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  • #21
  • Oct 31, 2015 9:16am Oct 31, 2015 9:16am
Quoting dkrock
EURJPY, since mentioned by Captain Jack. Another example of being sloppy all the way to the bank. Sure, only about 100 pips, but it is easy and everyday, so how much more do you need? Also, I trade 5M charts, so I need macro sloppy so I can do multiple charts all day long. Super easy if you just stop trying to be so precise. {image}
wow dkrock, you must be one of those millionaire traders they show on TV.

Great job making 100 pips everyday.
  • #22
  • Oct 31, 2015 9:23am Oct 31, 2015 9:23am
Quoting Atokys
Alright, time for a serious conversation on the subject. If we accept that price is random and the trends in price data are no different from the trends that may also occur in random data then people who profit from trading are simply lucky survivors of a random process. Some people are lucky to be born smart enough to realize that markets cannot be solved. Others are even smarter and were born lucky.
With all due respect, this is as serious to me as my wife's care. If the markets are random, why does it return to well know points like the fib ratio numbers? If it were indeed random, it may get "lucky" on occasion and hit one, but it returns at to high a rate for it to be a random occurrence. A random market would not act in that manner whatsoever.

IMO, "luck" is a concept used to explain away that which can not be explained by science.

-CJ-
A man is not defeated when he is beaten, he is defeated when he quits.
  • #23
  • Oct 31, 2015 9:41am Oct 31, 2015 9:41am
Quoting Captain Jack
If the markets are random, why does it return to well know points like the fib ratio numbers?
I don't know, im not the one making the assertion.
Quote
A random market would not act in that manner whatsoever.
Depends on how you define random.
Quote
IMO, "luck" is a concept used to explain away that which can not be explained by science.
Exactly.

The guy you should be furthering this discussion with is Redlion. Though I will say something in his defense; the ability to trade profitably is not sufficient to disprove his claim. Some profitable traders have claimed to use extraordinary methods in their trading. One such case involved receiving trade signals from outer space.
  • #24
  • Oct 31, 2015 9:47am Oct 31, 2015 9:47am
Quoting Atokys
{quote} Some profitable traders have claimed to use extraordinary methods in their trading. One such case involved receiving trade signals from outer space.
Hahaha! As could I, but I choose to truthfully explain the trading rational that is responsible for my results. Besides, I wear a tinfoil hat that blocks "those" signals!

-CJ-
A man is not defeated when he is beaten, he is defeated when he quits.
  • #25
  • Oct 31, 2015 9:56am Oct 31, 2015 9:56am
Markets are not random! They are continuous chaotic-reflexive process in which the market participants often act irrationally, based on insufficient information, and on their own biases and expectations, and thus creating random-looking result in the form price action.
Basically the market swings between 2 phases :
1. Negative feedback loop ( 70% and up to 90% of the time)
2. Positive feedback loop (often times can lead to bubbles and market flash crashes...)
"Reflexivity refers to circular relationships between cause and effect. A reflexive relationship is bidirectional with both the cause and the effect affecting one another in a relationship in which neither can be assigned as causes or effects."
"In economics, reflexivity refers to the self-reinforcing effect of market sentiment, whereby rising prices attract buyers whose actions drive prices higher still until the process becomes unsustainable and the same process operates in reverse leading to a catastrophic collapse in prices. This is an instance of a feedback loop."
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  • #26
  • Oct 31, 2015 9:56am Oct 31, 2015 9:56am
Quoting Captain Jack
{quote} Hahaha! As could I, but I choose to truthfully explain the trading rational that is responsible for my results. Besides, I wear a tinfoil hat that blocks "those" signals! -CJ-
I believe that guy was being truthful. Perhaps the unbelievability of his claim granted him an edge. If everybody exploited those signals then the system would cease to be profitable!
  • #27
  • Oct 31, 2015 10:02am Oct 31, 2015 10:02am
Quoting albchr
{quote} {quote} Well put folks. I would add it's basic human nature to make that which isn't understood complicated/complex. It's easier to accept our lack of understanding when we tell ourselves it's so hard. It gives us a pass to say "no way we can understand it" and thus releases us from taking the time and doing the work needed to figure it out. It's a comfort thing. IMHO, those who dedicate themselves to that work will inevitably find the work to figure out how easy something really is, was actually the hardest part.
Did Stephen Hawking not spend 30 years trying to find the answers to the Universe, to come up with "there is no answer?"
  • #28
  • Oct 31, 2015 10:09am Oct 31, 2015 10:09am
Quoting alphaomega
From very early age people learn to avoid risk and danger! Our whole society, and the education systems turns people into security/stability seekers. .

nice ! , this goes really deep! , there should be a whole new thread abbout that topic..

speaking of and covering ... mindfulness , stoicism , antifragility , thinking fast and slow , what makes the barin happy and why you should do the opposite ,6 pillars of selfesteem and the power of habit ....

the most fundamental subject one should work on , is the one of self-view, awareness and mind(-set)

back on topic..

