Do you see patterns in Random Walks?

Quote from MAESTRO:

RANDOMNESS AT LARGE IS NOT JUST A METHOD OF MODELING THE REALITY AND IT IS NOT A MEASURE OF OUR IGNORANCE OR OUR DEGREE OF UNDERSTANDING THINGS - IT IS A FUNDAMENTAL PROPERTY OF MATTER (SIMILAR TO GRAVITY) THAT EXHIBITS ITSELF ON ANY LEVEL OF COMPLEXITY INCLUDING HUMAN BEHAVIOR
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I'm not a scientist. But the word "FUNDAMENTAL" grabs my attention. I want to have a referance point for my mindset as a trader.

MAESTRO, you are the main 'attractor' in this thread so my questions and thoughts are to you.

Is it chaotic or random?

"Confluence of unknowable influences". That's what you have at any given moment.

If you cannot move the market why not just go with it, go with the flow, right?

If you cannot predict the market, why not make your own actions random, at least you will know that you will be right 50% of the time?

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In your example with the metronomes. They interact and influence each other. How your system with the randomizer can influence the market? Most likely it can't. So, is it a spontaneous synchronisation of totally independent systems?
 
Quote from rossky:



Is it chaotic or random?
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Thank you for your interest.

Randomness is the reason for chaos. Randomness is a universal property that manifests itself through chaos. Chaos is a state, randomness is a property.

Spontaneous sync is a phase shift of chaos. When pattern emerges from chaos it is a manifestation of sync. Randomness (like gravity) dictates certain stable characteristics that are very exploitable in the markets.

Cheers,

MAESTRO
 
Quote from MAESTRO:

Thank you for your interest.

Randomness is the reason for chaos. Randomness is a universal property that manifests itself through chaos. Chaos is a state, randomness is a property.

Spontaneous sync is a phase shift of chaos. When pattern emerges from chaos it is a manifestation of sync. Randomness (like gravity) dictates certain stable characteristics that are very exploitable in the markets.

Cheers,

MAESTRO
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MAESTRO, Thank you for your kind reply. The language you've spoken to me I understand much better. :)

The two systems (the market and your machine with the randomizer) are floating in the soup of chaos and don't have to be interdependent - they will be in sync, at some point, anyways?

How long is the wait for this to happen? Is there any regularity?

Also. When you are in sync, the direction doesn't matter - you make money, although some normal cost of doing business is involved to re-position yourself. (It's a zigzag, right? For every line up, there is a line that goes down.) But you will definitely lose when your systems go out of sync. Since you don't know what the range of any given move is going to be, does it mean that the risk amount is determined after you enter your position?
 
Quote from SunTrader:

Well then can the flap of a butterfly's wings in Brazil set off a tornado in Texas? :)
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One butterfly cannot; a billion butterflies can. There is a "critical mass" for everything. One milligram of uranium is harmless, 1000kg of it is deadly!

Cheers,
MAESTRO
 
Quote from rossky:

MAESTRO, Thank you for your kind reply. The language you've spoken to me I understand much better. :)

The two systems (the market and your machine with the randomizer) are floating in the soup of chaos and don't have to be interdependent - they will be in sync, at some point, anyways?

How long is the wait for this to happen? Is there any regularity?

Also. When you are in sync, the direction doesn't matter - you make money, although some normal cost of doing business is involved to re-position yourself. (It's a zigzag, right? For every line up, there is a line that goes down.) But you will definitely lose when your systems go out of sync. Since you don't know what the range of any given move is going to be, does it mean that the risk amount is determined after you enter your position?
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A very good analogy and a very interesting and quite correct mental image! Yes, my multiple "randomizers" are "floating" in the "soup" of market. There is always one or two or more of them are getting in sync with a particular segment of the market and start floating with it. The Sync could exist 2 - 3 minutes or 2 - 3 days. We stay with it until it's there. There are, of course, costs of doing business and sometimes they are quite high, however, on average the returns are much higher.

Cheers,
MAESTRO
 
MAESTRO,

Thank you again for your kind reply. I'm not sure I will ever be able to have a machine like yours but at this time I'm more concerned how to deal mentally with UNCERTAINTY.

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"Spontaneous sync is a phase shift of chaos." Does it mean it becomes less chaotic for a while?

Whatever the reason may be, we all need a reason to act, wouldn't you agree? Thus the reason is essentially a prediction, a belief in a certain outcome.

Before a pattern has emerged, could a group of people, that believes that a particular pattern must appear, grow larger and stronger contributing to the probability of a pattern to appear. Could the pattern itself attract another group that will make that pattern last.

Because it all happens spontaneously we will never be able to predict when or where a certain pattern will appear and, because it is still governed by Randomness, we cannot be sure for how long it will last.

But we can be certain that a pattern will emerge. The word pattern itself implies that it is of a familiar "shape" thus giving us a chance to recognise it and ride on it for a while.
 
Quote from MAESTRO:

One butterfly cannot; a billion butterflies can. There is a "critical mass" for everything. One milligram of uranium is harmless, 1000kg of it is deadly!

Cheers,
MAESTRO
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That originally was asked by - Edward Lorenz, circa 1972
 
Quote from rossky:


"Spontaneous sync is a phase shift of chaos." Does it mean it becomes less chaotic for a while?
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It becomes not chaotic at all. A rigid structure emerges like a layer of ice crystals over the puddle of water.

Whatever the reason may be, we all need a reason to act, wouldn't you agree? Thus the reason is essentially a prediction, a belief in a certain outcome.

It's not entirely a prediction; it's more a reaction to a condition

Before a pattern has emerged, could a group of people, that believes that a particular pattern must appear, grow larger and stronger contributing to the probability of a pattern to appear. Could the pattern itself attract another group that will make that pattern last.

Exactly. That is what we bank on when we enter trades

Because it all happens spontaneously we will never be able to predict when or where a certain pattern will appear and, because it is still governed by Randomness, we cannot be sure for how long it will last.

Right ON!

But we can be certain that a pattern will emerge. The word pattern itself implies that it is of a familiar "shape" thus giving us a chance to recognise it and ride on it for a while.

Precisely!

Cheers,
MAESTRO
 
Quote from MAESTRO:

It becomes not chaotic at all. A rigid structure emerges like a layer of ice crystals over the puddle of water.

Whatever the reason may be, we all need a reason to act, wouldn't you agree? Thus the reason is essentially a prediction, a belief in a certain outcome.

It's not entirely a prediction; it's more a reaction to a condition

Before a pattern has emerged, could a group of people, that believes that a particular pattern must appear, grow larger and stronger contributing to the probability of a pattern to appear. Could the pattern itself attract another group that will make that pattern last.

Exactly. That is what we bank on when we enter trades

Because it all happens spontaneously we will never be able to predict when or where a certain pattern will appear and, because it is still governed by Randomness, we cannot be sure for how long it will last.

Right ON!

But we can be certain that a pattern will emerge. The word pattern itself implies that it is of a familiar "shape" thus giving us a chance to recognise it and ride on it for a while.

Precisely!

Cheers,
MAESTRO
More...

Thank you, MAESTRO.

I have an image of the school of fish and that giant flock of birds in my mind.

(www.ted.com Mathematician Steven Strogatz shows how flocks of creatures (like birds, fireflies and fish) manage to synchronize and act as a unit ...)

Since "... it's not entirely a prediction; it's more a reaction to a condition...." you JUST DO IT, don't think. Study the tendencies, research patterns, have a plan, but when you recognize certain conditions just act.

"Herd Mentality" really helps here too, I guess. Stay in a tight pack, react just like most of them in the pack will do.
 
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