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Random vs Predictable

  • Poll

  • Is forex random or predictable?
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  • #1
  • First Post: Edited 7:16am Mar 4, 2015 3:34am | Edited 7:16am
This discussion of forex being a random market or not has been going on for years; there are parties that say forex is completely random while there are some that are saying there is at least a part of forex that is predictable. I am trying not to take sides in this matter but my opinion is, and has been said before by others, probably more smart than me, but is ignored by many, that forex is both those things; it has the predictable part and it has the random part.
When i started trading forex for the first time i believed there is some sort of secret indicator that would make me an excellent trader from the beginner that i was. I was trying to find ways to predict the price movements to the very pip and very important turning points.

PS. I have found how to attach a poll. Votes are not public.
PPS. Posting is restricted to minimum low impact members. Looks like my setting was not saved but i'm going to leave it like this so everyone can post i see even new members like me have interesting point of views.
  • #2
  • Mar 4, 2015 3:55am Mar 4, 2015 3:55am
Do you think it is possible that someone could predict major turning points with at least a few minutes before they appear on the time scale not the price scale?
Do you think it is easier to predict the time of a turning point or the price?
  • #3
  • Mar 4, 2015 6:30am Mar 4, 2015 6:30am
It's both for sure . Sometimes you can use logic to predict the direction of a pair and sometimes Forex just fucks the logic . Especially EUR/USD
  • #4
  • Mar 4, 2015 6:31am Mar 4, 2015 6:31am
Quoting mark72
there are some that are saying there is at least a part of forex that is predictable. I am trying not to take sides in this matter

Why not? Isn't it self-evident that if there were no predictability at all, there also wouldn't be people consistently making their living for decades by trading forex? Why would companies like Goldman Sachs be paying their most successful forex-traders all those 7-figure bonuses for their consistently successful forex trading, if there were no predictability at all?

They need only a very small degree of predictability to make a living: just enough to give them a tiny edge.

When you look at all the money the worldwide casino industry makes from roulette, with an edge of typically under 3% in their favor, overall, that shouldn't surprise anyone, should it?

Quoting mark72
forex is both those things; it has the predictable part and it has the random part.
Of course.

Nobody is suggesting that it's 100% predictable.

Even if it's 2-3% predictable, that's enough to make a steady living from it. The facts demonstrate this, irrefutably.
  • #5
  • Mar 4, 2015 7:05am Mar 4, 2015 7:05am
It is not predictable 100% of the time of course, thats why you don't trade when it is not....most traders can make money during the predictable times..the difference between good traders and the ones that lose all their money is, a good trader stops trading during the unpredictable periods....patience and knowing what you are looking for to find predictable markets is the key
  • #6
  • Mar 4, 2015 7:21am Mar 4, 2015 7:21am
Very interesting point of views until now; i see that we have no votes with the random side of the story so i believe that to be a good thing. I also think that nobody can predict 100% of the time what the price is going to do and i believe it is very predictable a good portion of the time. I do not trade during news half the time; the other half i do pick up good pips on the way.
  • #7
  • Mar 4, 2015 12:07pm Mar 4, 2015 12:07pm
it's definitely both - at times one can have total razor sharp clarity and focus when they are positive in things like trend and economic data etc.. and at other times the market shakes and distorts that clarity by switching gears and moving against.

say you know trend is down and you do all your calculations and wave counts fibo's etc... but sometimes those waves can go longer then you thought - that's the randomness - similar to using fibo level - you can enter a trade based on a level that in past looks to be true but the level you enter at is stretched lower/higher then past has shown yet you are correct in your direction, wave counts etc but the randomness cause it to peep above that level - is that to say that fibo was wrong? or is that to say that water flowed over the rock instead of around it?

that sounded so cheesy
  • #8
  • Mar 4, 2015 1:24pm Mar 4, 2015 1:24pm
Random is not the opposite of predictable.
Attached File(s)
File Type: xlsx random_is_not_the_opposite_of_predictable.xlsx   29 KB | 638 downloads
No greed. No fear. Just maths.
  • #9
  • Mar 5, 2015 3:40am Mar 5, 2015 3:40am
I look at resistance levels and fibs alike; they are too rigid for trading forex; you need not to look back in history and identify levels that already happened because the market is always changing and is in the same time the same since its birth.
I do not use fib because it was not thinked to be traded the way it is today even if some have good results with it; i use dynamic levels but this is not a discussion to be into. I like the water comparison with the market; bruce lee must be really proud now
  • #10
  • Mar 5, 2015 3:42am Mar 5, 2015 3:42am
Quoting hals12
It's both for sure . Sometimes you can use logic to predict the direction of a pair and sometimes Forex just fucks the logic . Especially EUR/USD
it's both for sure; sometimes the price moves with no obvious reason; i find eur/usd to be one of the pairs i like due to volatility; even eur/usd is quite predictble for me as any other pair.
  • #11
  • Mar 5, 2015 5:04am Mar 5, 2015 5:04am
Quoting mark72
{quote} it's both for sure; sometimes the price moves with no obvious reason; i find eur/usd to be one of the pairs i like due to volatility; even eur/usd is quite predictble for me as any other pair.
Yeah I agree . I find EUR/USD the easiest one to "predict" and has pretty nice volatility
  • #12
  • Mar 5, 2015 6:47am Mar 5, 2015 6:47am
The answer really is as obvious as; it depends how good you are as to how random or predictable the market is (for you). And that's the point in this it's not really about the market itself, it's about the traders interpretation/ understanding of that market. How can the market itself be random when it is unarguably controlled at all times by the price mechanism of supply and demand, manipulated or not.

