are markets truly random?

blackjack007 · Dec 31, 2007

Quote from ProfitTakgFool:

Black Monday 1987 is an outlier and can be discarded. The markets most commonly form an F-distribution with normal distributions within the F-distribution. I went to the pain staking task of actually plotting this out.

so you discard a real event just because its existence contradicts your claim? how convienent.

your plot actually proves my point that the stock market is not normally distributed. i don't see any 1987-like crash in your graph, any september 11-like crash, the 1997 crash, the 1998 crash.... any events that exceed several sigmas. since it lacks these real events, it does not accurately reflect the stock market.

it is foolhardy to discard these "outlier" events.

patoo · Dec 31, 2007

Quote from ProfitTakgFool:

Spot on again BSAM. Those who trade successfully based on technical analysis simply don't know how good they are at trading randomness. They have skills that even they can't fully appreciate.

a) its noise, dude, not a complete random walk

b) While I have an addiction to moving averages that I am working on, who sez I use TA?

robbie380 · Dec 31, 2007

getting a feel for how buyers/sellers/programs/stocks act is not random

black diamond · Dec 31, 2007

Quote from Fishbird:

Randomness of different markets:

Forex, intra 97%, daily 85%, weekly 75%

Bund, intra 97%, daily 90%, weekly 80%

US stocks, intra 92%, daily 80%, weekly 70%

EU stocks, intra 95%, daily 85%, weekly 75%

Commodities, intra 95%, daily 90%, weekly 85%

OK I'll bite, what are these numbers? p-values from some kind of statistical test?

u290 · Dec 31, 2007

markets are not random.

they are a tool of wealth redistribution, it is designed that way. if you research the consolidation of assets in the industry, you will see that there is a very limited number of people who push the big "buy" or "sell" button. and then there is always right moment to do one or the other to achieve the goal - wealth redistribution.
between these moments is noise, which can be random (but never on a strong volume).

Fishbird · Dec 31, 2007

Quote from black diamond:

OK I'll bite, what are these numbers? p-values from some kind of statistical test?

Just my experience after some years of real trading and backtesting.

You make most money were the randomlevel is the smallest. When it is at 100%, making money becomes 100% luck were the more bets you make, the more unlikely it gets to make it.

Especially Daytraders need to know what they are doing bc of many trades in highly random environment.

robbie380 · Dec 31, 2007

Quote from Fishbird:

Just my experience after some years of real trading and backtesting.

You make most money were the randomlevel is the smallest. When it is at 100%, making money becomes 100% luck were the more bets you make, the more unlikely it gets to make it.

Especially Daytraders need to know what they are doing bc of many trades in highly random environment.

lol that's why you don't take random trades. that's called CHURNING.

Fishbird · Dec 31, 2007

Quote from robbie380:

lol that's why you don't take random trades. that's called CHURNING.

You actually take random trades even though you think you dont. When you trade a specific setup /chartpattern/situation and your chosen market is highly random, then you still wont win or make the same as if you just flipped a coin.

Dackster · Dec 31, 2007

The word 'Random' is used a lot, no one ever questions wether or not the word is even worth arguing about in a market context?

Are the markets probable?

I'd say yes.

Are they Random?

I couldn't give 2 fuks. I used to reside in the 'non random' camp, these days i take it easy in randomville. Why? Because the two sides of the story are only separated by psychology and not fact, and i for one can't prove non randomness because i get trades wrong, sometimes.

gnome · Dec 31, 2007

Quote from Fishbird:

"... You make most money were the randomlevel is the smallest. When it is at 100%, making money becomes 100% luck were the more bets you make, the more unlikely it gets to make it.

Especially Daytraders need to know what they are doing bc of many trades in highly random environment.

One of the most astute posts anyone will find on ET.

A large majority of market action IS random... some of it is not.