Is the market random or not ?

LOL yes. Predict what happens next, do you buy or sell?????? If the market is not random why do approximately 1/3 use fundamentals, 1/3 use technicals, 1/3 use a combination of both. If the market is not random why do people use hundreds of different indicators and no one has ever come up with an indicator that is fool proof?? Why is it no one can predict a head and shoulders in advance but afterwards show a picture as proof that a H/S works??? Why do you have a beautiful picture of a H/S in the middle of your pic but the market kept going up????? Why is it after two years of trading that I began trading using randomness to my advantage that I started making money??? If the market is not random, why do you use stop losses?????? Just some thoughts. This is from an answer to a pic shown in post #7.

Wrong??? Traders dont move markets. Have a govt. change its interest rate and watch what happens. GM sold 100 million dollars worth of vehicles to a country in Europe and then 6 months later cashes the check. There is no news story that some company cashes the check or transfers the money but watch the market move. Some trader goes, What the _____ ???? Traders are just a small part of the market. The reason the market trades trillions every day is not because people are trading money, it businesses, banks and governments that move great deals of money. Most of these transactions are never reported in the news, therefore, predictability becomes impossible because of their random acts, money exchanges and deposits from these groups.

Random - an occurrence without reason or pattern.

No way is the market random. GE earnings this morning tumbled currencies. Was that a random event happening within seconds of the announcement? How about the dollar losing value - random action or a pattern and predictable? Anyone want to guess the effect of another 9/11 in NY or Tokyo?
Coincidence that these charts bounce off fibs like a yoyo?
The list is endless.

Playing dice at the MGM Grand is random but certainly not currency moves.

Bounce off of Fib lines. I remember when I did a test of Fibs. Candles went through a fib line and continued or retraced after passing through at a rate of 5 times greater than candles that bounced off a fib line. Study a chart with fib lines on it sometime and be honest with it. How many times did the candles not follow fib rules versus did. My ratio was 5:1 it did not. Something that worked 20% of the time is a lousy trading method. Do the math.

what i'm seeing is that most of the disagreements in this thread stem from people applying concepts differently and to different times in the trading flow. for example, some are saying that you cannot predict a humans response to stimuli and therefore cannot predict what effect any one trader will have on the market which makes any overall prediction of market direction useless, which i agree with. however presumably there is a point in time where said trader has made his decision and has not yet completed the transaction. now consider this as a thought experiment because it is not practical at all. but suppose you were able to learn of this traders decision and at what time he would complete his transaction. and suppose you could glean this information from all market participants. does it seem random any more? it shouldnt. this information exists at some point, you just have no way of knowing it. and it is these two applications which are both valid, just with different assumptions at the heart of this debate.

does anybody disagree?

All those in favour say "Aye"

to the contrary "Nay"




I think the "EYES" have it.

The poll is starting to make sense why majority of the traders lose.

it's random.

chaos theory. butterfly flaps its wings in africa - gets windy in brazil - coffe production is hit - price of coffee goes up - brazilliant real exchange rate goes up.

even if you could study every piece of info in the world the effect of those things are non predictable.

a professional trader trades newtons law - a body in motion tends to remain in motion unless acted upon by an outside force. just because something moves in one direction for long enough to make a profit does not mean it isnt random just as a ball pushed on a flat surface will roll in one direction for a while, but where it turns and which way is anyone's guess.

as far as the human element of predicting behavior goes the hole in that argument is the assumption that all the players in the market want to make money. this just isnt true as the biggest players in the market are industrial companies hedging export sales - they don't want to make money they just want to ensure that they get the right price for their goods and dont lose money. They don't care what the exchange rate is, just that their risk from currency movements are covered and no matter what happens they get the same price they agreed to sell at. if the market moves up they make from the exchange and lose on the sale - if it goes down then they get more from the sale but lose on the exchange by the same amount.

Intrest rates also have a bearing on this calculation as to how much to hedge by, this is why when rates change drastically all those hedging have to recalculate their exposure for the length of their hedge, the reason for the major moves are that Banks have already calculated what their clients need to do and so exposure is cut or increased.

you and I have no idea when these companies will hedge their sales nor how big these sales are and how much risk they will hedge. tomorrow Rolls-Royce might sell £4 Bn of engines and have to hedge that risk as they are selling to japanese airlines and will deliver in 12 months - the affects the markets as RR has to hedge that 4Bn and dont care at what price and the hedge will be in there until they balance that order with another order for another country. You as a trader have no chance of knowing this but as you look at the charts and see GBPJPY go down you just jump on board. The thing is you think you are smart and have prtedicted that move - you didnt, it was luck that you were there at the right time and right place. you jumped on the momentum that happens when money is pumped in.

this happens every day in every country as sales are made. as you dont know these deals you cannot possibly predict the market.

of course they are just one player - then there are the governments of the world who want to protect their export market by keeping a competitive rate, the banks who lump together daily their customers re-patriation of funds, holiday money, billionaire investments in various countries, hedge funds etc etc.

then in between this carnage there are the bank traders who rotate the market up and down to get clients / companies funds into the market at the best rate they can so they earn their few extra pips that they charge the client to broker the transactions. drive it down a little, get some more in, drive it down again, get some more in - this constant rotation is what causes the eddy of the market in ranges and trends you call em pullbacks and double bottoms / tops - the market is just rotating and putting the client funds in at places the banks agreed with the client or better. but we have no idea how much they have to get in the market through rotation or which way the investment is currently heavy. Even if we did there is nothing to say that some other bank is about to move a lot of money the other way.

there are so many reasons for people to trade in forex - the least of which and the bottom of the pile are the speculators like you and I who just ride the coat tails of the real market movers to make money. those who think they can predict the market with indicators etc are like the craps player who thinks that by blowing on the dice or throwing in a certain way can influence which sides they land on.


