Can one control Randomness? This seems to be an appropriate question/comment that comes to mind when reading your thought provoking post. Michael B.
bobcathy1> And math is sorely lacking in the ability to read emotion. Might there be some basis to say that technical analysis is an attempt to use math to read human emotion? ARogueTrader> Random is a human concept and exists as a concept in direct relationship to man's concept of order. In Does God Play Dice? Ian Stewart notes a key difference between Quantum Mechanics & Newtonian Physics being random or stochastic behavior. Einstein, himself, had difficulty accepting such ideas. But, isn't the human role in such randomness just to describe it, and not to contrive it? Gilbert Strang, an author and MIT math professor wrote an essay Too Much Calculus http://ocw.mit.edu/NR/rdonlyres/Mat...A7519-DBAC-4280-BE7A-10160BBC65FD/0/essay.pdf His main point is to criticize the prevailing wisdom that calculus is more important(serious) math than is Linear Algebra (or statistics, or discrete math). The point in mentioning this is that when people dismiss randomness as non-serious math, they are actually prioritizing deterministic math (calculus) over non-deterministic math (statistics). For anyone who thinks statistics is not serious math, perhaps they might work some SDE's (Stochastic Differential Equations) such as might be used for options pricing. The '97 economics Nobel for the Black-Scholes algorithm may have quieted some of the provincial attitudes against non-deterministic math. How do you think the implied volatilities in the VIX index are calculated? I forget if they use B-S or something more modern like the binomial model, but the point is the same for this discussion. For what it's worth, some institutional traders use grids of computers to price options via Monte Carlo techniques. May the smile* be with you [size=-2]*volatility[/size]
Something is either random or it's not. There is no such thing as partially random. If you can apply a structure that shows something to be random, it indicates it is not random. Random is a theoretical concept and cannot be expressed in the real world. A process or structure can be said to approach random, but it's in appearance only. Random is an illusion. A crutch to define forces and interactions we don't understand. All interaction between any two particles, things, whatever instantly introduces patterns in their behaviors regardless of their individual properties. Randomness has no meaning in isolation. Therefore all things have patterns. The level of appeared randomness is dependent upon the properties of the individual "things" that are interacting. This does NOT equate to a deterministic universe. But it does indicate likeliness of determination.
So are you saying that our inability to understand a pattern is often answered by a wrong conclusion of it being random ? or.... are you saying for every action there is an opposite and equal reaction? Michael B.
The former... When we can't understand the pattern we often conclude that it's random. But that's just a cop out. Similar to chaos theory: it's just a way of predicting outcomes that are driven by forces we don't understand or can't quantify. But, many say that without randomness, the universe is then totally deterministic. Add up all the variables, plug them into the equation and out pops the answer of everything. That's a false conclusion also. The universe is not deterministic but there are probabilities of behavior that make it appear somewhat deterministic. Patterns are tendencies not absolutes. Similar to trading a pattern. All things have patterns. There is no such thing as randomness (except in theory). The moment you imagine any "thing" into existence; it has properties. The moment a second "thing" is introduced it will interact with the first "thing". That interaction will be defined by the properties of those "things". That interaction has to have a pattern (however random it might appear).
What did you have in mind harry? I think randomness doesn't exist in reality. It's a theoretical concept. But for practical purposes all things have an element of randomness. Randomness being "outcomes that we cannot predict with enough certainty to be meaningful".
See this thread about Bradley http://www.elitetrader.com/vb/showthread.php?s=&postid=399999#post399999 "And does Bradley work for intraday : because if I know the price (example of today below: 10406.8/10407.1 was projected in real we made an absolute intraday bottom at 10407.04) and Bradley knows the time, well this would become totally deterministic . (In fact I should be able to determine time because I have now an idea of how my market's model clock is correlated with physical time's clock). Then the question would be: how can it be as anyone have apparently the choice of buying and selling freely whenever the want huh ... think a little bit there is only one rational solution " <IMG SRC=http://www.elitetrader.com/vb/attachment.php?s=&postid=399999>