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Is the market random or not ?

Quoting daytrading
Hi,

The amount of market participants almost guarantee the randomness of the FX market.


In trading, uncertainties can never be eliminated and will always be present but there is the approach of probabilities - and that is all a trader needs to beat a random market.
Your first statement makes sense to me. Actually, I haven't seen it that way so I'm glad you pointed it out.

Also the part about probabilities. Probabilities makes you use SL. If you had a trading-setup which provided you with 100% success rate you wouldn't use SL. But since we play with probabilities we can never be 100% sure. This is why we always hear how important (correct) SL is.

I have just swallowed and accepted that the market is more random than I earlier believed, which is a big step for me since I was so convinced about the opposite.

Do I dare making this statement (yes, I'm stepping careful here);

Market is not 100% random but randomness plays a considerable part ? Or shall I cover my head right away and wait for the next wave of post regarding this topic ?
Measure twice, cut once
Quote
I do not predict price movements at all in any way shape or form.
Come on! Of course you do, every time you enter a trade you are predicting that the price will go your way with a probability higher than that of it going the other way. Even if you were doing ARBITRAGE then you're making a prediction. That's the reason you're in the trade, no matter what you want to call your prediction. Every statement you make about the future is a "prediction" because it is uncertain.

Quote
if its going up with some weight behind it the chances are
Well there you go. You said it yourself. If X then, hopefully, Y. Randomness does not know ifs and thens.. you would not be able to make that statement about the market if it were purely "random". You are saying that some buying/selling is going to happen in some future time based on what you see now. That is called predicting (the reason does not matter).

Quote
why arent the writers of the non random walk rich beyond their wildest dreams if they proved it isnt so?
You misunderstand completely - just because something does not move entirely due to chance doesn't mean it follows a well known equation we can all plug numbers into. We are making probabilistic statements, not exact ones. There are many people who have made lots of money from trading currencies (have you heard of Japanese housewives ), I know traders who live entirely off it, and live very well at that.

The best way to think of this is weather prediction. It is never going to be "perfect" because it requires knowledge of universal state that will not be complete in any weather predictor's arsenal. BUT the weather girl on the news will not go away soon, because they get the general scheme of things right while cosmic variance (can't believe I used the term ) causes them to be wrong many times as well. They have an edge, and so do we.

That's all I will say on this thread, because you are an experienced man and I feel we are talking about different things. I'm a technical guy, words have very definitive meaning to me - even if they are about probability! So I apologize for any inappropriateness in my post right here. Good luck
Virtue finds and chooses the mean. Aristotle, Ethica Nichomachea
NOTHING is random in the world.
NOTHING
Quoting bshadroo
NOTHING is random in the world.
NOTHING

Some of my posts have been pretty random...
Quoting capitalist88
Again, just as with Soultrader, you are presenting an argument for NON-randomness not randomness.

One of the problems with this discussion is that many traders aren't clear on what the mathematical meaning of "randomness" is. Random behavior implies that an approach based on probabilities will NOT work.

If the probabilites of an up vs. down move are ALWAYS 50/50 then the market is completely random and a probabalistic approach will fail. On the other hand, the extent to which there ARE probability differences from 50/50 is the extent to which markets are NOT completely random. So if there are situations which consistently show a 53 - 55% probability of a down move for example, that illustrates the presence of non-random behavior.

This by the way is the basic approach to how a statistician would "measure" the amount of randomness in a system. A system isn't "completely random" or "not random at all" any more than we can say a person is "completely tall" or "not tall at all." Randomness, like height, is a measurable quantity.

Hi,

...well, this could turn into a far more complicated discussion should we venture away from the original question "is the market random or not?" to the question "how randon is the market - a little or a lot?"

Without a doubt, you are mathematically correct, I am sure. If I am not mistaken though and speaking in your terms, there is enough randomness in the market to throw off a good part of participants every single day.

I believe we are all using vocabulary here without being always 100% precise about the definitions. Nevertheless, my own 20 years of experience has shown me that there is no failsafe or riskfree mathematical formula to exploit the markets. I try to think outside the box and manage that risk.

If something is likely to occur, does that mean it is certain? - I think not.
If something is not certain, is it automatically random - I don't know....maybe in precise terms it is random to a degree.

My point being that if something is not certain, one has to take precautions - whether one calls that uncertainty randomness or gives it some other definition doesn't really matter.

Once we pull the trigger, we all sit in the same boat.

regards
daytrading
Enter Signature
Quoting Plutonite
Come on! Of course you do, every time you enter a trade you are predicting that the price will go your way with a probability higher than that of it going the other way.
when i turn a card in a deck am i predicting what it will be?

nope, i'm taking a chance.

truly plutonite, I do not predict - i take a chance and i'm eiither lucky or not. if i'm lucky then i maximise on that.

also the play on probabilities does not mean you remove randomness. for example: place a trade on the table with a 5 pip take profit and a 25 pip stop - the probabilities are that the 5 pip target will be hit before the 25 pip one - whichever direction you place the trade in. that's probabilities within a completely random world. - it's also true that the more times you do it the higher the probability becomes that a 25 pip loss will follow soon. the professional gambler does no more than the losing gambler than leave the casino as soon as he can before those probabilities weigh against him (or he changes the stakes - what we call managing the risk.)