In finishing just to let you know - there is an upside to the market being random. If it's random then why should you beat yourself up when you get the direction wrong? accepting a random market is liberating for your mental health AND your bottom line.

Hmm... from what I've read several times in several places from several different sources who are supposed to know these things (and heard from a forex investment fund manager in a small free forex course we had on campus recently) - 90+% of activity in forex is speculative and by speculators - be it the small people or large banks even scalping just the same. From watching market movements around trend lines, round numbers and other stuff I see no reason not to believe this statistic either. I'm sure Rolls Royce hedging funds affects the markets too but somehow your description doesn't seem to fully agree with that of others or the charts.

The powerful unseen forces of Nature don't care what anybody thinks. They know what to do and when to do it.

When a trajectory ends, another one begins, it's that simple.

I found a way to watch it working, I thought a green line appropriate.

It looks organised to me

There's more, in my thread.

Roy

Define random?

If you’re talking about the exact timing when a catastrophic, an unexpected event or anything that could cause the markets to react then I guess you could say that the timing of these events are random. Although there are some that say even these events follow a cycle.

But the way the market reacts to such stimulus is not.

I believe there was another one of Newton’s laws, something to do with the fact that for every action there’s an equal and opposite reaction.

What goes up will come down, those that are long will eventually take profit, and vise versa, and more times than not it will offer a tradable pattern as the market moves to the beat of it’s participants emotions, who are creatures of habit.

Fwiw,

stolen from wikipedia.

chaos theory describes the behavior of certain nonlinear dynamical systems that may exhibit dynamics that are highly sensitive to initial conditions (popularly referred to as the butterfly effect). As a result of this sensitivity, which manifests itself as an exponential growth of perturbations in the initial conditions, the behavior of chaotic systems appears to be random. This happens even though these systems are deterministic, meaning that their future dynamics are fully defined by their initial conditions, with no random elements involved. This behavior is known as deterministic chaos

end wikipedia

deteriministic chaos systems appear random. but are not. they are determined by a set of rules (in a market, there must be 2 parties for a transaction. if there are not price moves to the buying or selling interest. this is the rule)

the worldwide holiday market exchange of currencies provides more liquidity than speculators. And by the way - banks generally dont trade their own money - so if it's not theirs, who's is it? clients of course, the millions upon millions of exporters around the world.

your statement is a very short sighted view. but no matter what i say you wont be swayed - you dont know what you dont know. ..... yet.

ps, im glad that others don't agree - if they did then i'd have to look seriously for an alternative!

If this market was 100% random, Fibs and S/R would never work.

Let that be, more basic stuff like news related stuff ans some more that I won't mention but I've seen won't exist either. Of course you might say that when you know something is going to affect the market - then it's not random and otherwise it is, but actually we know quite often of things that are going to affect the market and often anough we can even guess with high certainty how it will affect it. Sometimes these things have nothing to do with outside events even, when e/u was going in a big triangle below 1.5 just as an example - EVERYBODY knew with good certainty where to long or short it. The fact that still many loose money in such cases are just the results of greed and impatience.

Thank You soultrader, that is definitely one of the most useful posts I've seen around FF in a while.

Fibs and S/R are no reason to trade, IHMO.

I couldn't agree more with this post. When the monsters of the market, money center banks for instance, place trades in equity, currency or other markets, the reason for doing so and the reaction to those trades is anything but random. However, whether I buy some Apple or some EUR/USD ... what do I really know? I don't control the market in any way at all ... so no matter what I think about economics or future earnings, the market will do what it will. This seems pretty random to me.

So as Tdion said, without that edge, the market is "random". I would state that even if that "edge" is based on quant data or anything based on past action, the market will always be random. The second you are convinced of something, based on past action, the market will go the other way for 5 months. Having said that, I believe that if you know something about something that controls the market, like when Citi will sell 10 billion dollars worth of bonds, then it would probably be a lot less random. This is just my perspective.

Unless you are a market dominator, random is the best you will ever get. That doesn't mean though that you can't get that "edge". A lot of people have found it, it is just a matter of how you deal with random behavior I suppose.

Lol, Just lol. The thing that is to be scared of in this market is yourself. And about continuing with the petty personal attacks, by all means get the last one in. Look on the front page of this thread at the poll numbers cowboy.
I was trying to be cordial. You my dear are a jerk. end of discussion from my part.

Obv humor and sarcasm are lost on the great one who calls himself kharvell

PS i am really depressed please help. ROFL!!!!!

SCORE: Piitb 3
Kharvell -1

my opinion yes the market has randomness to it. But it also has inefficiencies to it. So define random any way you want. If inefficiencies exist, then there is profit to be made. If you don't believe there are inefficiencies then don't waste your time trying to become a trader.

Find and exploit an ineffciency and you can make profits in the market. Will the inefficiency last forever? I think that would be naive to ever expect. Instead you use your knowledge to find another one. Is it easy to find one? No. Or everyone would be making money in the market(or maybe they are so easy to find they escape most). So I believe a true trader adapts with the markets as they change.

My advice to those still searching for one. KISS - if anything have a strong theory behind your method. But the actual trading should be rather simple in execution.


Have a good weekend

Mike