Is random really random?

I was bored a bit and looking around on youtube, i found a new video from one of my favorite youtubber, Vsauce.

This video is interesting and explains a lot about random theory.

It also says about coin flip theory, that some scientists have built a robot that can flip the coin 100% at the disred side.

Here is the video:





So is the market really random??

It's always comforting to find people (in this case, the presenters in the video) who think similarly to the way that I do.

No its not, get over it already guys.

makes an interesting point though - future price has nothing to do with what happened before and everything to do with what is happening right now.... where does that leave technical analysis?

IMO Fudomyo sums up the pros and cons of TA very well here and here.

I will say even though I am a "heavy believer in market is random"..the video does prove a point on random can be predicted (bias) if the condition is happen all the same time exactly to the "molecule"....

The video also say people themselves is random. So result, forex is play by million of people everyone have "a different brain, with different poor/rich life scenario..." it's impossible for everyone to same which why the market does not up and down in a straight "horizontal channel".

You would think everyone who learn the same stuff like price action pattern.. yet there is still enough people in this world who still sell a double/tripple bottom ...
to make buyer lose...

With that said, The market is STILL RANDOM, because YOU can't control... million of people to follow your way that would lead to the result you desire.

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Probably never going to happen but I figure I should say it at least one time:

I want to be rich by only buying DOUBLE double bottom/ triple bottom so I want "everyone in the WORLD to read this and FOLLOW" because by following "MY way, you will only need to bet the farm 10 time per year and live a rich life because it's a 100% sure direction if the world all think and act the same. Aren't you all tired of the market going against you every time? It's about time the FOREX WORLD decide on a 100% SURE WIN Pattern? It's definitely possible if we all agree to it.


Since I am so nice, I will give you a sure win Pattern that EVERYONE MUST agree to do ...
"When ever the government declare, they will print billion$ in the x month" You all agree the money value is decrease. Result.. sell the printing country's money..

If we all can agree on printing money is devalue... then why can't the we/the WORLD decide on an absolute 100% win pattern because we move the market by our action...

And that is the million dollar question 60, what is now? How do you quantify now? that can mean different things depending on what came before, in a News Event I can assure that what happen "now" can't do a thing about what took place "in the past" whether that be 30 minutes ago or not. Heck a news event can affect the market for months, and a news event by nature is always in the "past". So the idea that what happen in the past cannot affect the market is just crazy.

I understand why some people say that the market is random because the circumstances for any trade even though they may appear the same couldn't be more far from the truth. I can tell you that a signal has a better chance of succeeding if a currency is not causes opposite forces on the unit that it is being compared against. For instant if the EUR is bought against the USD and at the same time another currency is sold against the USD at about the same rate, then your trade is going to cancelled out, and the EUR is not going to gain againt the USD, simple as that. It is not rocket science and has nothing to do with candle patterns or any other "technical" methods employed. whether any trade fails or succeeds is because the market forces in the entire market were leaning more against one currency than the other that's all.

TA alone is not enough.

No, the market is anything but random. If you study the correct dimensions of market data (not all market data reveals the same things about repeatability), you will undoubtedly find that markets (especially the currency markets) are not structurally random in much that same way that you will find the structure of the universe to be fully randomized in its distribution of matter.

This brings up an important point that most traders never get around to asking themselves: What is a pattern? In order to see that the market is indeed not random, one has to first be able to define a "pattern." Patterns come in manner of configuration and their distribution is a dead give-a-way that repeatability is normative within the market itself.

Thus, the real question is not so much, is the market random - rather the top four (4) fundamental questions should be:

- What are the structural elements of the pattern being observed and how do I observe and qualify them?
- How uniformly distributed is the pattern through the Arrow of Time (how stable is the pattern through Time)?
- What is the historicity in the magnitude of the potential profitability of the pattern?
- What is the historicity of average maximum risk associated with the pattern?

As you can see, a real market pattern does have characteristics that are measurable and definable. However, patterns can often times be as difficult to find as symptoms of an ill running car. Without the proper diagnostic tools it can be difficult to pin point quality patterns that can be relied upon to a degree of unique certainty, making the dimensions of data that you analyze even more important.