What about being able to predict accurately when the market is random (to you)? Really that's the goal.
  • #13
  • Mar 5, 2015 6:58am Mar 5, 2015 6:58am
There is nothing random in the price action. There are patterns, trends and major moves. Of course there is always some noise here and there, but if you say the price is random then I'm afraid you'll have a very hard time in trading.
  • #14
  • Mar 5, 2015 7:21am Mar 5, 2015 7:21am
Quoting emanco
There is nothing random in the price action. There are patterns, trends and major moves. Of course there is always some noise here and there, but if you say the price is random then I'm afraid you'll have a very hard time in trading.
Personaly i do not believe the market is random, quite the opposite; i want to engage in a conversation about the random and predictable parts of the market and is also very good for new traders to read opinions in this matter because many believe the market is completely random which is not true in my belief.
I could say that turning points can be predicted and i know that many will say this is not possible; even so i do not base my trading on these predictions. Really i wanted to see if there is someoneelse that found a way of predicting turning points on the time scale and not price scale based on fibs or levels of resistance.
I am glad to see the majority of the votes are for 'both' and just a few for the 'random'.
  • #15
  • Mar 11, 2015 1:35pm Mar 11, 2015 1:35pm
Do u mind explaining more on the predictability of price cycles?

Are pi involved???
I only know I know nothing
  • #16
  • Mar 11, 2015 2:04pm Mar 11, 2015 2:04pm
Of course Forex isn't random. Forex is a market, the same as any other market in the world. It works on supply and demand. When there is more demand than supply, the currency will appreciate in value, and when there is more supply than demand, the currency will depreciate in value.

We can predict this based on information from the central bank and economic indicators, as well as relating to other markets such as commodities. If we know that the Fed is looking to raise rates, which is what's happening now, and we have some good data both forecast and released, then that currency is going to appreciate. If we then know a central bank has started QE which is essential printing money, and interest rates are low with no possibility of them rising, that currency will depreciate.

That's why EUR/USD has dropped right from the middle of 2014, and why it's so predictable. In fact, looking at these reasons why the market moves, you can predict virtually every move there is...
  • #17
  • Mar 11, 2015 2:17pm Mar 11, 2015 2:17pm
Quoting LearnAlways
Do u mind explaining more on the predictability of price cycles? Are pi involved???
Follow my other thread here for your questions; the cycles are a very important trading subject that i will talk about next.
http://www.forexfactory.com/showthread.php?t=529911
  • #18
  • Edited 4:03am Mar 12, 2015 3:46am | Edited 4:03am
Quoting mark72
I look at resistance levels and fibs alike...
A lot of traders focus on resistance, fibs etc. They focus on some points they need to see, easy to see. Eyes and brain need landmarks to make a decision, to rationalised their trades. Thats normal and good.
But what if, if you focus on nowhere lands... thats probably the most predictable area cause "inside the trend".

Never read about that here on ff or in books: What do you think?
Bottomless wonders spring from simple rules, which are repeated without end
  • #19
  • Mar 12, 2015 4:38am Mar 12, 2015 4:38am
Quoting limprobable
{quote} A lot of traders focus on resistance, fibs etc. They focus on some points they need to see, easy to see. Eyes and brain need landmarks to make a decision, to rationalised their trades. Thats normal and good. But what if, if you focus on nowhere lands... thats probably the most predictable area cause "inside the trend". Never read about that here on ff or in books: What do you think?
And you probably will not see it until the market changes, that being never, and it will be safe for them big banks to release to the public; you are so irrational when saying a trader should focus on small and not so obvious things when resistance or indicators paint such a pretty image on charts.
  • #20
  • Edited 6:16am Mar 12, 2015 5:24am | Edited 6:16am
Quoting mark72
{quote} And you probably will not see it until the market changes, that being never, and it will be safe for them big banks to release to the public; you are so irrational when saying a trader should focus on small and not so obvious things when resistance or indicators paint such a pretty image on charts.
The point is to define the nowhere land.

Nowhere is always somewhere on a graph.

This chart is better than any words:

Attached Image (click to enlarge)
Click to Enlarge Name: XAUUSDH1ff.jpg Size: 353 KB


This is basic of course, and it is not how i really trade, but i can say that every sell trade in nowhere land is a winner, is inside the trend. Here i dont trade support or resistance, i dont need a x% of fibo or a macd or any indicator to decide when or why to enter a trade...
Here i just need a simple sma which distance is quite away from resitance to trade, which is precisely nowhere, and sell anywhere in nowhere land to win.

The sma is for explanation. But you dont need it. You dont need any indicator except your eyes.

According to me, the market is not sometimes prdictably, sometimes random cause there is an up and down trend at the same time (on different time fame, and inside the same timeframe), the market is at the same time predictably and random.

Sorry for my awfull english, i cant developp or be more clearer because of language.

Take any point in nowhere land, in the middle, means a point that no indicators can show you, and see what you can do with it... the stucture of markets is more important to understand than any indicators (Thats why your other thread is very interesting). Indicators indicate some points of the structure, just some points, in one space-time. Thats why when you start trading, sometimes you feel like they perform well, sometimes you feel that they dont works. its why sometimes you think market is preditable, and sometimes is random.

Anyway, this is my point of view, and you can have different view and even an opposite view and can be profitable. Thats not my point. Every trader must find this own way to trade.
Bottomless wonders spring from simple rules, which are repeated without end
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