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Can you tell with naked eyes?

  • #21
  • Apr 14, 2010 6:47am Apr 14, 2010 6:47am
I did the same too.
First generate a number between 0 and 1 for Up- and Downbars next
a number between 1 and 52 (the Pipsdistance) which will be added or substracted from the starting price depending on type of bar.

The result looks excatly like a real chart you could draw trendlines or count Elliot Waves. But there is a underlying structure in all financial markets which I have been able to quantify (which proved that Fibnumbers are Bullshit). If you do the same test with a random chart and a real one it sticks right out.
That's all I have to say. I will not go into detail here because I'm afraid it will lead nowhere when discussed in an open forum because of its complexity.

You can also load Temperature Data into MT4 and get funny looking charts with Pinbars.
  • #22
  • Apr 14, 2010 7:00am Apr 14, 2010 7:00am
The whole "guessing-the-non-random" approach is a fallacy.

I can distinguish between a chart of my favorite pairs and a random chart if you would specify the timeframe.
I can't distinguish between any market chart and a random one, without additional information.

The traders look at the charts in their contexts, considering when a movement takes place, if there are significant news ahead, round numbers, important S/R lines etc. They are the path to an edge and profitable trading. Too much fixation on random charts is a useless activity.
  • #23
  • Apr 14, 2010 7:04am Apr 14, 2010 7:04am
If I cannot distinguish, I will just blindly apply technical tools on the charts.
  • #24
  • Apr 14, 2010 7:18am Apr 14, 2010 7:18am
Quoting kk007
If I cannot distinguish, I will just blindly apply technical tools on the charts.
Distinguish between what ?

What you need is the belief that what you are looking at is not random. That belief does not come from comparing randomly created charts with financial charts, it comes from understanding what it is you are looking at on a price chart.

If you for example use a random number generator to throw out a graph, that graph is missing very important aspects, such as supply and demand. FX is (although in its internal workings different) nothing but another commodity that has underlying factors - which you won't have on a randomly generated graph/chart.

So, looking and knowing that one is 'random' and the other is based on 'reality' in terms of economic and technical aspects, won't get you anywhere unless you believe in that reality.

H. Rearden
  • #25
  • Apr 14, 2010 8:08am Apr 14, 2010 8:08am
I know real price movement is not randomly generated. No need to repeat. If someone here can demonstrate how to distinguish between real price movement and random price movement, it would be very interesting. If one can distinguish between them, confidence in apply technical tools would be higher.

Quoting H. Rearden
Distinguish between what ?

What you need is the belief that what you are looking at is not random. That belief does not come from comparing randomly created charts with financial charts, it comes from understanding what it is you are looking at on a price chart.

If you for example use a random number generator to throw out a graph, that graph is missing very important aspects, such as supply and demand. FX is (although in its internal workings different) nothing but another commodity that has underlying factors - which you won't have on a randomly...
  • #26
  • Apr 14, 2010 8:12am Apr 14, 2010 8:12am
Quoting TJPLD
I did the same too.
First generate a number between...
I'd be very curious to see your work with fibs.
  • #27
  • Apr 14, 2010 8:46am Apr 14, 2010 8:46am
Quoting kk007
I know real price movement is not randomly generated. No need to repeat. If someone here can demonstrate how to distinguish between real price movement and random price movement, it would be very interesting. If one can distinguish between them, confidence in apply technical tools would be higher.
In which way would it be interesting?

How would your confidence in the application of technical tools grow by an ability that compares something that does not need comparison (you would never place a position on a randomly generated chart - besides the fact that you couldn't in reality anyway).

In which way would a demonstration of knowing how to tell one from the other give you an advantage other than the fact that you can only trade one of them?

Again, the only way to distinguish the pure picture is to know what 'made' the picture in terms of the underlying data. A chart is a mere 'representation' of something happening. In real price charts, its a representation of buying and selling, supply and demand and so forth. In a randomly generated chart, its a representation of....nothing real - some random numbers - based on nothing.

The picture you see might look 'indistinguishable' for the naked eye - what makes them different, is the knowledge WHAT created the picture.

H. Rearden
  • #28
  • Apr 14, 2010 8:55am Apr 14, 2010 8:55am
Perhaps, different people find different things interesting.

Quoting H. Rearden
In which way would it be interesting?

How would your confidence in the application of technical tools grow by an ability that compares something that does not need comparison (you would never place a position on a randomly generated chart - besides the fact that you couldn't in reality anyway).

In which way would a demonstration of knowing how to tell one from the other give you an advantage other than the fact that you can only trade one of them?

Again, the only way to distinguish the pure picture is to know what 'made' the picture in terms...
  • #29
  • Apr 14, 2010 9:01am Apr 14, 2010 9:01am
My humble interpretation, probably wrong on all counts, but who cares?
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  • #30
  • Apr 14, 2010 9:12am Apr 14, 2010 9:12am
Quoting TJPLD
I did the same too.
... I have been able to quantify (which proved that Fibnumbers are Bullshit). If you do the same test with a random chart and a real one it sticks right out.
That's all I have to say. I will not go into detail here because I'm afraid it will lead nowhere when discussed in an open forum because of its complexity.
Please by all means do! Some of us love complexity.

Cheers
  • #31
  • Apr 14, 2010 9:17am Apr 14, 2010 9:17am
Quoting kk007
Perhaps, different people find different things interesting.
I can agree with that in principle.

Nevertheless, you have invited people to comment on your question. I have done so in order to see where this might lead. You have not come up with any theory that could help you in trading, neither have you been able to tell your readers what you hope to do, once someone is telling you how to differentiate between randomly created and real price charts.

