What Happens Next

barjon

barjon

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No, not starting a new Wot Happened Next series because it aint real

I got a random number generator to give me 100 numbers +-10 then I plotted the result from a 200 starting point.

Look familiar? Clear resistance at 220 and support at 170. Couple of 1,2,3 reversals and I daresay you could find some of your own favourites amongst it.

Interestingly a decent trader could have made money from it.

Not decrying TA - just a warning to keep it in context.
 

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I was initially going to suggest you stick a 49 moving average and an ichimoku on there and that would sort it all out, but then realised it wasn’t funny.

Could be quite depressing if it hadn’t given me some comfort it’s OK to feel clueless as it’s all totally random. Probably essential to assume cluelessness in fact and keep in mind you’re just betting on raindrops on a window pane – a window pane which sometimes inverts –and don’t forget the random gusts of wind which can come from any direction too, at any time.

What’s missing though is the way each of those data points ended up where they did: there’s no OHLC and no way to drill down and tell how each data point got from O to C. I’m advised the formation of each point/candle/bar is more than half the picture.
 
I'm not saying TA is 'The answer' or even saying it doesnt work, but what needs to be taken into account is human behavior.
People look for patterns in random images like clouds or even Rorschach inkblots (as celebrated by google today), its the way your brain is hard wired. Darwinism rooted out those brains that couldnt make out the face of a predator hiding in a bush.
So if 100 people look at a pattern of dots on a chart like the one shown their brain is desperately trying to make sense of it. Now imagine all of those people had been told of such a thing as bollinger bands and channel lines then they would all look at your chart and breath a sigh of relief as they had now made sense of it.
Take that one stage further and now when the dots reach the extremes they will all buy or sell at roughly the same time therefore reinforcing the 'pattern'.
There is no one right answer to Mr Market.
 
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barjon said:
No, not starting a new Wot Happened Next series because it aint real

I got a random number generator to give me 100 numbers +-10 then I plotted the result from a 200 starting point.

Look familiar? Clear resistance at 220 and support at 170. Couple of 1,2,3 reversals and I daresay you could find some of your own favourites amongst it.

Interestingly a decent trader could have made money from it.

Not decrying TA - just a warning to keep it in context.
Click to expand...

A good post Barjon. There is decent divergence at 220 showing a good shorting opportunity. I dare say it was overbought there too.
 
barjon said:
No, not starting a new Wot Happened Next series because it aint real

I got a random number generator to give me 100 numbers +-10 then I plotted the result from a 200 starting point.

Look familiar? Clear resistance at 220 and support at 170. Couple of 1,2,3 reversals and I daresay you could find some of your own favourites amongst it.
...
Click to expand...

Just one more thing - if you added an 8% inflationary bias and let it run for 4 years this would fool anyone. At least I think that's what Bernanke did.
 
This is a snapshot of the waveform from Kalimba.mp3. It's obvious you should go long whenever the audio level dips to -10dB.

hrk5ki.png
 
barjon said:
No, not starting a new Wot Happened Next series because it aint real

I got a random number generator to give me 100 numbers +-10 then I plotted the result from a 200 starting point.

Look familiar? Clear resistance at 220 and support at 170. Couple of 1,2,3 reversals and I daresay you could find some of your own favourites amongst it.

Interestingly a decent trader could have made money from it.

Not decrying TA - just a warning to keep it in context.
Click to expand...

the thing about random number trading models is do you keep each new bar totally uncorrelated to the previous bar generated (100% random)....or allocate a small % of correlation based on the direction and strength of the last bar ....

because in many markets people buy and sell purely on where the price starts to move .........

dont they ? :whistling
N
 
I must confess that each and every day I open up my charts I am reminded of the Emperors new clothes story

are we really all just worshipping something that isnt there ?

hmmmmm
N
 
the ft offered £100,000 for anyone who could show them a ta pattern that had a tradable bias, do not think anyone collected the £100k
 
Wot No Liquidity ?

Patterns in nature are inevitable , liquidity isn't.




' There it is. '
 
But there is something missing.

If barjon had plotted a set of random numbers where for each x-axis point instead of just a single data point he had given us OHLC – all randomly generated – it would look nothing like any chart any of us have ever seen or could ever exit in reality.

The thing that is missing is the intent, knowledge, expectations and aspirations of the aggregate of market participants in every instrument being traded.

