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Forex Dream Chasers - The 90% rule of randomness

  • #121
  • Jun 15, 2015 7:39am Jun 15, 2015 7:39am
Just want to say that nowhere here has GoBigFx said that making money on Forex is impossible. The 10/20/30% (whatever the exact %, wouldn't count on 90/10 being correct without empirical evidence) of the time where market direction isn't random is where market direction is determined and what you need to be looking/prepared for. Those 10/20/30% are plenty enough to determine trends and make money if you have the stone-hearted patience to not move when conditions are not right and price is simply accumulating orders.
  • #122
  • Jun 15, 2015 7:44am Jun 15, 2015 7:44am
Quoting alexpi
Just want to say that nowhere here has GoBigFx said that making money on Forex is impossible. The 10/20/30% (whatever the exact %, wouldn't count on 90/10 being correct without empirical evidence) of the time where market direction isn't random is where market direction is determined and what you need to be looking/prepared for. Those 10/20/30% are plenty enough to determine trends and make money if you have the stone-hearted patience to not move when conditions are not right and price is simply accumulating orders.
Another intelligent man that is on his way to millions
  • #123
  • Jun 15, 2015 7:49am Jun 15, 2015 7:49am
Quoting Gobigfx
{quote} Another intelligent man that is on his way to millions
I'm still lacking too much in the patience department for that.

The thing is Davit, Fx-Ray, for sure, and many others posting here, most likely, are traders who realize this and trade with patience, looking for the right time to enter while waiting patiently during the noise. They're also profitable because of that.

It's your way of saying things that turns people against you. Though I'm guessing you know this, given how purposefully provocative every one of your posts is.
  • #124
  • Jun 15, 2015 8:00am Jun 15, 2015 8:00am
I'm more into the idea that the market is an entity created by the 1% of population that has the 90% of wealth in the world. I don't believe pure randomness rules the market, how would they keep profiting of the market but I have to admit that this 1% of people disagree sometimes on how to profit and then we see the jolts in the price action.

I work in an IT company for a living and I have 2 clients, 2 small hedge funds and neither of them believe the market is purely random but they agree that it's impossible to 100% predict price movement.

On the flip side take for example the spiral shape within a sea shell, the Fibonacci sequence. The crustaceous was born and within its genes there was the map to build the shell and as the animal grew and grew the spiral shape in the shell developed based on the Fibonacci sequence, random, yes, based on a gene map, yes.

Take another example, how healthy cells mutate become cancer and start spreading aggressively, this is another example of randomness, where's the cancer going to appear, where's it going to spread and how but there's a chain of events that trigger this and how the disease find its own path within the body.

What I want to get at is, I don't believe the market is purely random, maybe that's not how it can be defined, I would define it as unpredictability within boundaries and in control of a few and there are definitely signs, cues as to what they're going to do next. Please have a read to the PVSRA thread created by Traderathome for a more detailed explanation as to the signs and cues.
  • #125
  • Jun 15, 2015 8:01am Jun 15, 2015 8:01am
Quoting Gobigfx
Monday Morning Update There was a very good opportunity to go Long the AUDUSD at 2:30 am EST pretty much impossible for US traders and even London traders to get into. I don't have any good level for a Long yet on the GBPUSD I would like prices about 40 to 50 pips lower before buying it.
This trading opportunity was visible from fridays market movements, question is were you observing this potential buy opportunity and did you have a
plan ready to execute it ? This is prediction vs. waiting for a reaction.
It never gets easier, you just get better
  • #126
  • Jun 15, 2015 8:01am Jun 15, 2015 8:01am
Quoting Gobigfx
{quote} It's nice to see intelligent people in this thread Once we understand the true randomness of price then we can "start" to construct models and assumptions to exploit the randomness because as you clearly read from my posts the randomness has "some" structure to it ... congratulations sir you are on your way to millions. The problem with most traders is they are spending too much time looking at the randomness of the market when in fact the meat of the trading is to watch the Non Random times because that is where we shall find clarity....
Gobigfx,

That is what I have been doing too, finding a way to exploit the randomness. I have found that turning the normal time-based charts into renko charts makes my analyses easier. I then tried everything, every single possible candle-by-candle tests in order to find a pattern which could exploit randomness. I failed. The best I could do it breakeven. The reason behind this is the probability of each candle movement in a direction is 50-50, therefore, in the long run, you will breakeven. I have also found that if you apply some filters, you will be slightly profitable, not that much.
  • #127
  • Jun 15, 2015 8:02am Jun 15, 2015 8:02am
Quoting alexpi
{quote} I'm still lacking too much in the patience department for that. The thing is Davit, Fx-Ray, for sure, and many others posting here, most likely, are traders who realize this and trade with patience, looking for the right time to enter while waiting patiently during the noise. They're also profitable because of that. It's your way of saying things that turns people against you. Though I'm guessing you know this, given how purposefully provocative every one of your posts is.
LOL

Yes well I think I've seen too much fluff and heavy sales pitches from brokers and people selling the Dream its time for some hard core reality.

