Do you believe this market is random? | Page 12 | Forex Factory

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Do you believe this market is random?

  • #221
  • May 17, 2014 11:25am May 17, 2014 11:25am
I believe it is "controlled chaos". If you have a time-proven system, you can be very profitable. Is there any predictive system that is 100%? I'd say no.
  • #222
  • Edited May 18, 2014 7:29am May 17, 2014 11:49am | Edited May 18, 2014 7:29am
Quoting 60minuteman
{quote} the conclusion of the research is that the market can be considered random sometimes, and sometimes not, so you are right. As for your edge, it is most likely an illusion if it is based purely on a chart pattern, if it is an edge at all then there are other factors at play that you are just not noticing
Possible. When I trade a breakout of a pattern it is with the recent momentum. So maybe the trend is the one who gives a profit not the chart pattern and the trend is because of other factors. Actually I don't believe in patterns, for example I don't believe in the head and shoulders I only believe in the neckline which is usually an important level of support or resistance. I used to trade support and resistance as reversals but I have much better results with breakouts with stop hidden behind the former support/resistance. And it's very possible that this is because of trend which is being made by other factors.

If I think well patterns have their logic. Usually a pattern represents a period of consolidation (buyers and sellers are undecided). When price breaks of that consolidation and has a nice close outside the pattern probably either the buyers or sellers won the battle. The pattern reflects what happens in the market. I don't really care what was the reason buyers or sellers won the battle and the pattern consolidation was broken. I don't use any fundamentals. I don't care why the price moves. I don't agree with projection though (you can't really estimate how much price will move). I like to take quick profit usually if I have 1:1 RR. I don't want to prove that the strategy is winner, because I'm not a theorist or a professor. Gamblers are interested in money not in proving something works to those who don't believe.
  • #223
  • Edited May 18, 2014 7:36am May 17, 2014 11:53am | Edited May 18, 2014 7:36am
Quoting 60minuteman
{quote} that research has already been done (a quite famous bit of research on random markets).. maybe you should google it http://en.wikipedia.org/wiki/Random_walk_hypothesis
Where can I find more RNG charts? I tried on google but I didn't find.

I think even if RNG charts are similar to forex or stock charts I still won't believe the market is random. The level from the RNG chart is formed randomly while the level from the forex or stock chart is formed by the market, by buyers and sellers. Big difference.
  • #224
  • May 17, 2014 2:04pm May 17, 2014 2:04pm
Quoting str8
{quote} Here are other statistics: In the encyclopedia of chart patterns 2nd edition it says that head and shoulders bottoms has 3% break even failure for bull markets and 4% break even failure for bear markets (74% meeting price target and 58% meeting price target) and tops 4% break even failure and 1% break even failure (bull and bear markets), and they meet price target 55% and 56% (bull and bear markets). http://samuraitradingacademy.com/7-b...tion-patterns/ "The statistics on the price action patterns below were accumulated...
shhhh !! ....dont tell the banks this! , really glad samuritrading acadamy (the cheque is in the post) did all the due diligence and decided to share their findings with the retail community rather than selfishly packing in their fee based web site and embarking on single minded global financial domination.. !

but please dont spoil the party, keep this detailed analysis to yourselves, just think if the banks had the means and way with all to carry out this piss easy backtest too! the world would be a different place, glad they haven't thought of that , phewwww...
  • #225
  • Edited 2:42pm May 17, 2014 2:31pm | Edited 2:42pm
Quoting stricky1967
{quote} shhhh !! ....dont tell the banks this! , really glad samuritrading acadamy (the cheque is in the post) did all the due diligence and decided to share their findings with the retail community rather than selfishly packing in their fee based web site and embarking on single minded global financial domination.. ! but please dont spoil the party, keep this detailed analysis to yourselves, just think if the banks had the means and way with all to carry out this piss easy backtest too! the world would be a different place, glad they haven't thought...
What about the encyclopedia of trading patterns second edition? Do you think the stats from this book are fake? Do you think only statistics that show a strategy is losing are true? In my opinion the trade management from the link you posted is completely flawed (I wouldn't take seriously any trader that uses MT4 trailing stops and they didn't even wait for a close to enter the trade). If you have horrible trade management (like seeing a level on daily and then going to 1hr to find a better entry instead of waiting for the daily close) it's really impossible to make a profit. If you can't make a profit trading forex do you think no one can profit?
  • #226
  • May 17, 2014 2:45pm May 17, 2014 2:45pm
Quoting str8
{quote} What about the encyclopedia of trading patterns second edition? Do you think the stats from this book are fake? Do you think only statistics that show a strategy is losing are true? In my opinion the trade management from the link you posted is completely flawed (I wouldn't take seriously any trader that uses MT4 trailing stops). If you have horrible trade management it's really impossible to make a profit. If you can't make a profit trading forex do you think no one can profit?