Price fluctuations are chaotic yes , not random but chaotic , however the underlieng mechanics of transactions are not , the order executions are not random
they work in a pre set envoirnement according to the mechanics nature of the system and therefor are limited to these , ie.

if for example the market looks like this:



.........4 6
.........3 2
.........2 2
......1 1
-------------
BID PriceASK


and one Market BUY order with the size of 10 hits the market , it will consume the ask limit orders 2,2,6 all the way up to the price of 4
and by no means will this Market order by executed on any random manner ,.. and thats a fact

.........04 (12)
........6 3 (4)
(10) 8 2 (4)
........1 1
-------------
BID PriceASK


however, what may happen during this transaction or right afterwards is of course out of our reach , but we dont predict we anticipate anyhow..

  • #29
  • Oct 31, 2015 10:11am Oct 31, 2015 10:11am
Quoting Captain Jack
{quote} With all due respect, this is as serious to me as my wife's care. If the markets are random, why does it return to well know points like the fib ratio numbers? If it were indeed random, it may get "lucky" on occasion and hit one, but it returns at to high a rate for it to be a random occurrence. A random market would not act in that manner whatsoever. IMO, "luck" is a concept used to explain away that which can not be explained by science. -CJ-

30% gain Oct trading pivots and PA
Not random at all.Agree 100% Not demo.Last 3 months prior Oct above 30%
Attached Image (click to enlarge)
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In trading, you have to be defensive and aggressive at the same time
  • #30
  • Edited 10:42am Oct 31, 2015 10:12am | Edited 10:42am
Quoting the redlion
Good evening my fellow traders, I have been a student of the market since 2011 when I joined FF. The entire concept of investing, and obtaining profit through fluctuations in price movement has fascinated me. I have not been fortunate enough to blow accounts as many of you have, I enjoyed relative success in the markets earlier on which fueled my hubris. I erroneously surmised that observing charts, learning patterns, using some sort of money management system and discipline was responsible for my success. I have studied Technical Analysis tools...
Your tests definitely show that the market does not show linear correlations. The market indeed does not show first order autocorrelations and is virtually indistinguishable from random data when you look at simple statistical measurements like those you have carried out. However there are tests you can use to determine whether a time series is or is not random that are more involved than what you have just posted and target higher order autocorrelations and more complex associations. Just because you cannot negative the null hypothesis that the market is random with one test does not mean that you will not be able to negate it with all possible tests. There are all sorts of relationships that can make a market non-random, much more complex than simple first order autocorrelations.

If you evaluate for less trivial relationships you can certainly find out. I give you two examples. Look at Portmanteau tests for the determination of serial correlations. You can read more about how you can run these tests using R here. As you can read on that blog article (from one of my favorite FX blogs) you can say that the EUR/USD 1H charts are distinguishable from random walks with high confidence. Also look at other measures of randomness, such as entropy measurements. If you do this experiment with random data you will see that the level of entropy is much larger than for FX time series (at least many of them). You can negate the null hypothesis that the market is random using both portmanteau tests and entropy based tests.

There are many other tools that you can use to negate the null hypothesis that the market is random. You only need to prove that there is one way in which it is distinguishable from random time series (I have displayed two above) so that profitability and predictions become a possibility. However non-mathematical arguments are not useful, randomness is a clear mathematical concept and as such there are clear mathematical ways to analyze this and prove that the market is not random with a high confidence.
  • #31
  • Oct 31, 2015 10:15am Oct 31, 2015 10:15am
Waoo! This thread already got hijacked in less than 10 hours. Let's try nonetheless...

Redlion would you deduct of this picture that it is all randomness?
Attached Image (click to enlarge)
Click to Enlarge Name: analysis.png Size: 12 KB


This is the equation to generate the 1st picture:
0.0013t + 9²ε

Got it?
Attached Image
No greed. No fear. Just maths.
  • #32
  • Oct 31, 2015 10:16am Oct 31, 2015 10:16am
Quoting PipMeUp
Waoo! This thread already got hijacked in less than 10 hours. Let's try nonetheless... Redlion would you deduct of this picture that it is all randomness? {image} This is the equation to generate the 1st picture: 0.0013t + 9ε Got it? {image}
You have to love this guy. Exquisite example.
  • #33
  • Oct 31, 2015 10:21am Oct 31, 2015 10:21am
Technical analysis on its own will not work. You need to add fundamentals and most importantly sentimental analysis to it. Have a simple set of rules and just know when to cut your losers and when to hold. The more you complicate the more difficult it becomes. Money management is the holy grail without which no amount of analysis is going to make you money.

