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  • #201
  • Dec 21, 2011 10:19am Dec 21, 2011 10:19am
Quoting bbakker
Randomness??? It is not random at all. It is the herd trying to decipher the fundamental news that comes out, to predict where price is going that is random. It is all in the chart. Look at price, the answer is right there. Forget news, detach yourself from it, just stay out of the market before news releases and let price show you the way. Price is everything!

Baker, This market is so random, that I called the bottom of a bounce on U/C that happened LAST NIGHT, on December 15th.

Post:

Quoting Venice
I want min .9300 then i'm all in! .9244 LIKELY (I would say 75-80%). Depends on how well that 9300 does though.
That .9244 was a rough estimate, as I was just ball parking it. It was later revised to this post on December 16th:


Quoting Venice
Ah shit, i'm getting my currencies confused.

Let me try that again... I want .9300 min, and hopeful for .9242.
Last nights low on the swissy (December 21st). .92411.


Yes, I am fully loaded on the swissy, and yes, this should easily be a 300 pip (minimum) trade. But, I am already protected so it doesn't matter at this point. Risk Free. Locked in at +20. So it's profit no matter what now.


Yeah... random my ass. For those of you that think the market is random... look at the numbers I have posted, and look and see what I seen. Look for what I seen in the chart a week ago, and how patience plays out.

These markets are not random, they are simply the movement of price from demand to supply, and supply to demand. And if I was wrong? My total risk is about 50 pips. Yeah, I have no problem risking 50 pips for 300+.
  • #202
  • Dec 21, 2011 10:23am Dec 21, 2011 10:23am
Quoting Venice
Baker, This market is so random, that I called the bottom of a bounce on U/C that happened LAST NIGHT, on December 15th.

Post:



That .9244 was a rough estimate, as I was just ball parking it. It was later revised to this post on December 16th:




Last nights low on the swissy (December 21st). .92411.


Yes, I am fully loaded on the swissy, and yes, this should easily be a 300 pip (minimum) trade. But, I am already protected so it doesn't matter at this point. Risk Free.


Yeah... random my ass. For those of you that think...
These same patterns, these same risk setups exist on all time frames. From the 1m to the Monthly. It doesn't matter. I have yet to see any viable evidence that dictates that the markets are random. And even if they are random, that is what risk management is for.
  • #203
  • Dec 21, 2011 10:29am Dec 21, 2011 10:29am
Quoting Taigen
Your formula is nice and academic and all that but it really doesn't apply at all in the market.
I think the formula is probably correct. When I first started trading for a living about 10 years ago, I dabbled in developing automated systems. One of the first things that learned is that you can give practically any automated system to a bunch of people to test, with exactly the same parameter settings and you'll get a gaussian distribution in results. This fact tends to get masked in the chaos of testing in a forum environment, but its true. That means there are people trading a negative expectancy system, but making a profit over the short term. The converse is also true that positive expectancy systems can lead to losses over the short term.

It should come as no suprise to hear from brokers that 30% of traders are profitable over the last quater. The figure should be a great deal higher. The reason it isnt, is because spread has such a massive impact on mathematical expectancy.

Transaction cost are the reason we dont see people achieving a 15 year track record, and the reason why those applying the transaction costs are wealthy beyond most peoples imagination.

The sad reality is that most systems or methods when statistically evaluated, are no different than random chance. Its no coincidence that most profitable traders apply discretionary aspects to their methods.

If the brokers where crazy enough to provide transparent data, it would come as no surpise to discover that most market participants are acting as random agents.
  • #204
  • Dec 21, 2011 10:31am Dec 21, 2011 10:31am
Guys, guys, someone throws in the word "random" and you're so upset. Like I've desecrated a holy temple or something. It's just a word for f..k's sake?

You could be using all that energy for handicrafting Christmas gifts or decorations? I know it's not trendy these "shop till you drop" days, but it's nice.

Venice, great call indeed. More power to you!!! Are you accepting investors? :-)

Quoting Venice
Baker, This market is so random, that I called the bottom of a bounce on U/C that happened LAST NIGHT, on December 15th.

Yeah... random my ass. For those of you that think the market is random... look at the numbers I have posted, and look and see what I seen. Look for what I seen in the chart a week ago, and how patience plays out.

