Do you see patterns in Random Walks?

Quote from MAESTRO:

If I was too harsh then please accept my apologies. It's just too many times I have witnessed remarks here that do not add any value to the topic in focus. I am always opened to other people's opinion if it is related to the subject discussed. All I want is to keep this thread relatively clean. Again, my apologies if I was too impolite.
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I wouldn't say too harsh at all. My point was simply to observe that he is one of the many who apparently regularly changes aliases. This is basically how ET is, back and forth. Trading is an intensely emotional activity and anyone can come in the door here to do it, so no qualms about participating in the fray.
 
There are at least three distinct forms of uncertainty:

1. Ignorance. The limits of our knowledge lead us to be uncertain about many things. Does our poker opponent have a flush or is she bluffing?

2. Physical randomness or indeterminism. Even if we know everything that we might care to investigate about a coin and how we impart spin to it when we toss it, there will remain an inescapable degree of uncertainty about whether it will land heads or tails when we toss it. A die-hard determinist might claim otherwise, that some unimagined amount of detailed investigation might someday reveal which way the coin will fall; but such a view is for the foreseeable future a mere act of scientistic faith. We are all practical indeterminists.

3. Vagueness. Many of the predicates we employ appear to be vague. It is often unclear whether to classify a dog as a spaniel or not, a human as brave or not, a thought as knowledge or opinion.

Bayesianism is the philosophy that asserts that in order to understand human opinion as it ought to be, constrained by ignorance and uncertainty; the probability calculus is the single most important tool for representing appropriate strengths of belief

Cheers,
MAESTRO
 
Might have been mentioned somewhere along this thread but:

The (Mis)Behavoir of Markets - A Fractal View of Risk, Ruin and Reward
by Benoit Mandelbrot
 
Quote from phattails:

I guess there's also a critical point in the thread where it becomes trashed as well.

With regard to the chart Maestro posted, I don't know if I'm over reaching here, but perhaps these papers have something to do with his data plot.


http://www.crwr.utexas.edu/gis/gishydro05/Time/RepresentingSpaceAndTime.htm

www.siam.org/proceedings/datamining/2005/dm05_55kumarn.pdf
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RIGHT ON!!!!! I am so glad you dug it out! Now the next step is to translate it to market data! You will see what 99.99% of others would not suspect exists!
 
Quote from SunTrader:

Might have been mentioned somewhere along this thread but:

The (Mis)Behavoir of Markets - A Fractal View of Risk, Ruin and Reward
by Benoit Mandelbrot
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Good book, however, Dr. Mandelbrot was a bit naive about markets.
 
Question:

How many of you, guys really and truly understand the Bayes’ Theorem? How many can say that they easily could implement it in any situation? I have a strong suggestion: please read this article.

http://yudkowsky.net/rational/bayes

There is much more to it that meets the eye!

Cheers,
MAESTRO
 
Quote from intradaybill:

Thus, the more repeatable patterns I can find in data, the less random they are. I think this is a reasonable position.
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This would seem to run directly contrary to what we've learned from cryptography, where the highest degree of output randomness is achieved by the highest precision of input calculation, which means it is actually not random at all.

Patterns exist because it's nearly impossible to create sequences without inducing them. There are tests for randomness that specifically look for this artificial lack of patterns.
 
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