Are you referring to the now virtually available 24/7 (or 24/6?) forex markets, or anything else expected to launch soon?
I think the point you made for dynamic positions of overnight trading should be reasonable and insightful in order to reduce the risk impact of price gaps. Potentially that would also enhance profitability in some cases, I guess. I'm currently working on over-weekend trading of forex gaps. http://www.elitetrader.com/vb/showthread.php?s=&threadid=56791
Here, you definitely are in the right thread. Predicting randomness is an excellent technique applicable to this.
Can you please explain a little more about what you were talking about with all that you need is 3 bars of price to stay on the right side of the market. Maybe even show a chart explaining what you were talking about in your post. It seems that you were stressing the importance of picking the correct time frame to trade in that you can keep up with while monitoring the market.
Actually I'll not try to predict the upcoming gap, if any. I'll just adjust my directional positions more frequently than before in response to any price movements during weekends. One scenario would be similar to the dramatic movements on Friday's EUR/USD jumping up and down 200 pips within 2.5 hours.
It occurs to me that a lot of the discussion on this thread is coming from a definition of randomness. I f I say the chance of the next event occuring is 90% and 10% of not happening that to me is random. On the other hand, if by random you mean the chance of any particular event is equal. That is, a uniform distribution. So since, pretty much, anything can happen the probability of any event approaches zero. If that is what is meant by random, then I don't belive you can make money in the market. It seems pretty obvious to me that the mechanism operating in the markets is not of this form. As such there are regularities over certain time scales. For example over billions and billions of years the solar system is random but over the time scale of our pitiful lifetimes its pretty regular! Okay that's my epiphany for today
Simply put: When is a signal (most) random? When its autocorrelation function is the dirac function or, which comes to the same, when it has a constant spectral density function. This is called 'white noise'. Now, if the above doesn't hold, a signal can be 'colored noise' and still be random. Generally, in order to define a random signal you can show how it is build up or transformed from a relation involving a classical well defined probabilistic process like the increments of the Wiener process, Poisson process, etc. In a more general way, a random process can be defined as a solution to a stochastic differential equation. What is random in this thread? The definition of random. BINGO
The mere act of discussion is mind expanding to the trader. Some newbie is reading this thread, and your words have influenced their behavior. You may have created the next Market Wizard via the butterfly effect.