just look at a chart. if it is completely random then you would not see multiple support and resistance. it could be that it is to some degree random but it is not completely random
Randomness And Trading
- Thread starter Tall Mike
- Start date
The transactional nature of the market makes it exploitable.
Big players need to get in and out for various reasons and create temporary value areas.
If the market was all day traders then it would be totally random.
Charts are a confluence of shorter and longer term players.
Big players need to get in and out for various reasons and create temporary value areas.
If the market was all day traders then it would be totally random.
Charts are a confluence of shorter and longer term players.
Nope.
That is correct. If it moves 1 tick it is because an institution caused it or wanted it to happen for “whatever”reason. We retail make up 5% of market action. Computers with algos HFT’s...etc make up 70%. The other 25% are large institutions like banks..pension funds...Etc. We do not move the markets. Not even 1 tick.
There's runs and trends in random processes, too.
Simple trend-following systems are only profitable if there's a strong trend present which persists after your lagging entry and usually it's associated with periods of large drawdown. In periods of rangebound action you will usually get chopped up.
A good trend following system would know how to deal with that, but it won't be a 'simple' one.
Of course it would.
It would be equivalent to a large poker game with equally matched players.
Over time there is 0 chance anyone would come out way ahead. Especially after transaction fees.
It's buy and hold or short and hold that makes day trading possible.
Imagine a world of art dealers all buying and selling to each other with no intention of holding inventory, that would never be profitable.
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"Trends" in random games do not exist, meaning the series of up and down moves are normally distributed (google for that expression).
If trends existed in random games, then you would be able to beat any Head or Tail game - or the Roulette at the casino - just by "following" these (imaginary) "trends".
No, 5% of traders (smart money) would still pocket the money of 95% of losing traders (dumb money).
Which would be true if 95% of the volume was dumb money but the problem is 99% of the volume would be smart money.
The 1% unsophisticated day trading volume would be completely irrelevant.
So you're left with high frequency trading firms all trying to take money from each other with no other players in the market.
Game over.
Not sure why you keep changing the meaning of your last posts.
You clearly said and I quote: "If the market was all day traders then it would be totally random."
That's the point we are talking about, and nothing else.
So, again, why would the market become "random" suddenly, if the players/traders were day-traders only?
It won't become random, for the simple reason that savvy traders will always take the money of less informed/disciplined traders, in the long run.
And greed and fear will always create trends that these savvy traders will exploit financially, while the dumb money is trying to pick tops and bottoms with "overbought" "oversold" nonsense.
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