Do you see patterns in Random Walks?

[MAESTRO]

Quote from jem:

But, 10 years ago when a fund went down to the floor on the NYSE they did not dump a few million shares at once. They would go down and try and move 50,000 or 100000. The specialist would tell the broker where he could make the trade.. Once done he specialist would ask the broker if he had any more behind it.

with many stocks the crowd and specialist would frequently follow their recent patterns after that.

One long standing pattern was back to back larger double prints. You would see two 5000 or 10,000 share prints hitting the tape back to back. This was an indication the brokers in the crowd or the specialist and a broker were on the same side of a trade. After that given proper conditions and time you could expect the trend to continue with many specialists.

There will people arguing that prices were random, yet dozens of people in my brokerage made six figures every year off those patterns.

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Patterns still exist.

Yes, but the existence of stable patterns does not at all contradicts the total randomness! As I pointed out earlier, it is the relationship between individual molecules behavior and their combined characteristic such as gas pressure in an enclosed vessel. Pressure is stable and very predictable (hence the existence of a steam engine, for example) where the paths of individual molecules are unpredictable and random.

P.S. And, of course, patterns exist! otherwise we would not survive as species! However, the genesis of those patterns lies not in predetermined order, but in the self synchronized randomness.

 

[jem]

Quote from MAESTRO:

Yes, but the existence of stable patterns does not at all contradicts the total randomness! As I pointed out earlier, it is the relationship between individual molecules behavior and their combined characteristic such as gas pressure in an enclosed vessel. Pressure is stable and very predictable (hence the existence of a steam engine, for example) where the paths of individual molecules are unpredictable and random.

Ok that is all I wanted to hear.

As a trader... why would I care if the final prints of the data set made the set look random... but I could make systematic money in between those final prints.

 

[MAESTRO]

Quote from jem:

Ok that is all I wanted to hear.

As a trader... why would I care if the final prints of the data set made the set look random... but I could make systematic money in between those final prints.

If you continue to read this thread I will attempt to explain why it is crucial and very beneficial to accept and utilize the RANDOMNESS as the model. It actually leads to establishing of much stronger patterns that thought possible!

P.S. Thank you for chiming in! I always enjoyed your posts on actual trading; there is nothing like a hands-on practitioner.

 

[MAESTRO]

We shall continue tomorrow. Today is my 27 th anniversary with my wife (could it be that long?????); need to get some flowers!

Cheers,
MAESTRO

 

[Hansel H]

Quote from MAESTRO:

Good to see you again! Great points! However, I think that it might be useful to agree on what RANDOMNESS is first before we go too far in analyzing its characteristics (or lack of). Don't you agree? I will try to come up with my own definition and will put it for discussion. I think it might clear a lot! Too often people argue about a subject having in mind totally different notions.

Randomness at what level of existence? If randomness as epistemological then randomness is inevitable because in a system as complex and riddled with approximate knowns as is the markets we can never know the way all the variables will interact; we're lucky if we can even know the descriptions of all the variables.

 

[intradaybill]

Quote from MAESTRO:

We shall continue tomorrow. Today is my 27 th anniversary with my wife (could it be that long?????); need to get some flowers!

Cheers,
MAESTRO

Congratulations, Wishing you many more healthy and prosperous years together.

 

[zedDoubleNaught]

Quote from MAESTRO:

... it is the relationship between individual molecules behavior and their combined characteristic such as gas pressure in an enclosed vessel. Pressure is stable and very predictable (hence the existence of a steam engine, for example) where the paths of individual molecules are unpredictable and random.

Perhaps it's a matter of scale then?
Also, if this not an unrelated or unresolvable tangent, is dimensionalism important? It seems like, it's random because we don't know what will happen in the future, but this could be due to human limitations of perceiving the time dimension as undirectional and not all observable at once. Would it make a difference if we were 10-dimensional beings, and the time dimension (from human perspective) was knowable all at once, as humans can see all points on a 2-d picture at once?

 

[zedDoubleNaught]

Quote from zedDoubleNaught:

...
Also, if this not an unrelated or unresolvable tangent, is dimensionalism important? It seems like, it's random because we don't know what will happen in the future, but this could be due to human limitations of perceiving the time dimension as undirectional and not all observable at once. Would it make a difference if we were 10-dimensional beings, and the time dimension (from human perspective) was knowable all at once, as humans can see all points on a 2-d picture at once?

Tried to delete, but over the time limit. I think this is a moot point -- if the dimension is knowable in entirety, then there is no "outcome".

 

[DontMissTheBus]

Maybe instead of 'dimensionalism', you really mean what statistician may refer to as degress-of-freedom.

Quote from zedDoubleNaught:


Perhaps it's a matter of scale then?
Also, if this not an unrelated or unresolvable tangent, is dimensionalism important?

 

[jem]

Quote from jem:

Ok that is all I wanted to hear.

As a trader... why would I care if the final prints of the data set made the set look random... but I could make systematic money in between those final prints.

actually I take this statement back.

When trying to figure out what the afternoon was going to look like during lunch...

I was pretty sure that the least likely result would be a repeat of yesterday.