I put it to you that your question is flawed. The reason is that you are trying to obtain an answer (for no real question) by comparing two unrelated sets of data - where one has no bearing on the other.

Again, there is no purpose in a chart which is based on random numbers. In contrast to this, a price chart represents something real and tangible, e.g. the interest of market participants and their buying and selling of a financial instrument or commodity.

If you can answer me the question of what you believe you can do with the ability to tell between the two chart pictures, then we have a basis of sharing knowledge. So far, I have made a clear case for what you say you are looking for will lead to nothing....except wasting time.

Convince me and your readers that there is some real point and advantage and exactly what that advantage is. You must have a hypothesis in order to make a claim.

H. Rearden
  • #32
  • Apr 14, 2010 9:21am Apr 14, 2010 9:21am
The ability to distinguish a real price chart from a random price chart can enhance one's confidence in applying technical tools on the price chart.

Nevertheless, it sounds to me that this possible advantage does not apply to you.

Quoting H. Rearden
If you can answer me the question of what you believe you can do with the ability to tell between the two chart pictures, then we have a basis of sharing knowledge. So far, I have made a clear case for what you say you are looking for will lead to nothing....except wasting time.
  • #33
  • Apr 14, 2010 9:33am Apr 14, 2010 9:33am
Quoting kk007
The ability to distinguish a real price chart from a random price chart can enhance one's confidence in applying technical tools on the price chart.

Nevertheless, it sounds to me that this possible advantage does not apply to you.
How can it do this ? You make a claim without telling anyone here the theoretical workings of that 'enhancement' you refer to.

It does not matter what I think here. So far I am open to a real explanation as to the processes that would 'enhance' your confidence.

Neither you or I can say whether it applies to me or not since you have not explained how that advantage comes about, in what logic your assumption is grounded.

So, again, why would looking at two charts (one being the result of a random data set, the other being EUR/USD for example) and your assumption of the newly created ability to tell them apart, let you use technical tools in any other way than looking simply at the EUR/USD chart?

What is the basis and logic of that confidence (i.e. where does it come from) you speak about?

H. Rearden
  • #34
  • Apr 14, 2010 9:39am Apr 14, 2010 9:39am
Quoting H. Rearden
neither have you been able to tell your readers what you hope to do
Isnt't this obvious? He is looking for the little piece of non-randomness in a real price chart, how this non-randomnes looks like, how it can be spotted with the naked eye to determine how it could be exploited so he can trade it.
  • #35
  • Apr 14, 2010 9:42am Apr 14, 2010 9:42am
Thanks. I've been thinking it is obvious.

Quoting 7bit
Isnt't this obvious? He is looking for the little piece of non-randomness in a real price chart, how this non-randomnes looks like, how it can be spotted with the naked eye to determine how it could be exploited so he can trade it.
  • #36
  • Apr 14, 2010 9:50am Apr 14, 2010 9:50am
Quoting 7bit
Isnt't this obvious? He is looking for the little piece of non-randomness in a real price chart, how this non-randomnes looks like, how it can be spotted with the naked eye to determine how it could be exploited so he can trade it.
The chart itself is not the random data. You have to look at the data that make up the chart in order to test for randomness. You can create a chart from almost anything (like how many socks get lost in the washing machine in a 3 year period).

That is not the way to conclusively find evidence of the actual data being random. The comparison has to take place on the raw data level and not on the level of the derivative of the data, i.e. the individual picture/chart.

H. Rearden

P.S. the activity of most 'random number generators' is in fact a non-random one.
  • #37
  • Apr 14, 2010 9:58am Apr 14, 2010 9:58am
Quoting H. Rearden
The comparison has to take place on the raw data level and not on the level of the derivative of the data, i.e. the individual picture/chart.
This is what my first posting said.

It can hardly be spotted with the naked eye on a small chart. But some things can be obvious, like for example a strong persistent trend or if the data is obviously stationary over a long period or if there are strong autocorrelations that can be spotted with the naked eye. But you need to look at longer intervals, much more data than just a few hundred bars.
  • #38
  • Apr 14, 2010 9:59am Apr 14, 2010 9:59am
I must have missed a trading class .... what are "Random Charts:?
  • #39
  • Apr 14, 2010 10:10am Apr 14, 2010 10:10am
Quoting 7bit
This is what my first posting said.

It can hardly be spotted with the naked eye on a small chart. But some things can be obvious, like for example a strong persistent trend or if the data is obviously stationary over a long period or if there are strong autocorrelations that can be spotted with the naked eye. But you need to look at longer intervals, much more data than just a few hundred bars.
7,

I am not a mathematician, but as far as I am aware a random chart should not display or exhibit any repetitions of any patterns. Based on random data, it should not even have more higher highs than lower lows. That would mean to me that it would be impossible to actually plot something completely random - since a chart itself already exhibits 'patterns'.

Time is not relevant as such since the whole comparison would need to be based on data that happens with the same frequency in both scenarios. It would be rather difficult (if one attempts this comparison at all) to say for example we have 1440 one minute data points in a 24h period but only 350 random data points in the comparison chart.

H. Rearden
  • #40
  • Apr 14, 2010 10:18am Apr 14, 2010 10:18am
Quoting H. Rearden
7,

I am not a mathematician, but as far as I am aware a random chart should not display or exhibit any repetitions of any patterns.
I was referring to real charts.

If something does not look like random then it is not random. If it looks like random then it may still contain a pattern, you just cant see it. If you find a pattern on a price chart that is repeated over and over all the time and that won't appear on a random chart (there are no patterns on random-walk charts) then you have found your edge. Some of these patterns are difficult to spot with the naked eye.
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