When you say "achieve positive win %" are you implying that you need to pick the right direction before you can be a profitable trader? Do you consider me a directional trader if I only pick a range not a direction? I don't consider my self a directional trader so in my case I place a lot of my attention on trade management / portfolio management. Maybe I should be in another thread on this subject?
What is Technical Analysis? Why does it work?
- Thread starter iamnewuser911
- Start date
Someone earlier said it best. First, define the terms.
What does it mean to say "the markets are predictable," or "the markets are random," or "the markets are both?"
Pi is predictable, without fail. Is the Pi sequence random?
If the markets are predictable and not random, as some allege, why can't anyone here predict whether the sp500 will close up or down the next trading day, for the next year, without fail?
Could it be that it has both predictable and random components, as I've alleged?
Really and truly, everything in the universe, above the quantum level, has a cause and is not random. Lottery balls are governed by their initial starting positions, gravity, air flows, newton's laws, etc. They are not truly random. BUT, it is such a complex system, they we simply refer to them as being random draws.
Again, semantics. Everything thing above quantum level has a cause and effect in this regard, so nothing is truly random. However, the causes may be unknown and unknowable within sufficient time to make 100% accurate predictions. So, for such complex systems, we simply refer to them as being random.
Finally, let me be clear as to my opinion: The markets encompass so many factors as to make any entity having all of the causes and their values, currently impossible. As such, no one can predict the markets with 100% accuracy. The missing information adds a 'randomness' to the markets. However, The markets aren't totally random as some information regarding the causes can be known. Thus, the markets may be predicted with greater than 50% accuracy. The accuracy one would expect in a completely random system. (But again, less than 100%, the accuracy one would expect in a completely non-'random' system.
As I've stated in the beginning, both random and non-random.
What does it mean to say "the markets are predictable," or "the markets are random," or "the markets are both?"
Pi is predictable, without fail. Is the Pi sequence random?
If the markets are predictable and not random, as some allege, why can't anyone here predict whether the sp500 will close up or down the next trading day, for the next year, without fail?
Could it be that it has both predictable and random components, as I've alleged?
Really and truly, everything in the universe, above the quantum level, has a cause and is not random. Lottery balls are governed by their initial starting positions, gravity, air flows, newton's laws, etc. They are not truly random. BUT, it is such a complex system, they we simply refer to them as being random draws.
Again, semantics. Everything thing above quantum level has a cause and effect in this regard, so nothing is truly random. However, the causes may be unknown and unknowable within sufficient time to make 100% accurate predictions. So, for such complex systems, we simply refer to them as being random.
Finally, let me be clear as to my opinion: The markets encompass so many factors as to make any entity having all of the causes and their values, currently impossible. As such, no one can predict the markets with 100% accuracy. The missing information adds a 'randomness' to the markets. However, The markets aren't totally random as some information regarding the causes can be known. Thus, the markets may be predicted with greater than 50% accuracy. The accuracy one would expect in a completely random system. (But again, less than 100%, the accuracy one would expect in a completely non-'random' system.
As I've stated in the beginning, both random and non-random.
Maybe the term money management should be replaced with trade management as previously suggested.You can sell an OTM call which is short in direction and you can still profit if the underlying rises within a certain range. Thus being wrong in direction and still making a profit.
I guess I am not be precise. Actually you can have a low win% and still have a profitable system if your reward is greater than your risk. You can also sell calls to generate profits if you know what you are doing. There are many systems. However, what I am saying if you think prices are random, you are incorrect.
Prices being random would that mean that its possible that SPY could go to 0 or $1,000 by next week? In this case markets are not random they do have a predictable range. Predicting SPY direction up or down by end of tomorrow that's another thing that tends to be random.
Maybe the answer to this question would clarify. Is selling a iron condor directional? My definition of directional is that no its not. Maybe your definition of directional is that it is.
Yes, trade management would be better.
Yup. That's what I posted.
Lottery ball draws are random. But the range 0-9 is predictable. Again, there's a lot of debate about semantics...probably for debate's sake.
Anyone check out debate.org? Hard core debaters there.
Random in the context of markets discussion usually means " I have no clue what is going on". The term random strictly speaking may not be applicable to markets. Random and randomness are very interesting phenomena that are carefully studied but rarely properly defined. Closely related term is chaos (chaos theory) and in my opinion that term better reflects what is going here. Small difference but it may be significant. There is a thread on this forum addressing chaos and markets. Obviously this is not the only source of information; there are books and many online resources talking about chaos and markets.
I agree and would venture to say that most of what we call 'random' is actually chaos. I suspect that randomness only exists in maths (and perhaps, the quantum world), along with other non-physical, imaginary concepts like the square roots of negative numbers.