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Can you tell with naked eyes?

  • #81
  • Apr 15, 2010 5:50am Apr 15, 2010 5:50am
Quoting Craig
Wrong, consider a stationary Gaussian Random walk, it's generated via random numbers (or as random as a computer can), when it gets more than 2 standard deviations from the mean, what are the chances of the next step being closer to the mean? (hint: it isn't 50%).
If you have a probability disturbution, the randomisation is not completely random. i.e. there is non-randomness in the system.
  • #82
  • Apr 15, 2010 5:54am Apr 15, 2010 5:54am
OK. I have not stated everything in the first post, but the objective was stated in the other posts earlier.

And since you ask me to produce some model with the new knowledge presented on this thread, I (not other) have to gain the new knowledge.

Quoting H. Rearden
This was your first post (and the title of your thread):

Can you tell with naked eyes?

I need help from experienced traders. I have generated random price movement and plot OHLC charts. I wonder if it is possible to distinguish them they are random price charts with naked eyes?

In a concerted effort, we have answered that question and hence the objective was achieved.

The only person who can answer your second question (which is nowhere in your original post), i.e. whether you personally have gained...
  • #83
  • Apr 15, 2010 6:14am Apr 15, 2010 6:14am
Quoting kk007
OK. I have not stated everything in the first post, but the objective was stated in the other posts earlier.

And since you ask me to produce some model with the new knowledge presented on this thread, I (not other) have to gain the new knowledge.
Look,

I am not 'telling' you to produce anything - I can so far not see where this leads in terms of any tangible result.

I guess there are 4 parties in the thread:

1) you as the OP

2) people with experience in the field of randomness

3) people like me with trading experience (15+ years)

4) people who want to learn something from this thread (including yourself according to what you stated)

So far, you have asked questions and some of them have been answered quite competently by group no. 2 and some proactive comments have been made by group no. 3 to further the topic.

In spite of this, we still have no idea what the desired outcome might contribute to overall trading advantages - by that I mean, once you get what you are looking for from this thread, what will the trading community that helped you along the way get as your theory?

I am still following the thread but for the life of it, I cannot see what could possibly be gained from having the ability you are looking for - I will let you prove me otherwise of course while at the same time saying that I can't add anything more of value to the subject.

Again, good luck.

H. Rearden
  • #84
  • Apr 15, 2010 6:25am Apr 15, 2010 6:25am
The potential benefit of the thread is confidence enhancement for me. I know you don't agree it can enhance confidence. I am not you and you are not me. So, you cannot speak for me (and some others?).

Don't you feel disturbed when random movement can appear to be a good setup?

By the way, these two below are contradictory:
Quoting H. Rearden
Now we should ask the OP if he can construct a model that would tell him/her on any given 'real' price chart where to apply the 'technical tools' (as cited) based on that knowledge - we can of course wait if he/she follows through and investigates the mental functions behind the perceptional differences induced by random data vs. real data.in the philosophy of objectivism.
Quoting H. Rearden
Look, I am not 'telling' you to produce anything
  • #85
  • Apr 15, 2010 6:30am Apr 15, 2010 6:30am
You think the MIT research paper has answered the point conclusively, in the light of its crucial weakness that I stated?

Many reponses showed that they find it is very hard to distinguish between random and real? What have been answered conclusively?

Quoting H. Rearden
So far, you have asked questions and some of them have been answered quite competently by group no. 2 and some
  • #86
  • Apr 15, 2010 6:49am Apr 15, 2010 6:49am
Quoting kk007
The potential benefit of the thread is confidence enhancement for me. I know you don't agree it can enhance confidence. I am not you and you are not me. So, you cannot speak for me (and some others?).

Don't you feel disturbed when random movement can appear to be a good setup?

By the way, these two below are contradictory:
They are not contradictory: I am not sure what your first language is, but the statement is a suggestion in structure - if you need an example of 'telling you' what to do, I will oblige.

Whatever 'enhancement' you might extract from the discussion, I am sure all people who contributed would like to hear your practical application of it.

Otherwise, there would be an imbalance in the amount of time and expertise invested in helping you to get what you want without you giving at least some positive feedback (and I mean not just a 'thank's folks).

I would never take the liberty of speaking for you (or anyone else for that matter) without getting prior consent.

