Randomness And Trading

[Grantx]

The bar does indeed tell fibs/porkies.
If bars don't lie, can you show me your squillions banked. Ta muchly.
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He's read more than 600 trading books you should know. A god in the world of theory. Lolz

 

[themickey]

So many geniuses on ET, price don't lie, price not random...

 

[Grantx]

So many geniuses on ET, price don't lie, price not random...

Yet in the next post our genius brethren enlighten the unwashed masses by informing us to eliminate random and only trade when it trends.

Because that's how the pros do it we are told.

 

[oshjdf]

As someone who uses both fundamental and chart for trading, I feel sick when I see this kind of debate.

 

[formikatrading]

If you use fundamentals and you think they are helpful, that is great, but Tradex is correct, if you are really good at reading the chart, you don't NEED fundamentals, regardless of time frame.

We don't need fundamentals even if we are trading with yearly charts (1 bar = 1 year).
The chart itself is all we need, and it never lies.

On the other hand a fundamentalist can say ANY B.S. and get away with it, nobody will be able to contradict him, because he will NEVER publish a specific entry point and a stop.

 

[virtusa]

If you use fundamentals and you think they are helpful, that is great, but Tradex is correct, if you are really good at reading the chart, you don't NEED fundamentals, regardless of time frame.

Exactly.
Fundamentals only have importance when they influence the price. And the price is the only element that can generate you a profit or a loss. If it is not in the price it is irrelevant.
And as relevant fundamentals are in the price you don't need to watch them. They are incorporated in the price level.

 

[virtusa]

So many geniuses on ET, price don't lie, price not random...

So many geniuses on ET, price is random...

 

[KCalhoun]

Fascinating discussion.

When it comes to randomness and trading:

• Some things like average daily range are relatively consistent, not random
• Some chart patterns, like yesterday's PFE mean reversion bounce I traded profitably, are less random
• It's HOW you manage risk and profit taking, your response to seemingly random price action that counts

In poker we call it variance. Knowing your pot odds and opponents ranges helps decisions a lot, despite variance in what random card hits the flop, turn or river.

 

[themickey]

.....Some things like average daily range are relatively consistent, not random

• Some chart patterns, like yesterday's PFE mean reversion bounce I traded profitably, are less random
• It's HOW you manage risk and profit taking, your response to seemingly random price action that counts......

That's not really the issue with the immediate discussion.
Everyone agrees that markets are not wholely random.
But comments are being made "there is zero randomness." which is where I disagree.

 

[virtusa]

That's not really the issue with the immediate discussion.
Everyone agrees that markets are not wholely random.
But comments are being made "there is zero randomness." which is where I disagree.

I would describe the randomness part as follow:
It is the fight of the bulls against the bears. Eventually one of them will win and define the direction.

I consider this as non random too as it is the result of a deliberate choice of people. They don't buy or sell randomly. They have an opinion and a target. Random would be just the opposite: people who buy or sell without having any idea why they do that, and buying or selling at any price without any strategy.

This may look like random, but is not.