These markets are not random, they are simply the movement of price from demand to supply, and supply to demand. And if I was wrong? My total risk is about 50 pips. Yeah, I have no problem risking 50 pips for 300+....
forget about tomorrow, just steal away into the night
  • #205
  • Dec 21, 2011 10:34am Dec 21, 2011 10:34am
Quoting Razzle
I think the formula is probably correct. When I first started trading for a living about 10 years ago, I dabbled in developing automated systems. One of the first things that learned is that you can give practically any automated system to a bunch of people to test, with exactly the same parameter settings and you'll get a gaussian distribution in results. This fact tends to get masked in the chaos of testing in a forum environment, but its true. That means there are people trading a negative expectancy system, but making a profit over the short...
Check out this thread (more specifically, the last post's attachment):

http://www.forexfactory.com/showthread.php?t=298216

Even in the randomness of a simple coin toss, trends can be derived. I thought this was pretty neat. It sure looks a lot like our candle sticks. And of course, in the nature of a coin toss, as are the forex markets, they are a mean reverting medium.
  • #206
  • Dec 21, 2011 10:56am Dec 21, 2011 10:56am
Quoting Venice
Even in the randomness of a simple coin toss, trends can be derived.
Frightening isnt it. You can see support and resistance levels, you can see ranges, trends, previous support being broken and becoming resistance ! head and shoulder patterns, wedges, pennants. You can see pin bars and doji at swing highs and lows. Stick an Oscillator on it you'll see divergence too :-)

Stick some fib's on it and you'll see bounces at key fib levels, and you'll see trends exhausting at fib extension levels. I spent a lot of time applying TA to randomly generated markets :-)

But you wont get kurtosis from a random coin toss
  • #207
  • Dec 21, 2011 11:03am Dec 21, 2011 11:03am
Quoting Razzle
It should come as no suprise to hear from brokers that 30% of traders are profitable over the last quater. The figure should be a great deal higher. The reason it isnt, is because spread has such a massive impact on mathematical expectancy.

Transaction cost are the reason we dont see people achieving a 15 year track record, and the reason why those applying the transaction costs are wealthy beyond most peoples imagination.
Exactly.

Quoting Venice
These same patterns, these same risk setups exist on all time frames. From the 1m to the Monthly. It doesn't matter. I have yet to see any viable evidence that dictates that the markets are random. And even if they are random, that is what risk management is for.
There actually is lots of evidence that the market is random. And if the market is random, no risk management can ever create a positive expectancy. Check out some of Hanover's posts: he has made quite an effort teaching that to his peers.
The nail that sticks out gets hammered back in
  • #208
  • Dec 21, 2011 11:14am Dec 21, 2011 11:14am
Quoting Noloqy
Exactly.
There actually is lots of evidence that the market is random. And if the market is random, no risk management can ever create a positive expectancy. Check out some of Hanover's posts: he has made quite an effort teaching that to his peers.
my question is what if you can predict randomness with TA?
  • #209
  • Dec 21, 2011 11:21am Dec 21, 2011 11:21am
Quoting deltatrade
my question is what if you can predict randomness with TA?
I'd probably argue that TA isnt designed to predict anything. TA is NOT a predictive tool.
  • #210
  • Dec 21, 2011 11:22am Dec 21, 2011 11:22am
Quoting Razzle
I'd probably argue that TA isnt designed to predict anything. TA is NOT a predictive tool.
/Thread.

I do not think I can stress money management any harder in this thread. Apparently people are completely skipping over the money management / calculated risk stuff.

While my way of trading is supply / demand zones, I can make a profitable strategy over time with simple MA's, stochastics, or any other random indicator that can be thrown out.

You do not even have to be right more then you are wrong, if your rights pay for your wrongs and then some.

This is the holy grail to trading.
  • #211
  • Dec 21, 2011 11:30am Dec 21, 2011 11:30am
Quoting Razzle
I'd probably argue that TA isnt designed to predict anything. TA is NOT a predictive tool.
i can beat the random generated charts using technical signals.
  • #212
  • Dec 21, 2011 11:32am Dec 21, 2011 11:32am
Quoting deltatrade
i can beat the random generated charts using technical signals.
Do you incorporate a spread in this experiment?
Time hides Nothing
  • #213
  • Dec 21, 2011 11:35am Dec 21, 2011 11:35am
Quoting Razzle
I think the formula is probably correct.
I don't see how this formula is converging to zero:

P(k>(N/2)+1)

so k is greater than N/2. Let's carry it to extreme as say that N expands to infinity. Since infinity over 2 is, in essence, infinity and adding a 1, well that pretty much looks like infinity.

k>(infinity/2)+1) which says that k is greater than infinity so where is the convergence to zero? 2/N, yes but not N/2. But the formula adds a one so that it could never be zero. The conversion function would result in one.