I appreciate your candor and return the respect for your experience too - everyone is my superior in one way or another and unless i can walk a mile in their shoes i cannot know. fact is ive walked in a lot of shoes but maybe not yours yet
Telegram: https://t.me/soultraderforex
I didn't read the whole thread but If the market was random every entry with
TP/SL = 1, no matter what analysis would have been made before would have 50%* chance of lossing, what in the long term would make the profit from the market impossible, so the market is not random because we can get a higher than 50% chance of winning using technical and fundamental analysis.

*without taking into account the spread
Quoting C26000
I didn't read the whole thread but If the market was random every entry with
TP/SL = 1, no matter what analysis would have been made before would have 50%* chance of lossing, what in the long term would make the profit from the market impossible, so the market is not random because we can get a higher than 50% chance of winning using technical and fundamental analysis.

*without taking into account the spread
if you are going to contribute to this discussion then please at least have the decency and respect to read the damn thing before engaging your gob with such ridiculous schoolboy remarks!
Telegram: https://t.me/soultraderforex
Trading Market is not Random but is an illusion.

You create the charts, indicators, call buy and sell, get profit loss...Market just like the world is Objective ..it is independent of our action, it cannot be acted upon.

For Objectivity read Ayn Rand books, for illusion around you..read Advaita philosophy or monism.

Trading the market is just part of your overall karma.....The whole universe has to accept you ....for you to become rich.

Market or the outside world has nothing to do with your success or failure..you ..yourself are the creater and destroyer of self.

Therefore, the issue whether Market is random or not does not rise..cos it does not matter to thy self

Ha...had to much too drink tonight
Okaaaay,

I think it's time to change to a much safer subject like the war in Iraq or the presidential election, or even creationism vs. evolution.

These abstract mathematical discussions on probalitiy theory and how it relates to emergent behavior in complex non-linear dynamic systems like curreny markets always lead to insults, fights, slaughter, posters breaking up the FF furniture for great justice, and who knows what else. Everyone just put the rocket launchers DOWN.

I'm just sayin'

The last time I looked I believe there were 16 distinct personality types, 4 classes with 4 subclasses each. I would say this goes along ways into understanding one’s perception of market randomness and seeing if the glass is half empty or feeling if it’s half full.

One who seeks order in the market finds order, one who seeks chaos finds it. It doesn’t matter which is the truth as both will say they found it. What matters, is the fact that the individual forms a tradable and profitable edge from their perception.

Fwiw,
Quoting auxesis
The last time I looked I believe there were 16 distinct personality types, 4 classes with 4 subclasses each. I would say this goes along ways into understanding one’s perception of market randomness and seeing if the glass is half empty or feeling if it’s half full.

One who seeks order in the market finds order, one who seeks chaos finds it. It doesn’t matter which is the truth as both will say they found it. What matters, is the fact that the individual forms a tradable and profitable edge from their perception.

Fwiw,
Well I agree. Just an opinion from over here at the extreme INTJ corner of the Myers-Briggs chart.
For all these people voting that the market is not random, that would imply it is predictable.

So, where are all the profitable systems based on the predictability of the markets?

Why don't ANY TRADERS in this forum show profitable live account statments. I mean, not even a single one.... except Mystic_Genie who had a lucky week.

The truth is, the markets aren't predictable, because nobody knows what future economic news releases will be. Nobody knows when a terrorist attack will happen. Nobody knows anything about the future, and if you did you'd mortgage your house on your trade, and tell us about how you made a mint.
Quoting tdion
For all these people voting that the market is not random, that would imply it is predictable.

So, where are all the profitable systems based on the predictability of the markets?

Why don't ANY TRADERS in this forum show profitable live account statments. I mean, not even a single one.... except Mystic_Genie who had a lucky week.

The truth is, the markets aren't predictable, because nobody knows what future economic news releases will be. Nobody knows when a terrorist attack will happen. Nobody knows anything about the future, and if you did you'd mortgage your house on your trade, and tell us about how you made a mint.
Then why gamble?
"Gamble." Exactly.

Quoting auxesis
Then why gamble?
Quoting soultrader
ps, how do you like this chart?

generated by excel's random number generator!
If this means the market is random, then it proves that an airplane = a bird.

They do the same thing - fly. And there is similarity in appearance.
If your thought is random, the market looks random even if it is not. If your thought is not random, the market does not look random even if it is. It all depends on how you see the market.
Quoting tdion
"Gamble." Exactly.
Trading needs to be in the area of informed speculation not gambling.

When you put on a short position there's something going on in the gray matter that says there's a better opportunity for price to go south than north... correct? Or else why risk your money?

When the opportunity for potential profit out weighs the risk of loss we enter a position, this is trading.
Quoting tdion
For all these people voting that the market is not random, that would imply it is predictable.
Wrong. The people voting that the market is not random are implying that the market is not random.

That doesn't mean it's completely predictable. It's not a binary choice between "random and predictable". It's analog.
Quoting tdion
For all these people voting that the market is not random, that would imply it is predictable.

So, where are all the profitable systems based on the predictability of the markets?

Why don't ANY TRADERS in this forum show profitable live account statments. I mean, not even a single one.... except Mystic_Genie who had a lucky week.

The truth is, the markets aren't predictable, because nobody knows what future economic news releases will be. Nobody knows when a terrorist attack will happen. Nobody knows anything about the future, and if you did you'd mortgage your house on your trade, and tell us about how you made a mint.
Although I don't believe economic releases are random, nor are terrorist attacks, I will say for sake of this argument that the events and economic releases were random. Even then random is the wrong word. Unpredictable is the better word.

The markets reaction to these events is not random. If the market were random then the USD would be able to appreciate no matter how terrible the US economy is doing.
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