I believe in seeing 'meaningful' evidence of success ONLY. ( shouldn't be that hard , should it, especially if everyone has read the encyclopedia of trading tosh )
  • #227
  • Edited May 18, 2014 7:43am May 17, 2014 2:59pm | Edited May 18, 2014 7:43am
Quoting stricky1967
{quote} I believe in seeing 'meaningful' evidence of success ONLY. ( shouldn't be that hard , should it, especially if everyone has read the encyclopedia of trading tosh )
Most traders don't read books or forums. Even those who read lack discipline and want to be high frequency traders. Other traders read forums but don't understand trading too well (they read about support and resistance and then start to trade every minor support/resistance). There are others who read and think no one can be winning so they don't try any strategy because they think all strategy are losers (I don't understand why are posting on forex factory if they don't believe you can win, very strange, in poker and sports betting forums there aren't too many members that think it's impossible to win because those who think this don't post on forums, on forex it seems there are a lot of people who think no one can win and they still make posts).

Same with other people. All people lack discipline not only traders. I personally am a winner in sports betting after some years. How many people do you think are winners in sports betting after a lot of bets? Very few because most of them want to speculate on every sport event even if there is no value bet.
  • #228
  • May 18, 2014 6:44am May 18, 2014 6:44am
http://citeseerx.ist.psu.edu/viewdoc...=rep1&type=pdf

"Cleeremans and Jimenez observe that implicit learning occurs during noisy sequences (ones in which random elements are mixed into patterns), indicating that subjects can pull patterns out of streams of data - a skill that sounds very similar to the activity of short-term traders. The authors conclude that subjects in the SRT experiments become sensitive to the statistical regularities in the data - that over time, certain cursor locations are more likely than others to follow an appearance at one portion of the screen. In essence, the subjects act as neural networks, using new data to update the estimates of an event occurring.

After dozens and dozens of trials, subjects internalise patterns that they cannot fully describe. Most important, this learning is not the kind of absorption of facts and figures that occurs in classrooms. Rather it is motor learning - the connection between a perception and a response. Perhaps this is why so many highly successful traders are not distinguished by their book learning. When they say they have a "feel" for the market, they are speaking a literal truth."

Extracted from Enhancing Trader Performance
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  • #229
  • May 18, 2014 7:13am May 18, 2014 7:13am
I am posting 2 charts here.im not trying to prove the market is not random merely trying to illustrate the things we can determine, i feel many are looking at this subject in a black and white way . lets throw some grey into the mix.

chart 2 was posted on my journal on feb 17.it was my calculated longer term levels of interest. which are represented with green ,futer expected highs .grey averaged levels from past data . and red lower projected lows .these are calculated using daily weekly and monthly.

chart 1 is present chart and last weeks trading .they have repeatedly proved to be significant .using the same calculation on smaller time frames zooming into real time and intraday I can see the convergence from the lower t/f to the higher t/f. this at times will converge on almost all t/f to a certain price zone within 5 to 10 pips. this type of market movement is not random.it is governed by the simple fact of order flow and were large interest is building.the requirement of liquidity will take price there.

this is information which we can use to combat the randomness of unknown variables ,unfolding futer information.there are also ways of tilting the balance of incoming unkwown variables by combining data in the now moment and averaging it to give us bias,the more of the random you can eliminate the closer the balance can be tilted to surpass the 50/50 randomness minus the spread.

we don't know the next drop of rain,but at the same time you wouldn't pick south east asia for a beach holiday in the monsoon season.
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  • #230
  • Edited 7:33am May 18, 2014 7:17am | Edited 7:33am
Quoting diceman555
I am posting 2 charts here.im not trying to prove the market is not random merely trying to illustrate the things we can determine feel many are looking at this subject in a black and white way . lets throw some grey into the mix. chart 1 was posted on my journal on feb 17.it was my calculated longer term levels of interest. which are represented with green ,futer expected highs .grey averaged levels from past data . and red lower projected lows .these are calculated using daily weekly and monthly. chart 2 is present chart and last weeks trading...
I think even those who argue the randomness theory isn't arguing for 50/50, but merely appreciating the following fact:

Traders have to reconcile statistical regularities (at the macro level, with a large sample of trades) with randomness/unpredictability in individual outcomes at the micro level (whether the next trade will be a winner/loser).

