Random?
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rawrschach
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pfffffft
don't you know you're not allowed to make sense on this forum
don't you know you're not allowed to make sense on this forum
NewThought
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IMO, if people who are in a position to manipulate the market (if anyone actually is) do so, then they will actually create money-making opportunities in the process! They would probably also reduce the "randomness" of the market.
The above is an opinion (in contrast to my previous statement in this thread that it is easy to prove that market movements are not random - which is hard fact).
Do you mean that market returns are not normally distributed? I agree that that has been demonstrated.
But I never saw a proof of the much more general statement that market movements are not random, or that market returns are not random variables.
That is a very interesting proposition - can you elaborate on what the difference is? Is it merely the fact that the observer gathers incomplete information?
Any price or quote movement is determined by some transaction or by some market maker (or his machine) shifting a quote, so in that sense, any market movement is in theory determinable. But the market process is not deterministic in that no observer can gather all information about all market participants so as to create a function accurately predicting the next move.
4xpipcounter
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Splitlink, I think you got it right in your former comment, "It gives an impression of randomness." IMO, the markets could never be manipulated, and this is because of the mathematics. Let's say you could manipulate one pair. Every other pair would have to go with it. I could give copious examples. But here's an example of what I am saying, USD/CHF * EUR/AUD*GBP/USD*CAD/EUR*AUD/NZD*CHF/JPY= GBP/NZD*CAD/JPY. Do the math, and you will know I'm telling you the truth. For the CAD/EUR, you will need to take the reciporcal of EUR/CAD. If you could manipulate one of those markets, then everything else has to be affected. You could show the mathematical correlation of every pair there is.
DionysusToast
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There is no money in market makers making markets 'appear random'.
There is money in making a market look weak when it is strong and there is money in making it look strong when it is weak. There is money in opening a market at a level people want to buy/sell in the face of news that would otherwise of caused the opposite reaction.
Markets can be pushed around by people with money only in the short term - it happens most days on the S&P and that market has a very specific behaviour pattern because of it. This behaviour pattern will not be exhibited in a runaway market because no-one has the balls/$$$$ to stand in the way of that.
Short term traders should not be careful of market manipulation, they should be aware of it and be on the right side of it. It certainly is not random BUT you need to look at more than a 1 dimensional set of information (i.e. price) to see it.
Of course, if the only thing you are looking at is a chart, then randomness may well be the only conclusion you can draw.
In general, I agree with what you say, the market is not random. Whether it is pushed around by marketmakers or others doesn't matter much. Someone is doing it and, IMO, it gives an appearance of randomness which is not the case. What is happening is that stops are being taken out, top and bottom, to the detriment of careless traders and punters, so they say that randomness exists as an excuse.
DionysusToast
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SL - it only gives the appearance of randomness if you are only looking at half the picture.
When the market is being pushed around by someone, it is at it's least random. The pushing around itself occurs in reasonably predictable places.
I will repeat though - if the only thing you are looking at is the chart and you have not put in the time to see the behaviour of a particular instrument - you will see randomness. Similarly if you took half the pages out of a novel - that would seem pretty random too.
Just because you cannot see certain behaviours repeating themselves and you are only using a subset of the information to hand, does not mean it is random. It just means it hasn't clicked with you yet.
When the market is being pushed around by someone, it is at it's least random. The pushing around itself occurs in reasonably predictable places.
I will repeat though - if the only thing you are looking at is the chart and you have not put in the time to see the behaviour of a particular instrument - you will see randomness. Similarly if you took half the pages out of a novel - that would seem pretty random too.
Just because you cannot see certain behaviours repeating themselves and you are only using a subset of the information to hand, does not mean it is random. It just means it hasn't clicked with you yet.
I am not disagreeing with you on this. IMO, no market, even if it is cabbages, is random. Traders are going to try to drive the market price in the direction that interests them. How powerful they are will determine market direction in the end.
NewThought
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I haven't done the test myself, but I know that some good mathematicians have. An obvious way to do it would be the kind of tests that are used to check the quality of a pseudorandom number generator (e.g. a spectral test: when the numbers are mapped into multidimensional space, they should not form a hyperplane (for example, when numbers from a poorly designed linear congruential random number generator are mapped into a cube, they tend to form a plane)).
barjon
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The link escapes me, but there was that guy who did a random up or down for the next bar (coin toss) coupled with a random selected price range between 1 and 20 (or something).
The resultant chart looked just like any other - it had trends, reversals off support/resistance, fib retracements, triangle breaks, etc, etc. Quite an eye-opener.
jon
The resultant chart looked just like any other - it had trends, reversals off support/resistance, fib retracements, triangle breaks, etc, etc. Quite an eye-opener.
jon
arabianights
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It quite common jon.
Or even, just look at Betonmarkets' random walk - the charts show all sorts of interesting things on loads of different time frames
Jaydee
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The way I see it is the problem with randomness is that it, all too often, doesn't look random.
For what it's worth, I think markets are random but they do have inductive properties too. I.e. higher prices attract more buyers to buy higher and sellers to sell higher, etc.
50:50 randomness/induction maybe? I dunno...
For what it's worth, I think markets are random but they do have inductive properties too. I.e. higher prices attract more buyers to buy higher and sellers to sell higher, etc.
50:50 randomness/induction maybe? I dunno...
DionysusToast
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It has to be said, you would have to be a complete retard to trade that.
Where do I sign up?
arabianights
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Do you feel the same way about roulette?
We don't cross paths very much because you trade forex and I like indices. I don't, really, understand what you do but I do appreciate that you are good at it. As for this debate. Can indices be manipulated? I think so, more when volume is low than when it isn't. As you say, forex is difficult, if not impossible, so I don't try it.