Sure, quality patterns do exist, but they don't typically sprout legs and leap into your lap. You have to investigate the market, build tools of differential analysis, study good data dimensions that lead to quality discoveries and then qualify the integrity of the pattern for its true profit potential - always using the historicity of the data as the pivot point for reliability and trust. After that, you can then build a trading model (some people call them trading systems) predicated upon such research that complies with your own personal goals and objectives.

An illusion in your brain.There are no patterns in the market.

A real pattern in the forex market is an event, but the funny thing is, this event can happen almost anytime, and at almost any candle "pattern" that's why sometimes what think you see it not actually what is happening. And it's the reason why the "patterns" that many look for are nothing more than misinformation most of the times.

In quantum theory, there is little to no distinction found between "past," "present" and "future" events. Slice Time into ever decreasing increments and at some point the very definition of Time begins to change as it dissolves into the fabric of Space itself. So, the attempt to decouple "history" from the "present" and the "future," is just as hopeless as trying to decouple Space from Time. The creation of Space is not possible without Time as the carrier of sorts enabling the extension of Space [through Time].

Thus, in order for P (Price) to move anywhere, it must do so through the corridor of Time, linking its incremental movement to the past, present and the future, by definition.

One cannot decouple Time from Movement, as movement can only take place across the membrane of both Time and Distance. The idea of movement over any Distance without Time, is simply not possible. Distance requires the pre-existence of movement, which itself requires the pre-existence of Time. Space, Time, Distance, Movement are all coupled.

So, when you observe the movement of "P" from any point in Space and across any Distance, you are literally witnessing History unfolding and not future price movement.

The real mind numbing reality is that if you slice Time through enough cycles, you will find that there is no real Present and no real Future, only an extant History of events in Space. The only way to come close to observing this theoretical box of worms, is to start slicing Time into astronomically small units. At some point, Time will (theoretically) dissolve into Space itself, leaving just extant events in History. Thus, so-called "Time Travel" would more appropriately be called "Dimensional Travel." In other words, when you walked into Starbucks this morning and bought your cup of coffee with a Visa Card, that event still "exists" (remains extant), just inside another Dimension which you no longer have physical access to.

Start looking at "Dimensions of Data" (Space) instead of "Bars of Data" (Time) and your trading will take on a whole new meaning. You will start trading "events in space" (before the market knows) instead of "events in time" (after the market knows). That will put you on the event horizon of market moves seemingly as if to be some kind of savant, when in reality all you are doing is swapping space for time.

The Space you trade is the Pattern you observe. That is the key. Trade inside the Dimension of Space, which is always made identifiable with good robust Patterns: Has the market fulfilled its historically significant dimensional pattern?

Find a solidly repeating Pattern and you have found a Dimension in which to trade with a level of uncanny predictability. On a two dimensional chart, patterns in space take on specific Shapes. When you know the Pattern to look for, you know the Shape the market must make in order for it to exist in that particular Dimension (Space). The Shape of the Pattern has to be formed within the Space of the market.

Insert capital into a position where the Shape of the market has not yet been fully realized and then allow the Pattern enough Time to fully form itself. They will think you are a genius - don't let that go to your head. You are just a good observer of Shapes and Patterns in two Dimensional charts and you have the patience to allow those Shapes and Patterns enough Time to become History.

In fact, there are so many of them, you could spend lifetimes hunting them down. All you need is one (1) good Pattern with sufficient structural foundation and the rest will be "History," literally.

For a really good "edge," make sure your Pattern exists within a unique set of data that nobody else uses. You can build your own iCustom to do this, or you can take any Standard Indicator and layer it until you derive sufficient data points to analyze. Then all you have to do is find the correlation between your unique data points and real price. Residing between the two you will find the "Pattern." The best "Patterns" don't come directly off Price Charts, where everybody else is looking.

You have to develop the right set of "tools" for the job. Those tools reveal good "Patterns." Once you have the Shape of the Pattern, the rest is algorithm building for automating the process of trade execution. Or, manually trade it.

Personally, I trade Shapes, not Prices. Shapes are much bigger, highly visible (after you've done the homework on finding robust Patterns) and very predictable with a reasonable margin of risk. The Patterns are not perfect - they are not supposed to be and this is where people get it all wrong. They falsely conclude that a "Pattern" must be completely rigged and inflexible. Patterns are EXACTLY like Clouds in the sky in this one characteristic - they constantly move and their Shape changes with ever tick. However, if the Pattern has good core fundamentals then even when its overall Shape is constantly changing, there is still enough robustness in its structure to retain a high enough degree of probability and reliability.

