Random Walk Theory Proved, once and for all.
- Thread starter mu200411
- Start date
Random Number Series should have no trend.
What we see is just an illusion caused by the fact that the end point is higher than the starting point.
If the number of +1 is more than the number of -1 it will give an impression that it is an uptrend, but in reality it is not a trend.
Trader can use this as an edge. If he knows that something will make number of +1 > number of -1 he should go long and make money. If he knows that something will make number of +1 < number of -1 he should go short and make money.
What we see is just an illusion caused by the fact that the end point is higher than the starting point.
If the number of +1 is more than the number of -1 it will give an impression that it is an uptrend, but in reality it is not a trend.
Trader can use this as an edge. If he knows that something will make number of +1 > number of -1 he should go long and make money. If he knows that something will make number of +1 < number of -1 he should go short and make money.
Yeah but you could keep calculating your "random" control numbers over and over until you get a "winner" and post it here acting like you proved Random Walk.
Not mentioning the many many times you only came up with garbage when you used random numbers.
That's just statistics in action.
We in the anti-vendor establishment call it "cherry picking", just like any other loser snake-oil salesman, keeping digging through charts til your indicator or method worked, and then show everybody else the "proof".
.
Not mentioning the many many times you only came up with garbage when you used random numbers.
That's just statistics in action.
We in the anti-vendor establishment call it "cherry picking", just like any other loser snake-oil salesman, keeping digging through charts til your indicator or method worked, and then show everybody else the "proof".
.
um, a random number series is random.
16.04 , 10674.33, 34.98, 98.67, 56.01
show me, anywhere, that any instrument, in any market, ever, ever randomly moved in price such as the above.
please, when an IBM bar opens at 100.91, then, the next bar (be it a 5minute, 15minute, or 3hour and 37minute bar) opens at 2.42, then the next at 5,001.87 then I'll buy into your random nonsense.
until then, i'm always on the other side of you pal.
16.04 , 10674.33, 34.98, 98.67, 56.01
show me, anywhere, that any instrument, in any market, ever, ever randomly moved in price such as the above.
please, when an IBM bar opens at 100.91, then, the next bar (be it a 5minute, 15minute, or 3hour and 37minute bar) opens at 2.42, then the next at 5,001.87 then I'll buy into your random nonsense.
until then, i'm always on the other side of you pal.
price isn't random; its the probability that the next trade is higher or lower that is random.
Steam looks like smoke, but I'm not sure I can drink a glass of wood.
Maybe you should try to find a more precise argument than "looks like".
You know, I started an MBA. A couple of days ago I had a discussion with my professor about efficient markets. I asked him if he believed that markets were efficient, mentioning what probably is the best recent good example: 1999. His argument was that for the expectation at that time the market was efficient. I would rather use this argument instead of a random chart. I never really appreciated what Malkiel wrote
mu200411, this is very interesting and thought provoking work but how are you creating successive random numbers? For example, if the market is at 1470.00, as it is now, the next tick will either be 1470.25 or 1469.75. I believe the market is random but only to a point. The next random tick is dependent on the last tick. I've been trading the ES long enough to know that randomness and technical elements are both present in the market. Support and resistance does work but the move to and from is typically random and there's no guarantee the price will not fall slightly above or below that support or resistance level, which reinforces the random walk theory slightly more.
Bottom line...randomness and technicals can be traded but if your method is based on timing the market perfectly and you ignore money and risk management you will always lose. No one can time the market so consistently that they can ignore the way they manage their account.
Bottom line...randomness and technicals can be traded but if your method is based on timing the market perfectly and you ignore money and risk management you will always lose. No one can time the market so consistently that they can ignore the way they manage their account.
Quote from mu200411:
If I can draw charts using Random number series that look like stock charts, will it be a proof that Random Walk Theory is true ...?
No. But, they shore are purty.