Quote from makosgu:
What is different for some of us is in the connecting of the dots. When you go from one moment to the next it is NOT RANDOM. Unlike tossing a coin, each subsequent coin toss is 50/50. If you get 10,000 heads in a row, on the next coin toss, the stat is STILL 50/50. It is completely false to assume that the next coin toss is more likely to be tails then head. This is because for coin tossing, each toss is a completely independent event from it's predecessor. This statement is only false when you can toss the coin the same exact way each time (ie. using the same initial factors). So, unlike a coin toss, each price change and tick is in fact related to it's previous state. This, in a sense, is what connects the dots. So in other words, subsequent price changes and ticks are NOT RANDOM. However, if you isolate just PRICE alone and compare an up vs a down, then it will look like coin tosses. But unlike the initial conditions of a coin toss, you can actually see all of the initial conditions that connect each tick to one another except for a component that would only appear on the DOM anyway.
The problem here is how you define what you monitor. When I use a right trend line, my comparable string of heads is alot longer then someone who is evaluating from tick to tick. What I mean is that, tick to tick, price can go up or down and for some folks it is comparable to get heads (up) or tails (down). When I use a reference point, an up tick and a down tick, with respect to my right trend line can be a heads heads toss even though the one tick was up and the next was down. Here, I am completely redefining what the possible strings of sequences can be.
As far as prediction goes, I predict that there will at least a short trade today and a long trade today. This "prediction" will be 100% accurate. However, nobody can take this to the bank because we all know that without timing, the prediction is useless in trading. Hence the emphasis on focusing on whats happening right now. NOW, incorporates timing all of the time. A year bar has a NOW window of the whole year. A 5M bar has a NOW window of a full 5M. Someone who trades a 5M chart has a 5M NOW window. Someone who swings a daily chart, has a one day NOW window. The most important datapoint is the NOW datapoint. Using datapoints that are older than now is less informative than the current one... Because some of us find that there are long strings of NOW moments, we do not see wild swings from moment to subsequent moment. This is again like weather. Weather does not randomly fluctuate from moment to moment. Wind change might, but something like precipitation (ie. Rain/Snow) won't. SInce we only have 3 types of trades LONG/SHORT/OUT, it is comparable to having three types of weather conditions RAIN/SNOW/SUNSHINE. We don't see the weather randomly moving from one to the other moment by moment. Instead we get long strings of the same weather moment to moment. Trading can be defined as such if you elect. I'm sure most traders would like to see long sequences of NOW in which they are in one of the 3 trading states. When looking at things this way, you avoid have to make a prediction about where, when and what the market will do. Instead you what the market IS doing. In a sense, you are reading the market as it unfolds...