In this sense we are all treading in the grey area. Ofcourse the problem arises when such regularities might not last for long; the market is dynamic; its underlying parameters are changing over time... You discover an 'edge' only to see it disappear in a couple of months.

Does anyone disagree with that ^?

Now for the more audacious assertion: I believe there are no profitable systems in the long run for a zero-sum game like forex, every system when applied over a long enough time frame produces an expected value of zero (before costs). In the stock market (a positive sum game) this translates to: no system can beat the market in the long run.

Profit then arises from the ability/skill to pick the right system to use in the right context => this implies that at the heart of it, trading is about 'gambling' on which strategy to choose/stick with. Gambling in the sense that you are making an entrepreneurial decision, based on wisdom and judgment and instinct and intuition and statistics; much like the kind of decisions any leader in any industry would be making... it's about seeing past the complexity and choosing a course of action.

The harder we try to escape the uncertainty, the more it'll come back to haunt us; instead we have to embrace it.
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  • #231
  • May 18, 2014 7:27am May 18, 2014 7:27am
Quoting shellsnail
{quote} I think even those who argue the randomness theory isn't arguing for 50/50, but merely appreciating the following fact: Traders have to reconcile statistical regularities (at the macro level, with a large sample of trades) with randomness/unpredictability in individual outcomes at the micro level (whether the next trade will be a winner/loser). In this sense we are all treading in the grey area. Does anyone disagree with that ^?

yes I do agree.even most of the papers written in probability ect ect seem to be at odds on the stop point.being martingale cant remember if its pre or super has a possible positive outcome ,but in the rules of fair game a stop point cant exist. huh the rules of science
  • #232
  • May 18, 2014 7:34am May 18, 2014 7:34am
Quoting shellsnail
{quote} I think even those who argue the randomness theory isn't arguing for 50/50, but merely appreciating the following fact: Traders have to reconcile statistical regularities (at the macro level, with a large sample of trades) with randomness/unpredictability in individual outcomes at the micro level (whether the next trade will be a winner/loser). In this sense we are all treading in the grey area. Ofcourse the problem arises when such regularities might not last for long; the market is dynamic; its underlying parameters are changing over time......
again agree with you.

I read somtime back on ff that a profitable trading system requires one element of discretion .im inclined to believe that .even the algos are adapting to there micro eco system
  • #233
  • May 18, 2014 7:57am May 18, 2014 7:57am
Quoting diceman555
I am posting 2 charts here.im not trying to prove the market is not random merely trying to illustrate the things we can determine, i feel many are looking at this subject in a black and white way . lets throw some grey into the mix. chart 2 was posted on my journal on feb 17.it was my calculated longer term levels of interest. which are represented with green ,futer expected highs .grey averaged levels from past data . and red lower projected lows .these are calculated using daily weekly and monthly. chart 1 is present chart and last weeks trading...
In July alone, 2.2 million tourists entered Thailand, or an increase of 400,000 persons, or 22.47 per cent, year-on-year, which indicated the country's strongly positive growth for tourism. - See more at: http://www.pattayamail.com/business/....Bp6AOCer.dpuf

human just love to make random decisions then
tradewith60
  • #234
  • May 18, 2014 8:37am May 18, 2014 8:37am
Quoting shellsnail
{quote} I think even those who argue the randomness theory isn't arguing for 50/50, but merely appreciating the following fact: Traders have to reconcile statistical regularities (at the macro level, with a large sample of trades) with randomness/unpredictability in individual outcomes at the micro level (whether the next trade will be a winner/loser). In this sense we are all treading in the grey area.
great post

To prove that the market has not randomness, 1 chart is not enough, what about 1000 chart with perfect mathematical pip touch and bounce?
There are no valid research done out of one sample, not even 10...

