Coin flips psychologically better??

[DionysusToast]

Far from it

But I wont be drawn on this stuff at the zoo, other than to say its a very worthwhile exercise

The problem I have with it is simple - the charts aren't the market. Just the result of trading.

So - to attempt to profit from a random chart is a bizarre experiment.

There is no herd behind a random chart. There are no news announcements on random charts. There are no opens and closes on random charts. No holidays, no recessions, no euphoria, no puking, no speculators etc. etc. etc.

No CNBC, no Bloomberg, no bucket shops, no MF Global, no PFG, no Goldman, no Bernanke, no Obama.... Hell - I'm beginning to like it...

I'm still getting a whiff of almonds here.

 

[Shakone]

The problem I have with it is simple - the charts aren't the market. Just the result of trading.

So - to attempt to profit from a random chart is a bizarre experiment.

There is no herd behind a random chart. There are no news announcements on random charts. There are no opens and closes on random charts. No holidays, no recessions, no euphoria, no puking, no speculators etc. etc. etc.

No CNBC, no Bloomberg, no bucket shops, no MF Global, no PFG, no Goldman, no Bernanke, no Obama.... Hell - I'm beginning to like it...

I'm still getting a whiff of almonds here.

Yep. Just plotting random points that have nothing to do with the market, and deriving a system to attempt to profit from that, is of as much value as deciding to plot the temperature each day and deriving a trading system to profit from that. Actually it's worse, because there are trends in temprature and patters of behaviour.

Unless your model exhibits the properties of a real market, it is as you say bizarre.

 

[Jason101]

What do you mean by a randomly generated chart?

As in the creation of a string of 50/50 moves as in this link...

Random walk hypothesis - Wikipedia, the free encyclopedia

Edit: Looks like there are a few break out trades and a trend trade or two there to be taken.
.

 

[Liquid validity]

Markets are not random. Whilst markets are not rational, they certainly are not random.

To a certain extent I agree.
Markets certainly have times when they are far from random.
I also think there are times when they are random.

None of that matters a bit.
Whether markets are random or not is actually irrelevant.
That argument is as old as the hills, both approaches can work both can fail.
So in effect, it does not matter one iota whether it is factually correct to say
markets are random.
As I said earlier, for me its shades of grey anyway...

Where randomness truly comes into play is with trade results, now they are random.
Markets are not PnL, trade results are...

Anyone that disputes that needs to have a serious think about why the disagree
with that statement.
There is not one trader on the face of the earth who has not had a losing trade,
so why did you take a losing trade?

Simple, factors beyond your control or knowledge transpired to take your stop out.
Even with a high strike rate, that randomness is still present.

As for charts being the past, the tape is the past as well, just more recent past.
The DOM may be the future, then again it may also be the false future someone wants you to believe...
Nobody except those with pockets deep enough to move markets can truly
know what will happen next, and even they get burnt.

 

[0b101]

To trade a real auction is real skill. Lot of people can not do it and get angry and rubbish trading. Arrogance will get u nowhere in this game. Skill is wot U need.

Trading chart only is 4 foolhardy gambler. May aswell random guess and flip coin...it all gambler have.

 

[forker]

Multi-nick

 

[Splitlink]

I made 47 points today in 3 trades- Was it random? I don't think that the entries were. The exits, though, I'm not sure about. The first, I lost half of my profit and got scared, closed and saw the trend resume its original course. The second was the spike, upwards, at 1321 hours, which netted me 10 points because I guessed that it was a spike and took profits quick. I did not catch the fall, though, which was far more profitable.

The third, at 1554, got me 19 points. I like to think that entry was well thought out, but the exit? Pure guerilla warfare. Take it and run. I believe that trading has to be like that, with predermined stops because, I, at least, am one of those idiots who hopes that it will come right. Mine rarely do so I set stops along with the entry.

My advice to any newcomer to trading is that as most times entries are planned, once in the trade things get worse than random. A loss of 5 points never comes right for me. It will go to 7, then 10 and worse. These losses are what make traders lose over the long run. Never believe that losses will come right. Mine, at least, don`t.

