"Marketsurfer is correct: There is no Trends!" --- There are only Turns!

Random maybe, unpredictable for sure. In any event, trends can exist in all types of time series, even random ones. If they last long enough in a price series, one can profit from them.

 

Actually, they're predictable as well, at least within the framework of Auction Market Theory.

 

If a trader can make 75% profitable trades on a statistical representative numbers of trades, what is then the conclusion?

1. Was the trader fooled by randomness?
2. Or was randomness fooled by the trader?

Randomness means to me that in a statistical representative numbers of trades there will be in the long run about 50% winners and 50% losers. If it becomes 65/35, 70/30 or 75/25 things are not random anymore.

 

It seems unfair the markets are random to some but predictable to others.

 

Yes, it's a bit isn't it ? But that's how life is, we are given different gifts. If you are not good at something, you can always concentrate on something else that you are good at.

 

You can make money by predicting with >50% accuracy, but you can also make money without predicting i.e. <50% accuracy. The second method is harder, and you can get hit by some long losing streaks, but you can still make money that way if you are disciplined and have done your research properly. Most people lose discipline though. Not many people can handle losing money for extended periods of time.

If you start out trading with a method that wins less than 50% of time, if you trade that long enough you will start to notice market behaviours that are predictable >50% of the time. Eventually you will be able to find patterns that actually work more than 50% of the time.

 

It is not unfair, it is necessary to make the system work. The "randomers" have to pay for the profit of the "predictables".

But I have another question: some say that 90% of all traders don't make money.
If this is true, is it not the ultimate proof that markets are not random? Normally 50% should lose money. 90% looks not random to me.

 

One thing no one will argue with is once you enter a directional trade "the trend" is hoped to go your way.

The question is, does "trend" matter prior to the entry?

surf

 

The trend is your friend.
He can be a very good friend.
But, never a better friend than a Golden Retriever.
But, if you have one, it's best to have both.
Take care of your pets, even if you haven't graduated to a Golden Retriever or a trend.

 

I disagree. I met a hedge fund yesterday that approaches the market as a random system. They have posted impressive results over the last several years. surf