That formula makes no sense to me.
Taigen Profit This Month: na
  • #214
  • Dec 21, 2011 11:44am Dec 21, 2011 11:44am
Quoting deltatrade
i can beat the random generated charts using technical signals.
A standard brownian motion without drift has an expectancy equal to the current state. Because the increments are independent, and identically distributed, it is a fact that you cannot "beat" it.

If you state that you can beat the market, I'll take your word for it. If you state that you can beat a random process, either you're fooling with us, or you just lost your credibility.
The nail that sticks out gets hammered back in
  • #215
  • Dec 21, 2011 12:08pm Dec 21, 2011 12:08pm
Quoting Noloqy
A standard brownian motion without drift has an expectancy equal to the current state. Because the increments are independent, and identically distributed, it is a fact that you cannot "beat" it.

If you state that you can beat the market, I'll take your word for it. If you state that you can beat a random process, either you're fooling with us, or you just lost your credibility.
here is what i did. i generated the random numbers (flip coin) and i observed the movement after pin bars. if you take them at a easy identifiable and repetable location then it's easyer to make observations for everyone. if the random number generator stops right when we see a pin bar at that specific location then we can try and play with this and see if future direction is anticipated or not. i never saw a random generator candlestick chart until today and i generated some charts and have observed 10 such situations. i will atach some charts and anyone interested can make the experiment.
Attached Image (click to enlarge)
Click to Enlarge Name: random.JPG Size: 108 KB
  • #216
  • Dec 21, 2011 12:15pm Dec 21, 2011 12:15pm
Quoting Taigen
I don't see how this formula is converging to zero:
P(k>(N/2)+1)
I think you interpret it differently than I intended. What I tried to say is:
Attached Image


Note that n is countable.

The intuition is as follows: If you have even a negative expectancy, if you trade long enough, there is a 100% chance that you won't end up with a profit (even disregarding a limited account size.)
The nail that sticks out gets hammered back in
  • #217
  • Dec 21, 2011 12:38pm Dec 21, 2011 12:38pm
Quoting deltatrade
i can beat the random generated charts using technical signals.
I played around with this sort of thing for a while, mainly looking at oscillator divergence on randomly generated bars.

Its quite fascinating that you would pick a pin bar as an example. Most traders could give a reasoned arguement to justify the pattern, particularly if seen at previous S&R, and I suppose that you couldnt really argue with the explanation that they'd provide.

However, in your example, its a randomly generated pattern, there is no support, noone bought anything at that level previously, and the shadow on the bar doesnt represent a rejection of price.

That doesnt stop you from trading it. You can still cut losses short, and you can still let profits run, and you can still capitalise on streaks of good luck, and protect yourself during streaks of bad luck.

If your random chart started to exhibit fat tails, you could make even more money !

The doubters of course will argue that you couldnt profit from a mechanical system (and I'd probably agree with them, although in reality you might be able to if you where smart enough). They'll argue that discretionary exits are easy to identify retrospectively, but you couldnt do it in real time.

Despite all that, there's still a 30-40% chance that you (or anyone) could trade this profitably over the next 3 months, even if there's no edge there at all !

Thats what makes this so much fun.
  • #218
  • Dec 21, 2011 12:51pm Dec 21, 2011 12:51pm
Quoting Razzle
I played around with this sort of thing for a while, mainly looking at oscillator divergence on randomly generated bars.

Its quite fascinating that you would pick a pin bar as an example. Most traders could give a reasoned arguement to justify the pattern, particularly if seen at previous S&R, and I suppose that you couldnt really argue with the explanation that they'd provide.

However, in your example, its a randomly generated pattern, there is no support, noone bought anything at that level previously, and the shadow on the bar doesnt...
I really like the way you think.
  • #219
  • Dec 21, 2011 1:04pm Dec 21, 2011 1:04pm
Quoting Razzle
I played around with this sort of thing for a while, mainly looking at oscillator divergence on randomly generated bars.

Its quite fascinating that you would pick a pin bar as an example. Most traders could give a reasoned arguement to justify the pattern, particularly if seen at previous S&R, and I suppose that you couldnt really argue with the explanation that they'd provide.
i've chosen the pin because it's a public thing. nowadays everybody knows about it.
  • #220
  • Dec 21, 2011 1:05pm Dec 21, 2011 1:05pm
Quoting deltatrade
i've chosen the pin because it's a public thing. nowadays everybody knows about it.
The point he was making, was that in trading you actually have buyers or sellers standing behind that pin. In a random chart, at best, you have a 50% shot of the pin playing out.

50% accuracy is more than enough to be successful in a random chart or a true market.
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