I have backtested and come to the conclusion that a 40 point stop must work and been stopped out on the first trade. 40 points is too big a chance for me to take so I get out far sooner.

Rant over!

 

[forker]

I made 47 points today in 3 trades- Was it random? I don't think that the entries were. The exits, though, I'm not sure about. The first, I lost half of my profit and got scared, closed and saw the trend resume its original course. The second was the spike, upwards, at 1321 hours, which netted me 10 points because I guessed that it was a spike and took profits quick. I did not catch the fall, though, which was far more profitable.

The third, at 1554, got me 19 points. I like to think that entry was well thought out, but the exit? Pure guerilla warfare. Take it and run. I believe that trading has to be like that, with predermined stops because, I, at least, am one of those idiots who hopes that it will come right. Mine rarely do so I set stops along with the entry.

My advice to any newcomer to trading is that as most times entries are planned, once in the trade things get worse than random. A loss of 5 points never comes right for me. It will go to 7, then 10 and worse. These losses are what make traders lose over the long run. Never believe that losses will come right. Mine, at least, don`t.

I have backtested and come to the conclusion that a 40 point stop must work and been stopped out on the first trade. 40 points is too big a chance for me to take so I get out far sooner.

Rant over!

Sounds like you don't have confidence in your strategies or your edge is weak. If I may ask, how do you plan your targets. You should never be uncomfortable to the point that you fail to give your trade room to fulfil its purpose. The markets are not perfect and I don't understand why people try implement trade management plans that leave little wiggle room for trades to work. Very few trades are alike when it comes to price movement which translates to few trades turning on a dime with the majority exhibiting slopp before price goes either way. It is far better to give a trade room and reduce your risk by lowering your stake than to implement a rigid "I can't afford it going 40 points" approach. Trade management is a function of an edge but not the edge itself (unless you're taking lots of small losers before hitting a big runner, in this case the edge is trade management)

 

[DionysusToast]

To a certain extent I agree.
Markets certainly have times when they are far from random.
I also think there are times when they are random.

None of that matters a bit.
Whether markets are random or not is actually irrelevant.
That argument is as old as the hills, both approaches can work both can fail.
So in effect, it does not matter one iota whether it is factually correct to say
markets are random.
As I said earlier, for me its shades of grey anyway...

Where randomness truly comes into play is with trade results, now they are random.
Markets are not PnL, trade results are...

Anyone that disputes that needs to have a serious think about why the disagree
with that statement.
There is not one trader on the face of the earth who has not had a losing trade,
so why did you take a losing trade?

Simple, factors beyond your control or knowledge transpired to take your stop out.
Even with a high strike rate, that randomness is still present.

As for charts being the past, the tape is the past as well, just more recent past.
The DOM may be the future, then again it may also be the false future someone wants you to believe...
Nobody except those with pockets deep enough to move markets can truly
know what will happen next, and even they get burnt.

Hmmmm - some interesting arguments.

This started because someone mentioned trying to get an edge over a random chart.

Not being able to predict the future, not being able to win every trade is not proof the markets are random.

Take a car auction. Let's say you have 5 Toyotas - same model, same year, same condition being auctioned. Can you predict the exact price of each Toyota after the first on is sold? Of course not but you can roughly predict that they will sell around the same price. Of course, there being 5 means that you might have little interest in the later auctions.

It isn't random, people will perceive value after seeing the first auction (as well as understanding market price). Price will fall when there the demand is spent.

This is not randomness in action, you wont see the first car go at $10k and the second at 50c. It is not predictable but the prices attained are based on perceived value and presence of buyers.

 

[Shakone]

It's not sometimes random, and sometimes not. It's ALWAYS random, just that sometimes we can have a good idea of the probability. You can't use an after the fact assessment, that of price doing what you expected, to say it's not random sometimes, it still was, even if you got it to the tick. Just as if your job was to predict the weather, and you said it will rain from 1pm and there will be 2mm of rainfall, even if you got it spot on, and other days you weren't so accurate, that doesn't mean it wasn't random on every day.

 

[Liquid validity]

DT and Shakone: good points raised by both.