The next time you witness a Cumulus Cloud in the sky passing overhead at 20kts, notice how its overall Shape is continuously changing, but its fundamental structure remains the same until it stops being a Cumulus Cloud. This is the underlying nature of the market and its predictability. You have to hunt for high probabilities while their Patterns are structurally valid - because they are always changing their Shape over Time and Distance. A good Technical Trader already knows this.

Depends also on the importance of the event.Lemme tell you 2 events and you tell me the difference between them:

1) Due to a landslide/earthquake a major australian gold mine just collapsed...investors are concerned over the effects of this on the gold markets
2) Australian new home sales went up 0.1% compared to previous month data

Which will have a greater impact on the spot-gold markets?

.....

If you answered 1) then you are correct.

Besides you dont have to predict these events, just be in touch with the latest news, and trade the aftermath

Study the Weather/Meteorolgy. You will find exactly what you just alluded to within the earth's atmosphere happening all the time someone on the planet's surface. Weak Cold Fronts or Occluded Fronts where a cold front overtakes a warm front produces many cloud patterns that are genuine clouds, but that do not have much stability. Those clouds will be rapidly changing their Shape. What you want are market Patterns that are the most resistant to changes in their Shape over Time.

Shape over Time. That's a big key. You are looking for the Shapes that stick around for a while, enabling you to get in and get out with the highest degree of probability for profit as possible. Thunderstorm conditions produce giant cloud formations. So, what produces Thunderstorms? Convective activity, moisture and heat. Those clouds stick around for a while. So, what would a Market Thunderstorm look like by definition?

And, there are all kinds of cloud types. The major formations:

Cumulus
Cirrus
Stratus
Stratocumulus
Cirrocumulus
Altocumulus
Altostratus
Cumulonimbus

They all look different and they all form for different reasons. Similarly, there are all kinds of Market Patterns that have specific Shapes which come about for different reasons associated with market conditions. But, just like the atmospheric cloud patterns, market patterns are constantly changing. For example, you typically find Cirrus clouds above 18,000ft and Stratus clouds below 6,000ft, while Cumulonimbus clouds can be found from near the ground to over 50,000ft.

The stability of the Market Pattern has everything to do with the causation behind its formation in the first place. You have to know what market you are trading by taking a close look at the Time Frames in all Dimensions of Time and understanding their respective Start and End points with respect to each other. This Universal Time Frame Coordinated understanding of the market should be REQUIRED study for every serious technical trader. In fact, I would not even consider myself a technical trader without developing good Time Frame Situational Awareness across ALL Dimensions of Data (all bars of data). This is tantamount to developing a good understanding of Weather Engines - what drives Weather Patterns. What drives Market Patterns. Without that understanding at a fundamental level, even seeing the Patterns will be difficult for most.

Cumulonimbus Clouds are being driven up to 50,000ft for a good reason. They don't just appear there without Causation. Likewise, a string of 4-6 D1 Time Frames don't just expand their ATR for 171 pips for no good reason in the middle of the Month. There was a Causation behind those 4-6 D1 Time Frames and their imminent expansion of ATR and it had to do with the fact that MN had to expand its ATR at some point in Time. Everything in trading begins and ends with the expansion of the Time Frame (M1, M5, M15, etc.). There is no market unless those Dimensions expand.

What a good Pattern trader does is figure out the links and relationships BETWEEN the Time Frame Dimensions and the Timing of their imminent expansion. Bingo! That's a Pattern. That Pattern had nothing to do with Direction (in this example) and everything to do with the Magnitude of expansion within the Time Frame itself. The rest is figuring out which type of "Cloud" (Pattern) you are dealing with (most probable direction based on expansion rates and expansion levels in all time frames) and then trading accordingly, paying attention to the structure and stability of the Pattern - allowing its Shape to take form over Time.

It is just plain common sense. There is an absolute 100% guarantee that every single Time Frame (bar of data) will expand at some point and to some predictable level within a certain range. If that fails to happen in ALL Time Frames, then the market has just stopped dead its tracks and if that happens in the Currency Markets, the last thing you need to be worried about is trading, because there is probably something far more important going on in the world at that point. This is WHY I like the currency markets - they just keep expanding their Time Frame Dimensions with a lot of reliability.