What happens if someone wishes to become a professional doctor? Do you have a thousand people all telling them its easy and no problem just give me your $$$ ?

No you have the whole world telling you its 7 years of university and even after you graduate your going to need hundreds of thousands to set up a private practice and another 7 years to build it up.

Reality Sucks sometimes but its still Reality.
  • #128
  • Jun 15, 2015 8:04am Jun 15, 2015 8:04am
Quoting Gobigfx
{quote} LOL Yes well I think I've seen too much fluff and heavy sales pitches from brokers and people selling the Dream its time for some hard core reality. What happens if someone wishes to become a professional doctor? Do you have a thousand people all telling them its easy and no problem just give me your $$$ ? No you have the whole world telling you its 7 years of university and even after you graduate your going to need hundreds of thousands to set up a private practice and another 7 years to build it up. Reality Sucks sometimes but its still...
Fair enough, especially the doctor analogy

It's especially amusing how many ads there are that say something along the lines "make money easily by trading on the financial markets". Crack me up every time

It's 2015 and this strategy clearly still brings in cash, given how many ads like that there are
  • #129
  • Jun 15, 2015 8:09am Jun 15, 2015 8:09am
Quoting Shabs19
{quote} This trading opportunity was visible from fridays market movements, question is were you observing this potential buy opportunity and did you have a plan ready to execute it ? This is prediction vs. waiting for a reaction.
Yes I was predicting the market imbalances from the institutional orders would continue into today that is correct but I was predicting that the non random behavior would continue I had no actual evidence until after it did.

What I knew was that I sure do not want to be in a Random market because then their is no edge at all until it becomes non random and imbalanced and then and only then can I plan to exploit the hopeful continuation of imbalance.

I can never see the accumulations of all the orders hitting the market from all different directions or for that matter any new orders that will be decided upon in a 10 billion dollar fund "this morning in the next 15 minutes" all we can do is figure out what has happened and assume it will continue and use Money Management to protect us when we are incorrect and randomness resumes.
  • #130
  • Jun 15, 2015 8:19am Jun 15, 2015 8:19am
Quoting Davit
{quote} This goes against the very idea of a TREND!If price is random how did we get EU from 139 to 105 Random?True if you trading 1-5min charts but not true H4 daily weekly.I disagree with your entire outlook. Many examples of strong trends like AN AU NU GN GA EN EA etc list goes on. {image}
I'd say looking at higher tf isn't the way to go. People tend to forget that the lower tf gives birth to what we see on the higher tf. The randoness which the OP refers to can easily be seen on the lower tf.
Men lie, women lie, the numbers don't.
  • #131
  • Jun 15, 2015 8:29am Jun 15, 2015 8:29am
Quoting superblack
{quote} Gobigfx, That is what I have been doing too, finding a way to exploit the randomness. I have found that turning the normal time-based charts into renko charts makes my analyses easier. I then tried everything, every single possible candle-by-candle tests in order to find a pattern which could exploit randomness. I failed. The best I could do it breakeven. The reason behind this is the probability of each candle movement in a direction is 50-50, therefore, in the long run, you will breakeven. I have also found that if you apply some filters,...


Good thats a good start your exploring possibilities.

There is always some sort of rules that Random must follow for example we know the universe is random in its expansion but we don't see square planets right ?

The market is a random bunch of ORDERS all interacting with each other and tens of thousands of participants all with varying objectives and most importantly differing time frames on those objectives.

The Rules of the Randomness are what we need to focus on because orders must be placed in specific ways through specific channels of executions so what I described earlier about what we do at an institution to fill those orders is vital because it gives us the Rules of Randomness.

So lets explore those Rules

1. Large Corporations place orders in the currency Exchange market to either hedge their "potential" profits or make new profits. It is done in the form of a forward contract and given to a trader sitting on a desk who is charged with its best execution and fills. If that trader does a good job and gets the clients good fills he and his company get bonuses beyond the commissions charged.

2. These traders can not become the market so they must fill those orders very carefully to not slip prices away from them too far and not receive the bonus.

3. in this whole process the market will find an equilibrium point where the net price range will balance between net buyers and net sellers.

This is were we see so called Trends or Price Congestion Zones its just the accumulations of the NET but whats really important to understand is we don't know for how long the NET orders will continue to be NET in the existing outcome it is producing right ?

4. New information that comes into the market will effect the existing NET outcomes and shift the motivation of the existing still unfilled orders as well as NEW orders from the new information will cause the market to become out of balance and MOVE in the now Non Random direction by the new information.

