Predicting randomness

Discussion in 'Trading' started by oddiduro, Nov 3, 2005.

  1. I have concluded that there is no such thing as a trend. All patterns happen in hindsight. Taleb has something with his market views.

    I am not marketsurfer:D

    Seriously, my trading experience has shown me that trying to predict the direction is worse than flipping a coin and using good stops with risk management.

    Let's talk yet again about whether we are not barking up the wrong tree with this prediction stuff.

    Any pattern that can be shown to have worked in hindsight can also be shown to have NOT worked in hindsight, which means that the patterns we think we see have no predictive potential at all.

  2. Arent u Jack Hershey follower?

    Did you give up his methods?
  3. That was Wittgenstein's point in his Tractatus Logico-Philosophicus- the bit about pointing at the moon and the other part about trying to predict a mathematical series.

    Taleb's point- Sith happens.
  4. duard


    So today's bounce @ 3:20 pm off yesterday's EXACT close in the SPOOS was random?

    The three rejections off an attempt at an intraday high today @ 7:39, 8:19 and 8:53am in the SPOOS was again a random event?

    Calculate the odds of that event and get back to me.

    Good Luck
  5. Every price movement has a reason...and a place to go..

    And is definitely not random...To suggest that price movement has no reason...can only come from a fool...
  6. I'm afraid we couldn't predict randomness for anything, but we can randomly predict everything including trading (particularly when disregarding the risk of ruins). :confused:
  7. Many make the mistake of overlooking the many possible paths price MIGHT have taken , and concentrate only on what happened.

    There are many scenarios that would constitute a PATTERN had they occured. Since only one path is actually taken, that is assumed by the unenlightened to be the only path that is valid.

    Is is hard to predict because your brain, however tiny it may be, contemplates all the possibilities, not just one.

    That said, there are outcomes that are more likely and rational, and that's your job to divine.
  8. You seem to come to the edge but for some reason you're unwilling to jump. As a trader, you're intuition is probably saving you. This is not a flame, as I am sure you are wondering about these things and are just trying to figure it out. But you have to look into the distance at where this particular path leads and admit that in the end, if you follow it, you have to confront the following question -

    Are markets a random walk?

    Anyone who believes in the random walk is either a disgruntled trader or an academic, a theorist.

    What is interesting is that you made no mention of the kind of time frames you are talking about. Are you talking about the likelihood that we can predict the market's direction for the next 1 minute? 10 minutes? 2 hours? 2 days? 2 weeks? 2 years? It seems to me that some time frames are more 'predictable' than others. Didn't Linda Bradford Raschke says that she doesn't think longer time frames are predictable, and that she can only trade intra-day moves? Guaranteed there is someone else who makes a living on the premise that only the opposite is true.
  9. What creates predictability in an environment like the market is the fact that people use systems to predict market direction. In other words, we are all making assumptions and many of our assumptions are similar creating the support and resistance at various levels.

    Hope that clarifies the subject a bit for you. :cool:
  10. If you flip a coin and get three heads on Mon, Tuesday, and Wednesday at noon precisely, does that mean it will happen on Thursday and Friday.

    You sir, may have been fooled by randomness:D
    #10     Nov 4, 2005