all events that affect currency prices.

[/size]

With due respect, you can be more knowledgeable than me, but it does not make you smarter than me. If your wonderful knowledge of PPP and GDP has made you the forseer of future, I'd love to see your perfect, ever-increasing account balance statement. The reality is that there is more than one way to skin a cat and to trade forex. So have fun trying to confuse people with information that doesn't account for randomness. You do your way, I'll do mine, which relies on probabilities and accounts for randomness.



Here is the thing. If there is a market influence that is quantitative. Then the effect on the market is not random. Even if it is a hurricane. There is a huge difference between random and predictability. If you want a fortune teller go to the ICHING metode thread. This is a talk about the market. It is not random.

Are you trying to argue that there are variables in the market???? Seriously?that is your big finish? The market has variables, does not by any angle mean that it is random.

No disrespect dude. I am not a jerk, I promise. Sometimes I just exaggerate my points. LOL

Let me ask you this. Before this subprime mortgage fallout, back when the fed was still hiking rates. When the job numbers came in instead of like 100k, the actual number was negative for the first time since 2004.

Was there some random affect that make the Eur/Usd tank for a couple of hundred pips???Hell no

It has been going up steadily since then.BECAUSE the market is quantitative.

Again I am sorry for sounding like jerk. Come check me out in my scalp thread. Youll see i am a decent fellow
  • #53
  • Apr 11, 2008 5:08pm Apr 11, 2008 5:08pm
Debates on vague questions like this always degenerate from being about facts of reality to being about semantics and perspective.


One side says, "Well, since the markets aren't completely predictable and you can't tell me what the next tic will do and your equity curve isn't a straight upward sloping line then the markets are random. QED, I win!"

The other side says "Oh yeah? Well, since the markets aren't completely random and there are a few times a year where someone can actually make a winning trade then they're not random at all. QED, I win!"


It's a matter of perspective. Is an individual auto accident random? Sure. Are the constant profits that auto insurance companies make year in and year out random? Not so much.
  • #54
  • Apr 11, 2008 5:11pm Apr 11, 2008 5:11pm
Piitb,

You clearly haven't read all my posts here in this thread, so I'll make my example heard again using a direct quote from your thread featured below.

Quoting Piitb

I have been trading for about 5 years. I have considered suicide more than one/ROFL. I have lost plenty of money doing this, and guess what new traders. THERE IS NO WAY AROUND IT. There is no way to play football without getting stuck once in a while. DEAL!!!!!! I have overcome my ego. I have overcome my fear. And i am overcoming the 8 freakin pip spread on the GBP/JPY on a daily basis.
What is it that you were afraid of? If the forex market is not random, there is no need to worry, everything will behave as expected.

Our disagreement lies, as mentioned before, in the definition of random. You cannot deny that there is a random unexpected element that is omnipresent in trading. I keep asking for your perfect account statement and your quote above depicts someone who is far from perfect.

You saying that the market is not random, but just has variables is another mistake on your part because there are such things as random variables. Why do you think you contemplated suicide? Losing? Why do we lose? Unexpected occurrences. Randomness.

We can agree to disagree, or you can keep up the small personal attacks. (This is my 'big finish') Asking one if he's serious in a serious discussion makes one think he's wasting his time talking to others.
  • #55
  • Apr 11, 2008 5:16pm Apr 11, 2008 5:16pm
Quoting capitalist88
Debates on vague questions like this always degenerate from being about facts of reality to being about semantics and perspective.


One side says, "Well, since the markets aren't completely predictable and you can't tell me what the next tic will do and your equity curve isn't a straight upward sloping line then the markets are random. QED, I win!"

The other side says "Oh yeah? Well, since the markets aren't completely random and there are a few times a year where someone can actually make a winning trade then they're not random at all. QED, I win!"


It's a matter of perspective. Is an individual auto accident random? Sure. Are the constant profits that auto insurance companies make year in and year out random? Not so much.
I think people keep confusing predictable with random. kharvall made a similar point above around 9/11, wars, hurricanes, etc..

Things occur for reasons. An auto accident is the culmination of several events. A car accident would be random if one second a car is parked, and the next it is a a crumpled pile of metal. In real world accidents there have to be mistakes, or poor driving conditions, etc..

For hurricanes to occur there has to be certain conditions such as warm ocean water evaporating into the sky, moving inland, etc etc..

The events are not random, just as forex is not random. There are certain events, conditions, etc that push the market in certain directions. The market would be random if a price fell no matter how many people were buying. That doesn't happen though, because the price is tied directly to the transactions of the market. How much buying pressure is there? How much selling pressure is there?

All because we can't predict the direction of the market does not make it random. There is a lot of business we can not see on the market. We are far off from having access to all of the volume in the market. Even then, we can't predict future volume. When that future volume comes, it will shift price. Price moves for a reason.

Forex is not random.
  • #56
  • Apr 11, 2008 5:19pm Apr 11, 2008 5:19pm
Quoting kharvell
Piitb,

You clearly haven't read all my posts here in this thread, so I'll make my example heard again using a direct quote from your thread featured below.



What is it that you were afraid of? If the forex market is not random, there is no need to worry, everything will behave as expected.

Our disagreement lies, as mentioned before, in the definition of random. You cannot deny that there is a random unexpected element that is omnipresent in trading. I keep asking for your perfect account statement and your quote above depicts someone who is far from perfect.

You saying that the market is not random, but just has variables is another mistake on your part because there are such things as random variables. Why do you think you contemplated suicide? Losing? Why do we lose? Unexpected occurrences. Randomness.