Ultimately, I still believe it doesn't really matter whether markets are random or not.
Trade results and their distribution are, that was the point I was making.

Shakone, I can ssee what you mean, even on a no brainer day (ECB has a brainfart
for example ) direction and range of movement may be pretty clear, but you
will never know in advance if that is truly correct to the tick as you say.

DT, I'm neither trying to prove or disprove markets are random, as I said it
doesn't really matter to me anyway.
Trade results are random, that is the main point I was raising.
I agree with a lot of the points you raise as well.

 

[Liquid validity]

To trade a real auction is real skill. Lot of people can not do it and get angry and rubbish trading. Arrogance will get u nowhere in this game. Skill is wot U need.

Trading chart only is 4 foolhardy gambler. May aswell random guess and flip coin...it all gambler have.

Troll denied

 

[forker]

Have any of you ever seen a random generated chart? I am talking of a chart where the direction is generated by a function designed to be random? I might just create one for you when my Internet is back online and if I have time (new born in the house). I did years ago and it wasn't really a surprise that the resulting chart looks nothing like the typical chart. To say it's random without doing due diligence is misleading

 

[DionysusToast]

Bottom line is - nobody trades @ random - well, except for our resident to$$er.

The price charts are not the market, merely the result of trading.

Fact is - they don't throw off lots of nice, playable, repeatable patterns - this doesn't make markets random. In fact, it says more about the people looking for patterns in time spliced historical price data. Why should this representation of the market action be resolvable to a few price patterns anyway?

Just find the pattern, get your R:R right and trade the pattern for life! Problem solved, eh?

Now - of course, you can compare random charts and market generated charts if you like. On the other hand, you could put charts to one side for a second and consider the actual marketplace, why people trade and what their perceptions might be at any time.

 

[Shakone]

Have any of you ever seen a random generated chart? I am talking of a chart where the direction is generated by a function designed to be random? I might just create one for you when my Internet is back online and if I have time (new born in the house). I did years ago and it wasn't really a surprise that the resulting chart looks nothing like the typical chart. To say it's random without doing due diligence is misleading

Forker, I think there's often a slight misunderstanding when I say random to some people. A coin that is 50-50 is random. A biased coin that is 95% heads, 5% tails is also random. You could obviously trade the 2nd coin, but not the first. It's random, because the alternative to being random is that it is determined, fixed, a function of known variables, which you can be certain about. Which price never is, because price can be moved by individuals or institutions, and there's no way for you to know that.

I agree with you about most randomly generated charts.

It was posted before, but there was an experiment by Andrew Lo to see if people could distinguish random from real charts. The results were that some could with very high accuracy.

ARORA

if you want to have a go

 

[DionysusToast]

ARORA

if you want to have a go

Stupid game....

 

[forker]

Forker, I think there's often a slight misunderstanding when I say random to some people. A coin that is 50-50 is random. A biased coin that is 95% heads, 5% tails is also random. You could obviously trade the 2nd coin, but not the first. It's random, because the alternative to being random is that it is determined, fixed, a function of known variables, which you can be certain about. Which price never is, because price can be moved by individuals or institutions, and there's no way for you to know that.

I agree with you about most randomly generated charts.

It was posted before, but there was an experiment by Andrew Lo to see if people could distinguish random from real charts. The results were that some could with very high accuracy.

ARORA

if you want to have a go

okay, my misunderstanding

 

[DionysusToast]

I think we are in danger of people agreeing and falling out @ the same time.

The search for repeated patterns in charts IMO is a fools errand.

On the other hand, using charts, with an understanding of the market dynamics that create the action represented on the charts - that's where you start to make leaps forward.

Analyzing the crap out of price time series data without context or an understanding of market structure is not a sound approach in my opinion.

 

[0b101]

Men who stare @ chart only all day R like mad scientist, Dr. Frankystein. We all all know wot happen to Frankystein and his munster. It all go rong EOD.

 

[neil]

Men who stare @ chart only all day R like mad scientist, Dr. Frankystein. We all all know wot happen to Frankystein and his munster. It all go rong EOD.

Stop using "Google Translate" for your posts and hire a translator