My trading is just as random as yours But how do I, or you, really know? Maybe it just works right now. Maybe I will blow up today, especially if I bet the farm on that test of support on lower volume that I know is coming today...or is it higher volume Anyway, as another poster posted, there are so many variables that we cannot possibly know them all. Even if we did, would we know what the outcome of the interaction of said variables would be??
First clever post I find on this thread. Question : you are talking about linear, two points, correlations. What about the rest of all possible correlations ?
We agree on supply and demand, but what is the engine that drives supply and demand? If that engine is random, then the results from that engine will be random as well. If all of Americas loans were called today, the US dollar is worthless. Yet many will still say that the Treasury note is a low risk venture. LTCM thought the same thing about Russia, if you remember. They were fooled by randomness. http://www.agribiz.com/merchdiz/cointoss/cointoss.html
I don't agree with supply and demand theory. Actually I make most of my money in trading disagreeing with this economical principle.
Predicting randomness? You got to define things so that the question makes sense though. Then you can start with Wiener filtering. A classical exercise is the Wiener Optimal predictor, which indeed predicts "randomness" of a suitable kind. This is indeed possible. That's roughly what you might want to dream about in markets. It ain't that simple though if you want to make money with it. Prediction, mathematically, is possible. You have to understand what is meant by it.
To those who played the coin toss simulator there were some great trends in there weren't they? All we need to do now is backtest the data and out comes a system! Backtesters......Fooled by Randomness.
Mathematics, to my very limited understanding of it, becomes probability beyond a certain point. I read somewhere that there are some axioms that still have no proofs.