Trends in random data

[Ciatronic]

Hello

I made a random generator number in excel (range between -1% and +1%) and then I summed up this numbers range starting from a value of 1000.
The result? Trends in random data. Isn't weird?

I attached a graph example generated by the random gen. function in excel and the excel file.

 

[Ciatronic]

graph

 

[Moderate]

theres no such thing as a true random number generator on a computer

 

[nLepwa]

Quote from Ciatronic:

Hello

I made a random generator number in excel (range between -1% and +1%) and then I summed up this numbers range starting from a value of 1000.
The result? Trends in random data. Isn't weird?

I attached a graph example generated by the random gen. function in excel and the excel file.

Why are you surprised?

In a RW you should expect the price to deviate from origin by sqrt(2*N/pi) where N is the number of steps in your walk.

 

[Ciatronic]

But this make me to question the validity of different technical analysis patterns that many 'traders' are using it. My conclusion is that from this type of TA, you can't extract an edge if you rely only on TA. (ps: I trade fundam.)

Quote from Moderate:

theres no such thing as a true random number generator on a computer

Yes, I agree. There is no such thing as a "true" rand. gen. but it's better than nothing.

 

[logic_man]

Quote from Ciatronic:

But this make me to question the validity of different technical analysis patterns that many 'traders' are using it. My conclusion is that from this type of TA, you can't extract an edge if you rely only on TA. (ps: I trade fundam.)





Yes, I agree. There is no such thing as a "true" rand. gen. but it's better than nothing.

But isn't it possible that your experiment is a "false positive"? Yes, there are "trends" in random data in some, maybe all, instances, where the data set is large enough, but that isn't sufficient to prove that market movement is random, which is what it would need to be for your "proof" that there are trends in random data to matter.

The real proof of what you are trying to say, it seems to me, would be to prove the market's movements are random.

 

[nLepwa]

Quote from Ciatronic:

But this make me to question the validity of different technical analysis patterns that many 'traders' are using it. My conclusion is that from this type of TA, you can't extract an edge if you rely only on TA. (ps: I trade fundam.)

Good!

You've got it.

(fundamental is not the only way however)

Ninna

 

[Dacamic]

Quote from Ciatronic:

But this make me to question the validity of different technical analysis patterns that many 'traders' are using it. My conclusion is that from this type of TA, you can't extract an edge if you rely only on TA. (ps: I trade fundam.)

Would fundamental analysis work if prices are random?

 

[Visaria]

Quote from nLepwa:

Good!

You've got it.

(fundamental is not the only way however)

Ninna

What has he got?

 

[nLepwa]

Quote from Visaria:

What has he got?

This:

"
But this make me to question the validity of different technical analysis patterns that many 'traders' are using it. My conclusion is that from this type of TA, you can't extract an edge if you rely only on TA"

Ninna