The market is not random

someone · Jan 7, 2009

Quote from NeoRio1:

Hows it going jasonn? Bad I assume.

blessed be the man with many faces

for he has imagination

2cents · Jan 7, 2009

renko charts... priceless :-)

))))) and why not some ichimoku cloud combo while your at it? :-)

)))))))))))))))))))))

eagle · Jan 7, 2009

There have been a lot of arguments in the past where one side believe in random and another side believe in unpredictable. I believe in unpredictable. Let me explain.

Assuming the market as the weather. The weather is a kind of orderly chaotic, but not random. Meaning that you cannot predict a rain in one month ahead but you can be sure that there is no snow in Africa in the next month. Where random will not guarantee that there will be no snow in Africa in one month. As well Wall Street can expect ahead within a small margin of error a company will earn X dollar a share for its next quarterly report.

Quote from ivanbaj:

I say the market is not random. Does this mean that it is not efecient?

stock_trad3r · Jan 7, 2009

Quote from ivanbaj:

This is a renko chart of an actual future contract. It seems that there are about 250 boxes. I see that there are few big consecutive runs:

18 up boxes
23 up boxes

Can someone calculate the probability of getting 18 and 23 consecutive runs within 250 tries?

My calculations show that if there is 50% chance of getting an up or down box the probability of getting the above is very low.

I see such runs very often. This is only one random sample.

I say the market is not random. Does this mean that it is not efecient?

The market isn't random. it obeys varous symetry equations, which are a function of scaled price, slope, and volume.

MAESTRO · Jan 7, 2009

Quote from ivanbaj:

This is a renko chart of an actual future contract. It seems that there are about 250 boxes. I see that there are few big consecutive runs:

18 up boxes
23 up boxes

Can someone calculate the probability of getting 18 and 23 consecutive runs within 250 tries?

My calculations show that if there is 50% chance of getting an up or down box the probability of getting the above is very low.

I see such runs very often. This is only one random sample.

I say the market is not random. Does this mean that it is not efecient?

Would it kill you to read a few books? If you toss a coin and it landed 12 times in a row "heads up" does it mean the coin tossing game is not random and/or you are in a "head trend"? Education, my friend, is a virtue.

eagle · Jan 7, 2009

You keep giving this unrealistic example. It depends on how many times you will toss in a set, if you toss only 25 times in a set then you will spend your entire life tossing coin to get the above combination, or maybe never.

Quote from MAESTRO:

Would it kill you to read a few books? If you toss a coin and it landed 12 times in a row "heads up" does it mean the coin tossing game is not random and/or you are in a "head trend"? Education, my friend, is a virtue.

MAESTRO · Jan 7, 2009

Quote from eagle:

You keep giving this unrealistic example. It depends on how many times you will toss, if you toss only 25 times then you will spend your entire life tossing coin to get the above combination, or maybe never.

Have you ever heard of Quincunx or Sir Francis Galton? Or your education is optional for you?

eagle · Jan 7, 2009

No for the two authors. Yes, my education is optional for that kind of knowledge.

By the way, is that your entry/exit will be determined as the way of tossing coin?

Quote from MAESTRO:

Have you ever heard of Quincunx or Sir Francis Galton? Or your education is optional for you?

MAESTRO · Jan 7, 2009

Quote from eagle:

No. Yes, my education is optional for that kind of knowledge.

By the way, is that your entry/exit will be determined as the way of tossing coin?

You got it! Yes, in broad strokes my entries are more or less random, but they follow a stable distribution pattern. There is a huge difference between "random" and "normally distributed". But, I guess, the knowledge of this sort is optional to you.

eagle · Jan 7, 2009

So your belief is in "random" and your system is based on "normally distributed". Your belief and your system seem to be contradicting. Please justify that difference.

Quote from MAESTRO:

There is a huge difference between "random" and "normally distributed".