I don't know. But if one large trader makes a big move (say for logical reasons like a serious investor acquiring large stake) then it may be followed by 100s of other traders who try to decipher what he/she meant, each making different conclusions and decisions, some shorting, some going long, and each setting different targets and stops. They all have reasons to do that, each feeling some purpose and enlightenment, but collectively they pull the market in different directions that causes lots of fluctuations without any one trader's logic prevailing. Whether that can be called random or not, or noise or not, may be a topic on its own (and maybe that's what's being discussed here).
Randomness And Trading
- Thread starter Tall Mike
- Start date
I don't know. But if one large trader makes a big move (say for logical reasons like a serious investor acquiring large stake) then it may be followed by 100s of other traders who try to decipher what he/she meant, each making different conclusions and decisions, some shorting, some going long, and each setting different targets and stops. They all have reasons to do that, each feeling some purpose and enlightenment, but collectively they pull the market in different directions that causes lots of fluctuations without any one trader's logic prevailing. Whether that can be called random or not, or noise or not, may be a topic on its own (and maybe that's what's being discussed here).
I find this impossible to comprehend but I'm gonna let it go because we all have different perspectives.
Flexibility is what's required to be a trader.
Zero randomness does not exist in the market.
A 100% non-random market (the outcome of each trade can be predicted with 100% accuracy) will cease to exit instantly, simple as that.
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Actually, that's exactly how value is created or lost. Holding anything has no value until it is sold and art/classic cars/traders do buy and sell off each other (long or short) to affect value.
“The random walk model of price change has been so durable because it’s nearly correct. The difference between futures prices and certain random walks is too small to detect using traditional time series analysis. Incredibly, this difference is detectable using trading systems.”
— William Eckhardt
— William Eckhardt
But we are already buying and selling from each other when we buy stocks, for instance.
A buys from B with the intention of selling to C (at a higher price).
C buys from A with the intention of selling to D (at a higher price).
D buys from C and so forth...
The stock circulates like a hot potato and everyone is profitable, due to the upside bias of the stock market (and the never ending supply of new buyers and sellers).
Markets are random in the sense that there are no known models to accurately calculate many probabilities.
Things like the probability of an uptick in ES at any given time are seemingly random. But traders know very well how to estimate the probability of the next move i.e. the outcome of aggregate ticks over a given timeframe. They use smart shit that gives them edge.
That or they pretend to do so and blow out their accounts.
Things like the probability of an uptick in ES at any given time are seemingly random. But traders know very well how to estimate the probability of the next move i.e. the outcome of aggregate ticks over a given timeframe. They use smart shit that gives them edge.
That or they pretend to do so and blow out their accounts.
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Thank you for mentioning him. He started the thread Intuition Amplifiers 2. I've started reading through and mind blown
link me bro!
Start here:
https://www.elitetrader.com/et/threads/intuition-amplifiers-2.260064/
It starts hitting turbulence when others begin polluting so try to stay focused and follow the core thread of his wisdom.
That thread led me to another character who seems to know a thing or two. jack hershey. Quite difficult to understand initially, but if you put your brain into gear and disentangle the complexity of his narration you will find some very valuable and usable knowledge.
I have only just started scratching the surface but spent probably 4 hours last night reading and making notes from these dudes. Still a lot more to go which I am grateful for.
I see that @Sprout commented on jack Hersheys profile page. Hopefully, he will point out some links and threads he found useful.