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Is random really random? 231 replies

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Is the market random or not ? 210 replies

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Attachments: Do you believe this market is random?
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Do you believe this market is random?

Quoting Rap Skallion
Just because I cannot guess does not mean it's random.
Yes it does absolutely mean that it is random. This is the definition of a random variable. The randomness is independent of the fact that the uncertainty comes from the generating process or your lack of knowlegde about the event. When I look at the coin and I know the result it is no longer random for me. But
it is still random for you.
No greed. No fear. Just maths.
Black swan?!
Attached Image
No greed. No fear. Just maths.
This discussion is frustrating me, so let me summarize in this way: I can't tell you where the market will be priced at the end of the day, nor at the end of the month, so that makes the market random; I can't tell you what the next tick will be (ie, a buy or sell), so that makes the market random; and I can't tell you with 100% certainty if the market will go up or down today or in the next 4 hours, so that makes the market random. But, I made over 335 pips on the GBP/$ over the last 24 hours, by building a position that consisted of up to 6 trades, eventually running to my targets this morning with 4 trades. There was nothing random about that. Not bragging, but trying to make the point that the randomness most people experience is within themselves, less in the market.
Sheeeet i have the feeling people still confuses the meaning of the word random.

Quote
Randomness means lack of pattern or predictability in events.[1] Randomness suggests a non-order or non-coherence in a sequence of symbols or steps, such that there is no intelligible pattern or combination.

Basically, unpredictable, unknowable by any means.So both me and PipMeUp used the word incorrectly.

When you talk about a bias or a pattern, then it cant be random anymore, end of story.

And so the market has some nice patterns, which are totally non-random, but appearing at random intervals, or hardly quantifyable like unexpected/sudden news.But still, the outcome will be the same breakout->retracement , trend->reversal...Its predictable, if it goes up it will eventually fall down

HAVE YOU SAW ANY TREND THAT NEVER EVER REVERSED ??????? C'MON BIG BANKS MUST TAKE PROFIT AT A CERTAIN TIME, AND THAT WILL RETRACE/REVERSE PRICES!!!!


CONCLUSION: THE MARKET IS NOT RANDOM! IF YOU CANT PREDICT IT, DOESNT MEAN THAT OTHER GUYS CANT!

And the terminology like "random walk" is misleading because the market behaves like that, yet with a bias/pattern, so its tehnically not random, yet we still call it random walk.Its just a stupid name, we should rename that term
"There's a sucker born every minute" - P.T. Barnum
And also dont confuse uncertainty with randomness.

Now technically its totally non-random, but it is uncertain.Thats the difference.

So basically just like weather forecasting: You can predict the weather by looking at wind speed and water levels in the air, and its generally accurate >50% of one thing over another, but you never know when a volcano erupts and messes up your calculations, thus changing the weather for example.

But can you say that the weather is random?Hell no because you can measure the wind and other climate factors, so how can it be random, it doesnt come out from a global dice or a galactic roulette machine , it is just physics.

But the unexpected factor makes it uncertain and hard to predict, but not, not in any way random.

The same with the market, unexpected stuff happen, but usually it will be resolved the same way than the previous 999999999999 unexpected stuff.
"There's a sucker born every minute" - P.T. Barnum
Quoting GEfx
This discussion is frustrating me, so let me summarize in this way: I can't tell you where the market will be priced at the end of the day, nor at the end of the month, so that makes the market random; I can't tell you what the next tick will be (ie, a buy or sell), so that makes the market random; and I can't tell you with 100% certainty if the market will go up or down today or in the next 4 hours, so that makes the market random. But, I made over 335 pips on the GBP/$ over the last 24 hours, by building a position that consisted of up to 6 trades,...
Again with the risk of repeating myself: random and unpredictable are independent concepts.
No greed. No fear. Just maths.
Quoting PipMeUp
BTW guys if the market isn't random for you what's the point in predicting something you already know?
If you are good at something, never do it for free--Joker
For me the forex "market" is defined as the "the accumulation of all prices (current and past) of a currency pair". Now having said that...the most important fundamental aspect of the "market" and the guiding principle behind my 4-year-old strategy is this:

"It does not matter whether the market is actually random or not...but the trader must treat the market as if it is random."

You can use indicators, price action, order flow, trend lines, fibs, r/s, etc to define whether the market is trending or consolidating or oversold or overbought or ranging or whatever market condition terminology you want to use. However, to make long-term, consistent profits, you must remember that the current and past market conditions have very little to do with what will happen in the future.