Just follow the macro trends in the long term you will always make money.

A surefire way just trade news surprises i.e. when central bank cuts rate abruptly or expands or contracts their que or inflation target. You will be surprised how easy it is to make money trading that way.
  • #34
  • Oct 31, 2015 10:22am Oct 31, 2015 10:22am
Quoting PipMeUp
Waoo! This thread already got hijacked in less than 10 hours. Let's try nonetheless... Redlion would you deduct of this picture that it is all randomness? {image} This is the equation to generate the 1st picture: 0.0013t + 9ε Got it? {image}
Yes, excellent.
  • #35
  • Oct 31, 2015 10:30am Oct 31, 2015 10:30am
Quoting Captain Jack
With all due respect...
You know, CJ, I just realized that you probably thought I was addressing you with that post. Well, I hope you realized that my post occurring just after yours was mere coincidence.
  • #36
  • Oct 31, 2015 10:32am Oct 31, 2015 10:32am
Quoting jen101
{quote} Did Stephen Hawking not spend 30 years trying to find the answers to the Universe, to come up with "there is no answer?"
That he did sweetie. However, I have to wonder if he'd have a more definitive conclusion had he spent that time studying Forex trading. ...

Quoting PipMeUp
Waoo! This thread already got hijacked in less than 10 hours. Let's try nonetheless... Redlion would you deduct of this picture that it is all randomness? {image} This is the equation to generate the 1st picture: 0.0013t + 9ε Got it? {image}
Top notch PipMeUp! ... lol
Ghost Rider - WWTBMD?
  • #37
  • Oct 31, 2015 10:44am Oct 31, 2015 10:44am
Quoting the redlion
Good evening my fellow traders, I have been a student of the market since 2011 when I joined FF. The entire concept of investing, and obtaining profit through fluctuations in price movement has fascinated me. I have not been fortunate enough to blow accounts as many of you have, I enjoyed relative success in the markets earlier on which fueled my hubris. I erroneously surmised that observing charts, learning patterns, using some sort of money management system and discipline was responsible for my success. I have studied Technical Analysis tools...
Also redlion, the fact that you cannot negate a null hypothesis does not mean that your null hypothesis is true! That's a logical fallacy. If you cannot negate the null hypothesis that the market is random it does not make it random, it just means you cannot tell it from randomness through the tests you have applied but there might be many others that can!
  • #38
  • Oct 31, 2015 10:49am Oct 31, 2015 10:49am
Quoting Atokys
{quote} Depends on how you define random.
There are many ways depending on the subject and or discipline.

https://en.wikipedia.org/wiki/Randomness

However when related to trading, I rather fancy this particular section of that page.

Randomness versus unpredictability

"Randomness is an objective property, unlike unpredictability. That is, what appears unpredictable to one observer may not appear unpredictable to another. For example, a message that is encrypted appears as an unpredictable sequence of bits to any observer who does not have the cryptographic key needed to decrypt the sequence and produce the message. For that observer the sequence is unpredictable, while for someone who has the key it is predictable."

"Some mathematically defined sequences, such as the decimals of pi, exhibit some characteristics of random sequences, but because they are generated by a describable mechanism, they are called pseudorandom. To an observer who does not know the mechanism, a pseudorandom sequence is unpredictable."

"One intriguing aspect of random processes is that it is hard to know whether a process is truly random. An observer may suspect that there is some "key" that unlocks the message. This is a foundation of superstition, as well as a motivation for discovery in science and mathematics."

But honestly, I'm really out of my element here. You folks are obviously far beyond me with your knowledge of mathematics and all. I'm loving this thread and all your comments. Great brain food.
Ghost Rider - WWTBMD?
  • #39
  • Oct 31, 2015 10:53am Oct 31, 2015 10:53am
Quoting Atokys
{quote} You know, CJ, I just realized that you probably thought I was addressing you with that post. Well, I hope you realized that my post occurring just after yours was mere coincidence.
No offense taken, mate... all its all gravy!

-CJ-
A man is not defeated when he is beaten, he is defeated when he quits.
  • #40
  • Oct 31, 2015 10:54am Oct 31, 2015 10:54am
Quoting albchr
{quote} There are many ways depending on the subject and or discipline. https://en.wikipedia.org/wiki/Randomness However when related to trading, I rather fancy this particular section of that page. Randomness versus unpredictability "Randomness is an objective property, unlike unpredictability. That is, what appears unpredictable to one observer may not appear unpredictable to another. For example, a message that is encrypted appears as an unpredictable sequence of bits to any observer who does not have the cryptographic key needed to...
This makes more sense to me than anything even I had said lol... nice!

-CJ-
A man is not defeated when he is beaten, he is defeated when he quits.
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