Multidimensional Analysis of all Time Frames is essential. If you are not doing that, then you really don't have good Situational Awareness of what the market is doing, which Time Frame is in the driver's seat and where the market is most likely headed "next."

I do find it's intersting some how in this world... "There seem too many people who know the news before it even publish out in online..." I alway feel like I am alway the last to know (aka price priced in). Even when it's clearly "economic calendar" stated 5 min more until news data release so either there is some B.S insider trading or I am just getting the short end of the stick everytime when it come to acquiring news before live release.

However the "aftermath" is also problem. Everyone know that during 2008 Market housing bubble crash.. It send the stockmarket, forex market down about 3,000 pip... for 3 month. I seriously would like to see a statement even "on demo is ok too"that some one in this world actually sucesfully ride/scalp most of the down there. It should be SO easy any sell at any bottom price would win ... (but that is not the case since there during the 3000 pip drop everyone is buying....eurusd. go figure even when the news is so obvious).

Even so if you find a temporary pattern which shows a real edge with positive expectancy trading it, you never know when those rules change.

Suppose the "morning star" pattern worked perfectly 50 years ago on the S&P 500, it predicted every single reversal for 5 years with 100% accuracy.But then something changed, the market became more volatile and whipsawy so after 5 years it's magic dissapeared like if it never worked.

But if you still trade it after 5 years, until you find out that its not working anymore you could potentially lose all your money finding this out, that which you earned during those 5 years of trading it.

But what if it never was a pattern, it was only an illusion, and that 5 years lucky years were only a lucky streak.

You see a random market can also produce a pattern which repeats itself, but its not actually a pattern its only a random structure which just happen to have a 5-6 sigma deviation event of repeating itself unusually many times with perfect accuracy.

After all if the market goes on to infinity all possible combinations of all possible prices could occur, its not a question of if,its a question of when?
So "morning stars" predicting price reversals consecutively 10 times in a row with perfect accuracy is just 10 random needles in the random haystack

The problem is that it was never a pattern, it only in your mind, it's like if a european tries to read chinese text, he sees only random pixels, while the chinese guy can extract information from those seemingly random pixels which make up that character.
But the fact remains that every picture/character/image/ or even price chart is just random if you look at it from your eye.

However if you dont look at the candles themselves but at the context, then it may have a meaning after all, but the fact remains that those doji or morning stars remain illusions in your brain.

All input to price movement give rise to all Patterns in existence. Pattern traders are Intra-Day Traders who while paying attention to the news are not absolutely driven by it. News Traders or Fundamental Traders care deeply about such "events." However, Pattern Traders already know that these events are part of the background noise produced by a lively market and are part of the inputs to the market that give rise to the Shapes in Price necessary to trade.

Every trader should be aware of pending news. The beautiful thing about currencies as opposed to equities is that equity prices are constantly hanging on the edge of a cliff, as no one knows when the next big "news" flash will come along to warp price patterns. Most price moving news comes with a date and time stamp in the currency markets, so traders can typically know ahead of time whether or not they wish to play Russian Roulette with their capital by hanging in a position on a report.

One of the primary reasons why I trade currencies is the early warning on reports and the relative rarity of such earth shaking news that blows a currency so far off its normative price behavior as to not be recoverable.

Well yes, the retailers have disadvantage on the news trading, since there are almost instant news feeds combined with high frequency traders which can trade any news with 1-2 milisecond delay maybe.While poor retailers have to suffer requote,broker platform freeze, huge spread widening, slippage/mispricing, both on enter, as on exit.

Then,there might be leakers who leak the CB data to big institutions before official release, but i think its rare as big institutions doesnt really need leakers or insiders to forecast the news.

Forcasting can be done legally and almost as efficiently as the CB does, there is really no need for insiders.Big institutions will calculate with the same methods the GDP,CPI or whatever as the CB does.

They spend millions of $$ to research the markets, every major bank has a department of market analysis, so by doing this they will almost always get the same numbers as the official release does.

So they research the markets, have their plans ahead of release then just put the orders a few seconds before the market jumps and bingo, go with the flow.

lots of theory and no proof... the research on TA has already been done.

And another thing, I dont need to develop any TA tools as trading intraday requires no TA.