I also did not disagree with you in terms of how this question answered might enhance your confidence - I simply stated that it would not (or does not) enhance mine. That is quite a difference - otherwise I would have said it will not enhance yours or mine. You still let me have my own independent feelings about it, I hope.

To answer your question re: whether I feel disturbed about 'random' movement on a good setup.

No, I don't get nervous or disturbed because I don't believe that any price movement is random. Someone buys or sells for a reason in an ocean of buying and selling that goes on as long as the market is open.

It would be an impossible task to track each and every individual transaction except to say that the results and effects of all transactions happening at each price level are visible to the trader. If the prices are moving directional, the imbalance becomes obvious - but again, because of the sheer amount of participants, it will rarely be a straight line on the chart...which might be perceived as 'random' by some.

H. Rearden
  • #87
  • Apr 15, 2010 6:56am Apr 15, 2010 6:56am
Quoting kk007

Many reponses showed that they find it is very hard to distinguish between random and real? What have been answered conclusively?

Even if not possible to distinguish, can still be traded the same way.
The quality of your life is brought about by the quality of your thinking.
  • #88
  • Apr 15, 2010 7:00am Apr 15, 2010 7:00am
Quoting kk007
You think the MIT research paper has answered the point conclusively, in the light of its crucial weakness that I stated?

Many reponses showed that they find it is very hard to distinguish between random and real? What have been answered conclusively?
I have not read the MIT paper, but they guys there are usually quite clued up.

I also remember that it stated along the lines '...it can be done...' and not that everyone can definitely do it.

If you are inclined not to include university research into your considerations, why do you ask a bunch of amateurs on a forum for their help?

I will for the final time wish you all the best in finding what you are looking for - but please leave me on the sidelines for the rest of the thread.

H. Rearden
  • #89
  • Apr 15, 2010 7:11am Apr 15, 2010 7:11am
Quoting H. Rearden
Whatever 'enhancement' you might extract from the discussion, I am sure all people who contributed would like to hear your practical application of it.
Isn't confidence boosting a benefit? Why benefit has to be a practical application? Provoking thinking is also a benefit on this type of discussion. Do you think all thread here have a practical application?

Quoting H. Rearden
Otherwise, there would be an imbalance in the amount of time and expertise invested in helping you to get what you want without you giving at least some positive feedback (and I mean not just a 'thank's folks).
As you know, help recievers will normally just say thanks if they get help on this type of forum. Why the standard is particular high on this thread?
Nevertheless, I don't think my question has answered yet or close.

Quoting H. Rearden
To answer your question re: whether I feel disturbed about 'random' movement on a good setup.

No, I don't get nervous or disturbed because I don't believe that any price movement is random. Someone buys or sells for a reason in an ocean of buying and selling that goes on as long as the market is open.

It would be an impossible task to track each and every individual transaction except to say that the results and effects of all transactions happening at each price level are visible to the trader. If the prices are moving directional, the imbalance...
Thanks for your sharing. Nevertheless, if you are counting how much you have contributed here and how much you will get back, you better stop sharing here, using your stoploss. The forum is not working in the way you think. If you enjoy sharing you share, if not don't.
  • #90
  • Apr 15, 2010 7:16am Apr 15, 2010 7:16am
I do not take paper serious not because it is a university research, but because the crucial weakness I mentioned. I think you missed the point.

Quoting H. Rearden
If you are inclined not to include university research into your considerations, why do you ask a bunch of amateurs on a forum for their help?
Quoting kk007
There is one critical weakness in the research. Participants may have memoried historical price movement of the real financial assets during the learning, and so they can distinguish between the random and real in the testing. I did not find the researchers have done anything to prevent this.

web.mit.edu/alo/www/Papers/arorassrn.pdf
  • #91
  • Apr 15, 2010 7:27am Apr 15, 2010 7:27am
Quoting kk007
Isn't confidence boosting a benefit? Why benefit has to be a practical application? Provoking thinking is also a benefit on this type of discussion. Do you think all thread here have a practical application?



As you know, help recievers will normally just say thanks if they get help on this type of forum. Why the standard is particular high on this thread?
Nevertheless, I don't think my question has answered yet or close.



