The market is not random

[MAESTRO]

"My major hobby is teasing people who take themselves & the quality of their knowledge too seriously & those who don’t have the guts to sometimes say: I don’t know…."

Nassim Nicholas Taleb

 

[ivanbaj]

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.

The point is that there were 18 and 23 in 250 to 300 boxes. It is not that there were 23 in a row that is interesting.

 

[swtrader]

Quote from someone:

market is RANDOM

but you are too young to know

give yourself few years grasshopper

give it few years

isnt there a thread in the oil futures section where someone called someone 'grasshopper' then promptly got their fucking head handed to them on a wrong long from 57 down to 35?

 

[OVVO]

http://www.riskglossary.com/link/stable_paretian_distributions.htm


The market is not random.

All coin toss examples are pretty much useless in the context that you will never find 2 identical market participants (a head and a tail) such that the weight of the coin is exactly distributed. One participant will inevitably have a larger weight (skewness) to the market outcome due to the non linear functions which all participants are comprised of.

Hence, there are trends in "random" data.

 

[BSAM]

Quote from ivanbaj:

.....I say the market is not random......

Ivan, do you trade real money?

 

[ivanbaj]

Quote from BSAM:

Ivan, do you trade real money?

Not sure. I trade USD. In my neighborhood they consider them real.

My trading method has nothing to do with this discussion.

 

[ivanbaj]

Let me ask this another way. How many throws do you need to determine if a coin is fair?

 

[BSAM]

Quote from ivanbaj:

Not sure. I trade USD. In my neighborhood they consider them real.

My trading method has nothing to do with this discussion.

Right. But, since you trade real money, I just wonder if you can teach us a method that works 100% of the time, since you believe markets are not random? Thanks.

 

[OVVO]

The coin will never be "fair" in the sense your thinking of. You're implying a Gaussian distribution which is not what markets operate under.

 

[oraclewizard77]

Someone flys a plane into a building, but before they do, their friends buy put options on the airline stocks.

The airline stocks go down, and their friends make profit, so is that random?