We can agree to disagree, or you can keep up the small personal attacks. (This is my 'big finish') Asking one if he's serious in a serious discussion makes one think he's wasting his time talking to others.
Or he could have misread/predicted the market. There was probably someone on the opposite side profiting from his loss. Did that persons 'expected occurance' of the market prove that the market isn't random?

The market was still acting in a structured manner, but his ability to read it was wrong. That doesn't mean the market was random.
  • #57
  • Apr 11, 2008 5:29pm Apr 11, 2008 5:29pm
Quoting permanentjaun
I think people keep confusing predictable with random. kharvall made a similar point above around 9/11, wars, hurricanes, etc..

Things occur for reasons. An auto accident is the culmination of several events. A car accident would be random if one second a car is parked, and the next it is a a crumpled pile of metal. In real world accidents there have to be mistakes, or poor driving conditions, etc..

For hurricanes to occur there has to be certain conditions such as warm ocean water evaporating into the sky, moving inland, etc etc..

The events are not random, just as forex is not random. There are certain events, conditions, etc that push the market in certain directions. The market would be random if a price fell no matter how many people were buying. That doesn't happen though, because the price is tied directly to the transactions of the market. How much buying pressure is there? How much selling pressure is there?

All because we can't predict the direction of the market does not make it random. There is a lot of business we can not see on the market. We are far off from having access to all of the volume in the market. Even then, we can't predict future volume. When that future volume comes, it will shift price. Price moves for a reason.

Forex is not random.

Again, you're making an argument from a specific point of view.

From the point of view of a person watching prices move in the FOREX market, those prices have at least a partially random character.

But you've switched to a different point of view. From the point of view of the "OMNISIENT UNIVERSAL LAW OF CAUSALITY BY WHICH ALL EVENTS PROCEED DETERMINISTICALLY FROM A CAUSAL CHAIN OF OTHER EVENTS" (play very rousing rendition of "Thus Spoke Zarathustra" here...) of course price movements aren't random.

So if it were possible to get all of the zillions of pieces of data necessary on every factor that will affect the next tic on the chart, then it's possible to predict every tic.

But the bottom line is, how does this very interesting but quite impractical point of view help a trader?
  • #58
  • Apr 11, 2008 5:38pm Apr 11, 2008 5:38pm
Quoting capitalist88
Again, you're making an argument from a specific point of view.

From the point of view of a person watching prices move in the FOREX market, those prices have at least a partially random character.

But you've switched to a different point of view. From the point of view of the "OMNISIENT UNIVERSAL LAW OF CAUSALITY BY WHICH ALL EVENTS PROCEED DETERMINISTICALLY FROM A CAUSAL CHAIN OF OTHER EVENTS" (play very rousing rendition of "Thus Spoke Zarathustra" here...) of course price movements aren't random.

So if it were possible to get all of the zillions of pieces of data necessary on every factor that will affect the next tic on the chart, then it's possible to predict every tic.

But the bottom line is, how does this very interesting but quite impractical point of view help a trader?

A couple things.

1. Even if we had all the data, we still would not be able to predict the market. We'd be able to explain why the market moved that way after the fact. We can not be given data from the future.

2. It doesn't help a trader. That wasn't the question. The question is, 'is the market random.'

There is only one perspective to take that from. The markets perspective. Why would we care how the trader sees the market? The market is not random because all of the actions and events eventually produce a result, ie price.

Is a horse race random? To the gambler, sure since they will never be able to predict the future. The race itself is not random. One horse had a stronger race. We can see in hindsight exactly why the race turned out that way. One horse slipped, and another broke too early. To say the race was random is just wrong.
  • #59
  • Apr 11, 2008 5:53pm Apr 11, 2008 5:53pm
Quoting permanentjaun
A couple things.

1. Even if we had all the data, we still would not be able to predict the market. We'd be able to explain why the market moved that way after the fact. We can not be given data from the future.

2. It doesn't help a trader. That wasn't the question. The question is, 'is the market random.'

There is only one perspective to take that from. The markets perspective. Why would we care how the trader sees the market? The market is not random because all of the actions and events eventually produce a result, ie price.

Is a horse race random? To the gambler, sure since they will never be able to predict the future. The race itself is not random. One horse had a stronger race. We can see in hindsight exactly why the race turned out that way. One horse slipped, and another broke too early. To say the race was random is just wrong.
That was my point. Talking about whether the market (or the universe in general) is "random" or not isn't going to help anyone trade better. It's just an excercise in speculative metaphysics. All we're doing here is blowing smoke around a beatnik coffeehouse. : Not that it isn't fun at times of course. But for me it's almost pizza time, and THAT'S not random at all.

Have fun. I'm out.
  • #60
  • Apr 11, 2008 5:57pm Apr 11, 2008 5:57pm
Quoting permanentjaun
A couple things.

1. Even if we had all the data, we still would not be able to predict the market. We'd be able to explain why the market moved that way after the fact. We can not be given data from the future.

2. It doesn't help a trader. That wasn't the question. The question is, 'is the market random.'

There is only one perspective to take that from. The markets perspective. Why would we care how the trader sees the market? The market is not random because all of the actions and events eventually produce a result, ie price.

Is a horse race random? To the gambler, sure since they will never be able to predict the future. The race itself is not random. One horse had a stronger race. We can see in hindsight exactly why the race turned out that way. One horse slipped, and another broke too early. To say the race was random is just wrong.
I agree with the last few posts.

In our own little room, with our own little computer screen, with our own little brains, the market has an appearance of randomness.

However every tick has a meaning... news/business/economics/retracement/etc... and after a certain point I do think we recognize the reaction certain conditions will create.

Which means I don't think it is random, however your forced into a situation where the majority of it appears random. I think our "little brains" are great at sorting out this perceived randomness, whether we notice it or not.

The only real investment needed is time. Which brings experience.
0 traders viewing now