Is price movement really random and unpredictable?

[volpri]

I think you're assigning far more numeric specificity and constancy to the markets than they actually offer.

Remember the definition of a calculator? A device that let's you take 2 seat-of-the-pants estimates, multiply them, and get accuracy to the 10th decimal place.

Could be …could be…however, I find it a useful tool in my trading. For scalping anyway.

 

[semperfrosty]

I have a few books by Ehlers and, frankly, they give me head cramps. There are so much math/science jargons. Anyway, you might find the following diagram helpful, which is from his book, Cycle Analytics for Traders (2013).


View attachment 331519

Jesus! Just got a head cramp myself.

 

[TrAndy2022]

Is price movement really random and unpredictable?

Yes and No, to a certain degree. Which is depending on each ones his skills.

 

[savoir]

What's dumb about it?

It seems to me that the "The Trader's equation" is just Al Brooks re-branding of the old expectancy formula which every trader is subject to.

At the end of the day no matter what approach you subscribe to, your trades summarized will come out with an average win, average loss and a win/loss %.

Every trader is subject to the Trader's Equation? You mean like gravity?

I know you like to compile stats and make predictions. Do you think the probabilities you assign are more rigorous than Al's 60/40?

 

[Laissez Faire]

Every trader is subject to the Trader's Equation? You mean like gravity?

Yes.

I don't know specifically how Al uses it, nor do I want to know, so I'll skip that video.

My point is simply that at the end of the day/week/year, if I tally up your trades, we will get an average win, an average loss and a win rate. Even if you don't use a stop loss in the markets or even if you don't predict, you will still have a list of trades that are subject to that formula.

And it's good for new traders to understand this equation and what's required of you to have a positive expectancy long term.

I know you like to compile stats and make predictions. Do you think the probabilities you assign are more rigorous than Al's 60/40?

Yes, because I think he's pulling them out of his ass.

 

[savoir]

Yes.

I don't know specifically how Al uses it, nor do I want to know, so I'll skip that video.

My point is simply that at the end of the day/week/year, if I tally up your trades, we will get an average win, an average loss and a win rate. Even if you don't use a stop loss in the markets or even if you don't predict, you will still have a list of trades that are subject to that formula.

Maybe you should watch the short clip because you seem to be saying the Trader's Equation is the same thing as averages of all your trades completed.

And it's good for new traders to understand this equation and what's required of you to have a positive expectancy long term.

The equation is conventional wisdom and who cares about new traders or not new traders. Everyone has a mind. They should build it and use it for their benefit.

Yes, because I think he's pulling them out of his ass.

Results are what matters but your method requires a lot more work for essentially the same pulling numbers out of the ass.

 

[schizo]

Probability is not a mere computation of odds on the dice or more complicated variants; it is the acceptance of the lack of certainty in our knowledge and the development of methods for DEALING WITH OUR IGNORANCE. Outside of textbooks and casinos, probability almost NEVER presents itself as a mathematical problem or a brain teaser. Mother nature does not tell you how many holes there are on the roulette table, nor does she deliver problems in a textbook way (in the real world one has to guess the problem more than the solution). In this book, considering that alternative outcomes could have taken place, that the world could have been different, is the core of probabilistic thinking. (Emphasis mine)

— Nassim Taleb, Fooled by Randomness

 

[Laissez Faire]

Maybe you should watch the short clip because you seem to be saying the Trader's Equation is the same thing as averages of all your trades completed.

Yes. And if it's not, I don't want to know.

As for the rest of your post: okay.

 

[ironchef]

What is this noise trading that provides the essential missing ingredient, and what does it look like in practice? Without noise traders, there is no information; liquidity in the market is low; trading is reduced or comes to a standstill. Without noise traders, prices would not be estimates of value, but value itself. In such an ideal state of the market, everybody would be happy but also very certain of what he or she knows and of what others know, so that there would be no trading.

Very profound.

I, a noise trader, provide price discovery, liquidity and help create the market. Yet I don't get any credits for it?

 

[schizo]

I, a noise trader, provide price discovery, liquidity and help create the market. Yet I don't get any credits for it?