Thanks for your sharing. Nevertheless, if you are counting how much you have contributed here and how much...

One last word:

You seem to live under the impression that good and qualified advice/help/input should be on a free basis while throwing in big phrases if someone like me reminds people of it.

Don't forget that you are on the receiving end and some of the 'decent' replies you get are made out of kindness because people want to help. That does in no way mean that these discussions should not contain a certain amount of reciprocity.

If you are able to stick around for a while longer, you might find that real good advice in here is very very rare - the reason for that is mainly that the discussions drift into personal issues between members and their ego's.

Stick to the points and try to make progress - that is what I would suggest.

I have for precisely that reason asked you to refrain from involving me any further into what has nothing to do with your original quest.

H. Rearden
  • #92
  • Apr 15, 2010 8:30am Apr 15, 2010 8:30am
Quoting H. Rearden
Don't forget that you are on the receiving end and some of the 'decent' replies you get are made out of kindness because people want to help. That does in no way mean that these discussions should not contain a certain amount of reciprocity.
I feel you keep trying to tell me my quest is pointless. Perhaps, your intention is to offer help. But from the very beginning, it is not something I want at all.

Quoting H. Rearden
If you are able to stick around for a while longer, you might find that real good advice in here is very very rare - the reason for that is mainly that the discussions drift into personal issues between members and their ego's.
I registered on forexfactory.com one day later than you! Yes. I agree real good advice is very very rare. At least I can't find one on this thread yet.
  • #93
  • Apr 15, 2010 8:33am Apr 15, 2010 8:33am
Since I cannot find some good advice which can help me to enhance my discrimination ability in identifying real price movement from random price movement, I will just learn it by practise. My plan is I will keep reading the randomly generated charts and real price charts, make note on their possible difference, until I get some conclusions.
  • #94
  • Apr 15, 2010 10:04am Apr 15, 2010 10:04am
Quoting kk007
Focus is different on this thread. My point is if experienced traders cannot distinguish a random chart from real price movement chart using naked eyes, how naked trading possible?
I think naked trading does not mean 100 percnnt naked. Even cndlestick is a form of indicator.
It doesnt matter if the market is random, we deal with randomity evryday in life . no big deal
  • #95
  • Apr 15, 2010 10:09am Apr 15, 2010 10:09am
Quoting kk007
Since I cannot find some good advice which can help me to enhance my discrimination ability in identifying real price movement from random price movement, I will just learn it by practise. My plan is I will keep reading the randomly generated charts and real price charts, make note on their possible difference, until I get some conclusions.
Btw to answer ur question. someOne did an experiment to see if trader can distinguish randomly generated chart and real chart.
Result: they ccouldnt tell the difference.

This result tells nothing bout market tradability. Dont take it too seriously
  • #96
  • Apr 15, 2010 10:10am Apr 15, 2010 10:10am
Yes. If I don't care about making profit, randomness is not a problem.

Quoting luqmanz
I think naked trading does not mean 100 percnnt naked. Even cndlestick is a form of indicator.
It doesnt matter if the market is random, we deal with randomity evryday in life . no big deal
  • #97
  • Apr 15, 2010 10:10am Apr 15, 2010 10:10am
Quoting kk007
I don't know what their "tradable" means, but random and predictable are two mutually exclusive concepts. If it is random, it is not predictable. If it is predictable, it is not random. And if it is not predictable, there is no edge. To find an edge, we need to exploit non-randomness.
Quoting Craig
Wrong, consider a stationary Gaussian Random walk, it's generated via random numbers (or as random as a computer can), when it gets more than 2 standard deviations from the mean, what are the chances of the next step being closer to the mean? (hint: it isn't 50%).
Quoting kk007
If you have a probability disturbution, the randomisation is not completely random. i.e. there is non-randomness in the system.
kk007 - you owe it to yourself to read up on the subject. After reading your last statement it's clear that even you don't understand what you wrote. Earlier in the thread, one of the posters was having a bit of fun at your expense - ForexQuant. http://www.forexfactory.com/showpost...1&postcount=16

Sorry FQ to spoil your little game but the OP owes it to raise himself/herself from ignorance by reading Mandelbrot's book, "the Misbehavior of Markets". In that book you'll find on page 17 the pictures that FQ posted, and a better appreciation for Darkstar's description of how to suss out fakes from real prices (the stated goal of this thread).