I'm sure there are traders who do not agree with this and have the exact opposite view of the market. That's perfectly fine...there are many different ways to be profitable trading forex. I can only say what has worked for me over 1000s of trades.
Although Yellen has emphasized the economy isn’t meeting the Fed’s goals, the markets recovered from yesterday's decline.
It's always the same thing, on Fed's days, buy buy buy....
.............................................
http://silvatradingen.wordpress.com/
"It is not enough to have a good mind. The main thing is to use it well." (Rene Descartes)
Quoting zznbrm
For me the forex "market" is defined as the "the accumulation of all prices (current and past) of a currency pair". Now having said that...the most important fundamental aspect of the "market" and the guiding principle behind my 4-year-old strategy is this: "It does not matter whether the market is actually random or not...but the trader must treat the market as if it is random." You can use indicators, price action, order flow, trend lines, fibs, r/s, etc to define whether the market is trending or consolidating or oversold or overbought or ranging...
yes... the correlation between future events and current available information is close to zero i.e. randomness.
Build good relationships with others.
Quoting shellsnail
{quote} yes... the correlation between future events and current available information is close to zero i.e. randomness.

No man, this statement went to far. That is one crazy statement to make. The market is moved by buying and selling, and by definition price always lags buying and selling. So that statement of yours is wrong all kinda ways.
Being a trader is lonely, but being a great trader is lonelier still
Quoting PipMeUp
{quote} Because the hypothesis "market is random" holds thus far. If you don't quantify you don't estimate the risk. What is the english word already for "risking money against the odds on an uncertain event?"
What about a subjective/skill-based edge? i.e. a fundamental based trade or discretionary trader. Trading as a performance skill. The only way to quantify such an edge is to show that the trader performs better than random entries and to use the traders' results as a gauge. You can't backtest or observe data because their edge cannot be expressed in words or formulas. Ever considered developing a skill for trading in this manner?
Build good relationships with others.
Quoting PipMeUp
Black swan?! {image}
http://blogs.wsj.com/japanrealtime/2...ance-by-a-yen/

LOL - aptly sums up what is about to happen to the yen pairs.
Attached Image
Build good relationships with others.
Quoting PipMeUp
{quote} Because the hypothesis "market is random" holds thus far. If you don't quantify you don't estimate the risk. What is the english word already for "risking money against the odds on an uncertain event?"
Does the hypothesis hold really?

For example here is one from Osler (I really like this one)
http://people.brandeis.edu/~cosler/d...s%20Orders.pdf

Here is a book that every random walk advocate should also read
https://is.muni.cz/el/1456/jaro2009/...MacKinlay_.pdf
Quoting PipMeUp
{quote} Again with the risk of repeating myself: random and unpredictable are independent concepts.
Yes they are, but in this discussion, they go together like hand and glove. These three things go together: random, unpredictable, and gambling. These three things go together, too: not random, predictable, and trading. Of course, both sets factor in statistical factors.
random walk hypothesis is a financial theory, It is consistent with the efficient-market hypothesis.

The Misbehavior of Commodity Futures Prices, D.L. Jones, Commodities Magazine (now Futures Magazine), August 1974.

Summary: Teweles, Harlow and Stone, authors of The Commodity Futures Game, McGraw Hill, 1974, voiced the efficient market hypothesis in an article. We pointed out that 'noise' or random fluctuation makes measurement difficult. Furthermore, a single counter example can disprove a hypothesis. The disproof we cited is the article on persistence of trends in our 1973 publication.


Persistence of Trends at Contract Highs and Lows, D.L. Jones, Commodities Magazine, (now Futures Magazine) Feb 1973.

Summary: This research on market continuation shows that a new life-of- contract high in a mature contract (60 days of trading) will be followed by a yet higher high within the next ten days 82% of the time. The probablility of two higher highs is 62% and three higher highs within the next ten days has a 46% probability. The same is true of new lows. This study refutes the efficient market hypothesis. If the future is (statistically) predictable as shown at new highs/lows, it is clear that the information driving the market is not instantly assimulated. This study is the first experimental refutation of the efficient market hypothesis known to the author.
Markets are not efficient, rather they are effective - Jones
Quoting GEfx
{quote} Yes they are, but in this discussion, they go together like hand and glove. These three things go together: random, unpredictable, and gambling. These three things go together, too: not random, predictable, and trading. Of course, both sets factor in statistical factors.
If your trading is predictable why do you lose? surely you would win every trade?
tradewith60
Quoting zznbrm
For me the forex "market" is defined as the "the accumulation of all prices (current and past) of a currency pair". Now having said that...the most important fundamental aspect of the "market" and the guiding principle behind my 4-year-old strategy is this: "It does not matter whether the market is actually random or not...but the trader must treat the market as if it is random." You can use indicators, price action, order flow, trend lines, fibs, r/s, etc to define whether the market is trending or consolidating or oversold or overbought or ranging...
agree 100%, nice post
tradewith60
Quoting GEfx
{quote} Yes they are, but in this discussion, they go together like hand and glove. These three things go together: random, unpredictable, and gambling. These three things go together, too: not random, predictable, and trading. Of course, both sets factor in statistical factors.
I have to agree with GEfx's semantic interpretation/connection of the 3 terms. That's how I use them too.
"To hold, you must first open your hand. Let go." - Lao Tzu
Quoting 60minuteman
{quote} If your trading is predictable why do you lose? surely you would win every trade?
Trading involves making statistically significant predictions. I lack the perfect information required for certainty of perfection. But, that's not very important.
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