If the market did not have some randomness, we would all be trading Fibonacci retrace with 100% hit rate. Instead, even by using the divine proportion, we can only guess or follow the action... the 50 or the 61, the expansion will be to the pip, break of 15pips, or will it get at just short of 10pips?

Pure vague direction is not enough to discredit randomness, research with mathematical proof is needed. Otherwise we'll treat trading like astrology:"the moon is aligned with mercury so you you might feel great today, or maybe not."
  • #235
  • May 18, 2014 8:41am May 18, 2014 8:41am
"The Market" is a pretty broad term.

Whats definitely not random? That's a better and less annoying question

Possibly a more productive one as well.
like totally failure brah
  • #236
  • May 18, 2014 9:20am May 18, 2014 9:20am
Quoting 60minuteman
{quote} in july alone, 2.2 million tourists entered thailand, or an increase of 400,000 persons, or 22.47 per cent, year-on-year, which indicated the country's strongly positive growth for tourism. - see more at: http://www.pattayamail.com/business/....bp6aocer.dpuf human just love to make random decisions then

nope ther not random,these increases related to thialand would show in a calculated way .7 year cycles would show this and allow for continued increase,longer term calculated forcasts would allow for increase in costs ect ,resulting in a fall off.

I was quite clear by saying my charts prove nothing regarding randomness ,im merly pointing out that there is information and ways to to help reduce the randomness within market.

Lines on a chart are nothing more than lines on a chart.its what you do from that reference point that matters.collective information from as many variables as possible smoothes out total randomness.

This is with out touching on market harmoney .a phase in the market when it all agrees .nothing in its wake can alter this state.even intervention fails at tuch times.this can be the result of random chance but results in non random behavour.
  • #237
  • May 18, 2014 10:48am May 18, 2014 10:48am
Quoting diceman555
I am posting 2 charts here.im not trying to prove the market is not random merely trying to illustrate the things we can determine, i feel many are looking at this subject in a black and white way . lets throw some grey into the mix. chart 2 was posted on my journal on feb 17.it was my calculated longer term levels of interest. which are represented with green ,futer expected highs .grey averaged levels from past data . and red lower projected lows .these are calculated using daily weekly and monthly. chart 1 is present chart and last weeks trading...
I still think it is an illusion, I see price going through the lines as often as respecting them, I can't help feeling you want to believe there is order so your brain allows you to see it. Have you tried placing random lines and comparing?
tradewith60
  • #238
  • May 18, 2014 11:55am May 18, 2014 11:55am
In my opinion, the market in its essence is not random (have in mind the law of large numbers). Due to it's complexity and size it does appear to be random and is ought to for a long time from now on. Despite this, I can give three reasons for which I believe the market is not random in its nature:
1. Price movements are the effects of determined causes. As long as there is a causally bond you cannot talk about randomness. The causes that exerts forces into the market are indeed random from the speculators point of view (but those are the effects of other causes and so on).
2. As long as the opportunity of front-running exists one can't assume that markets are random.
3. Every market, by the definition of market itself, is governed by the laws of supply and demand. Since there is a law which 'constrains' the manifestation of something, there is no randomness.

The question is: can you predict in the morning if at the end of the day there will be more buying pressure than selling pressure? For the time being, I believe not.
In conclusion, the problem is not if the market is random or not - it clearly, isn't; after all, there are only two direction a price can take having a determined reference point in time: up or down (as it's been doing from ancient times). The problem is if you can predict the behavior of all market participants at any time so your perception of what appears to be random changes.

You have attached the illustration from Wikipedia, section Law of the large numbers explaining how at a micro-molecular level the path of a molecule can appear random, but at a macromolecular scale the process of diffusion is always governed by a law which pushes the molecules from the more concentrated environment to the least concentrated.

Attached Image
  • #239
  • May 18, 2014 4:19pm May 18, 2014 4:19pm
In my opinion markets are random because we never know for sure what is going to happen, yet they are quite predictable due to the human nature.

People tend to behave the same most of the time and that is why markets are predictable, because herd is predictable. That means some situations and patterns in a given context are more likely to produce expected results than others.

That is where the edge lies as long as the odds are in your favour. But to master this it just takes time because even if you have a nice setup but the context is against... one kinda needs to create sixth sense through screen time. That is when it starts to fall into place.
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  • #240
  • May 18, 2014 5:26pm May 18, 2014 5:26pm
matters?
"Do you believe this market is random?"
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