Now to the point in the quotes above - Craig is exactly correct. Most people (myself included until I started doing research on the subject) think there is one type of randomness - Gaussian or bell curve shaped randomness, and that randomness is unpredictable. As Craig points out there are lots of different types of time series. The real question that the OP should be asking isn't how to differentiate between fake price series and real price series (though kudos to the poster for the link with the identification game - after one round I figured out the common denominator and on the next round went 20 for 20. Perhaps the OP had better reexamine his/her beliefs with regards to the perceived "crucial weakness" with the MIT study). The better question is what is the true nature of price series - and what are the exploitable characteristics of the underlying nature?

Craig gave the example of a normal standard distribution (Gaussian stationary) where at the 2nd standard deviation the probability of mean reversion is much higher than the probability of continuing to move away from the mean. This is a predictable characteristic of that particular random distribution (Gaussian with a stationary mean). If price distributions exhibit this Gaussian normal behavior then this would be a characteristic that could be exploited.

Another family of distribution is the non-Gaussian distribution - there are many types in this family. Generally speaking, the markets are non-Gaussian random with fat tails - some believe this is closest to the Cauchy distribution as Mandelbrot's book hints.

I realize some folks have a hangup with the word random. The individual transactions are random unless you can predict them a priori. But you take them all and put them together and you have a dynamic system that can be represented in a price distribution that has definable characteristics. What are they and which of them can be exploited? Perhaps that question would put you on the right path.

(as an aside, Can future transactions be predicted before they happen? This is the stuff that trading edges are built from - of particular note might be the study of order flow trading.)
  • #98
  • Apr 15, 2010 10:18am Apr 15, 2010 10:18am
This is a theory I make up.

Price as appears on the chart is driven by a mixture of randomness and non-randomness. (although price is not random in global reality - price is driven by a high complexity of trading behaviours)

Sometimes, the random drive can make price movement appear to be a proper setup, and that is precisely the occasion a setup fails.


Quoting luqmanz
Btw to answer ur question. someOne did an experiment to see if trader can distinguish randomly generated chart and real chart.
Result: they ccouldnt tell the difference.

This result tells nothing bout market tradability. Dont take it too seriously
  • #99
  • Edited 10:48am Apr 15, 2010 10:36am | Edited 10:48am
You have make a number of points without support, so nothing is convincing. After reading your post, I am clearly know you do not know much accurately.

If you frame a movement with a guassian/normal distribution, it is not completely random. Say, adults' height in a population is normally distribution, can you say that the height of an arbitrary adult in the population is completely random?

In the MIT paper, subjects learned the real charts in the training phase and they were told which is real and which is random. In the testing phase, they are given the same real charts and newly generated random charts again, and this time they have some ability to distinguish between the two types. It could be because they remember the exact shape of the price curve in the real charts.

You have no argument to justify this weakness and just ask me to re-examined my belief. Mine is not a belief. Mine is a valid argument. And you? you have no argument.

I did not read the book you mention, I don't know whether it is a good book or not yet. But it does not mean that you are knowledgable and other people are ignorance.

P.S. Also you made up the intention of FQ as if he had told you why he posted.

Quoting FXEZ
kk007 - you owe it to yourself to read up on the subject. After reading your last statement it's clear that even you don't understand what you wrote. Earlier in the thread, one of the posters was having a bit of fun at your expense - ForexQuant. http://www.forexfactory.com/showpost...1&postcount=16

Sorry FQ to spoil your little game but the OP owes it to raise himself/herself from ignorance by reading Mandelbrot's book, "the Misbehavior of Markets". In that book you'll find on page 17 the pictures that FQ posted, and a better...
  • #100
  • Apr 15, 2010 10:41am Apr 15, 2010 10:41am
Quoting kk007
This is a theory I make up.

Price as appears on the chart is driven by a mixture of randomness and non-randomness. (although price is not random in global reality - price is driven by a high complexity of trading behaviours)

Sometimes, the random drive can make price movement appear to be a proper setup, and that is precisely the occasion a setup fails.
that sounds logical to me, but to be practical in trading, i assume all setup will fail so im always prepared for failure. This is all trader need to worry about.
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