Not necessarily the Invisible Hands or an Animal Spirit, but there is an intelligence in the general waveform of every instrument. That’s what I think most of us perceive and the analysis thereof from which we attempt to gain advantage.
 
Regardless, I'm waiting for a retrace off the 200, short at 190 with a limit buy at 175. Safe.
 
Wot No Random Numbers Exchange ?

Where is the exchange for random numbers ?

Wall street? nope,

Banks? nope

Nasdaq? nope

CBOT ? nope


Camelot & The National Lottery ? Could be . I think that is. Yes.
 
barjon said:
.....
Click to expand...
An interesting chart and also comparable to a coin flip of heads/tails or a roulette wheel but without the numbers 0/00.....as it started at the number 200, it should and will, over time, come back to the number 200 as everything must balance itself out over time.....equilibrium.

For a trader to benefit would be to take advantage from the deviation from the number 200. TA would not be required.
 
I think barjon may have accidentally stumbled onto the next big thing in spreadbetting.

With nowhere to go to hedge in outside markets he’d have no option but to randomise out any outright exposure from skewed client positions and his machinations would appear quite as random as randomness itself.

Random Futures, Random100, RandomFX, RandDAX, RandOptions etc. The punters would be delighted with the wide spectrum of instruments to trade all with that hint of Randomness which instinctively they feel they have an edge over - and they’d be none the wiser - literally.

He’d have no expensive datafeeds or concerns about being arbed or need ever to justify his prices with respect to the underlying. All prices totally fictitious and actively managed to maximise returns without being too blatant or arrogantly rubbing the clients’ noses in it.

Oh wait, it’s already being done.
 
Last edited:
Triggerfish said:
An interesting chart and also comparable to a coin flip of heads/tails or a roulette wheel but without the numbers 0/00.....as it started at the number 200, it should and will, over time, come back to the number 200 as everything must balance itself out over time.....equilibrium.

For a trader to benefit would be to take advantage from the deviation from the number 200. TA would not be required.
Click to expand...

depends on the depth of your pockets ........equilibrium can be an awful long time in coming.....;)
 
Triggerfish said:
An interesting chart and also comparable to a coin flip of heads/tails or a roulette wheel but without the numbers 0/00.....as it started at the number 200, it should and will, over time, come back to the number 200 as everything must balance itself out over time.....equilibrium.

For a trader to benefit would be to take advantage from the deviation from the number 200. TA would not be required.
Click to expand...

The odds may not be rigidly fixed as is the case with roulette zero being the house edge,
but spread and commission costs can have a broadly similar effect if they are overlooked.

The effects of both are magnified as trade / spin frequency increase.
The difference with trading is your return isn't fixed odds.
Also, with trading you can look for lower spreads, earn the spread and seek volume commission discounts,
which lessen the effect, but you can never entirely remove the impact of costs.
 
Last edited:
Purple Brain said:
I was initially going to suggest you stick a 49 moving average and an ichimoku on there and that would sort it all out, but then realised it wasn’t funny.

Could be quite depressing if it hadn’t given me some comfort it’s OK to feel clueless as it’s all totally random. Probably essential to assume cluelessness in fact and keep in mind you’re just betting on raindrops on a window pane – a window pane which sometimes inverts –and don’t forget the random gusts of wind which can come from any direction too, at any time.

What’s missing though is the way each of those data points ended up where they did: there’s no OHLC and no way to drill down and tell how each data point got from O to C. I’m advised the formation of each point/candle/bar is more than half the picture.
Click to expand...

At last!. Whenever I said it's random, I got a chilly silence. There are one or two others. but not many. Perhaps FA calculated shares are not random, over a long term period but, certainly, day traders had better be nimble with their r:r factor, because that is all that will save them. I am not saying that big money will not influence the market, but we are not big money. We put our money down and live in hope that we have the direction right.
 
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My stance on random is pretty well known.
Despite that I would still say that markets themselves are not random.
Sure there is a random element which increases / decreases depending
on current factors and motivations at any given time.

The random element mainly applies to trade outcome, no one ever knows
in advance which trade will be a loss, scratch or win.
If you did, that would by definition imply a 100% strike rate, which no one has,
except those spanish stops nutters - until the inevitable blowup anyway...
 
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