5. Once the new information is now either A. adjusted to the expectations of the information or B. Continuing new orders keep hitting the market and a new move continues this is where we find our pot of gold.

We wait and we watch we do not know the answers YET.

Again I am talking in terms of "The Big Picture" you must understand and accept this reality first before we can make money from it.
  • #132
  • Jun 15, 2015 8:59am Jun 15, 2015 8:59am
Someone prior hit it right on the head when they said that we should focus on the non random parts. Simply look at how many people trade the higher TF, and you will notice that they take positions prior to a bar being closed. In other words, you could be looking at a weekly chart, but if you open a trade prior to it closing, then you are trading the most random of random tf's which is the tick charts.
The market HAS to have a non random moment, in which the last trend gets reversed, but many people are more focused on their personal prices being hit, then simply awaiting for the non random structure to be confirmed, that they lead to massive pip-drawdowns, which of course, leads to "stop hunts" "over-bought" "over-sold" chants.
I would say that if we focus on the lower tf, we should be able to weed out the "randomness" and focus on that one candle which sets off the 30-50 pip run.
Men lie, women lie, the numbers don't.
  • #133
  • Jun 15, 2015 8:59am Jun 15, 2015 8:59am
Trade update AUDUSD

I did not get this trade but if I had I would take profits here as it looks like the imbalances are now becoming random again for now.
  • #134
  • Jun 15, 2015 9:46am Jun 15, 2015 9:46am
Quoting Mingary
The price action is random --- until it's not. Most of the time there is a random "drift" component and sometime there is a reaction component. for example gold June 15, 2015 07:40 GMT 1 minute chart Why did the price turn at around 1181.45 ? Not random. Buy orders coming in ... {image} {image}
You can learn a lot from this guy. Spot on! Good work Mingary.
  • #135
  • Jun 15, 2015 10:44am Jun 15, 2015 10:44am
Quoting Gobigfx
Trade update AUDUSD I did not get this trade but if I had I would take profits here as it looks like the imbalances are now becoming random again for now.
It was a nice one:
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  • #136
  • Jun 15, 2015 11:14am Jun 15, 2015 11:14am
Quoting erod84
{quote} You can learn a lot from this guy. Spot on! Good work Mingary.
It is always easy to judge or set rules once an event has occurred. The problem is being able to see the non-random moves and take the trades. The randomness of the market, is set to cause confusion, and allow us to ignore the non-random events thus leaving us holding the bag.
Think about how many times you see a 60 pip move on a pair that occurs within say an hour, not during high impact news. You will notice that the move is very clean without any choppy movement. The start of that move had to begin with an engulf. This making that engulf not random, but how can you identify that engulf as not random when it occurs.... That is the million dollar question.
Men lie, women lie, the numbers don't.
  • #137
  • Jun 15, 2015 4:26pm Jun 15, 2015 4:26pm
I don't understand why it's not possible to profit in any market... even if it is random.
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  • #138
  • Jun 15, 2015 4:32pm Jun 15, 2015 4:32pm
Quoting atheer1
Read this please: {image}
It is a good article. Thanks for sharing!
Trading is the hardest way to make easy money...
  • #139
  • Jun 15, 2015 4:39pm Jun 15, 2015 4:39pm
Quoting Cubbybgood
I don't understand why it's not possible to profit in any market... even if it is random. {image}
The issue with Randomness, especially with profiting from it lies with the fact that if you profit from randomness, you can also lose money from it. Example.... If you have a bias to the sell side, and all of a sudden EU spikes 120 pips in 5 mins, you are more likely to open a sell due to the spike because of the "randomness" of the spike even if it wasn't caused by a PR. The reality is you can profit from it, but taking those trades goes against the non-randomness of the market, which has to do with the law of "extension,reversal, and accumulation".

I, for one, am working on trying to identify those non - random movements, and although you can clearly see it on the lower tf, the reality is you have to sit on your hands in order to trade those patters.
Men lie, women lie, the numbers don't.
  • #140
  • Jun 15, 2015 5:16pm Jun 15, 2015 5:16pm
Quoting Gobigfx
{quote}
4. New information that comes into the market will effect the existing NET outcomes and shift the motivation of the existing still unfilled orders as well as NEW orders from the new information will cause the market to become out of balance and MOVE in the now Non Random direction by the new information.
5. Once the new information is now either A. adjusted to the expectations of the information or B. Continuing new orders keep hitting the market and a new move continues this is where we find our pot of gold. We wait and we watch we do not...
'like it... I call these times decision points, i.e. initial move because of point 4 above...then pause... here's where you trade. Trade the decision points and point 5 eventuates... This is the vertical move where you make your money, the rest of the time the market is just washing around absorbing people's beliefs/predictions, random noise call it whatever you want. It's not a market I want to be in.
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