Predicting randomness

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

  1. Why do use assume that random walkers don't make money?

    In a random market there is an infinite number of ways to make money.

    Managing risk is the only way to KEEP it, though.

    The black swan will get you....be patient.
     
    #51     Nov 4, 2005
  2. Yes, but, just because the tosser simulation produces patterns that kinda look like (mega term in statistics that) price trajectory patterns, does that mean that the processes that lead to the evolution of those trajectories are similar, or better yet, that they can be modelled in the same manner?

    Just because the following looks like an anvil...
    [​IMG]
    ...don't mean Jack (hi Jack!). It is still a cloud...:confused:
    (If you squint, it might even look like a Weasel).
     
    #52     Nov 4, 2005
  3. ES335

    ES335

    Your coin toss 'proof' is weak and illusory.

    Consider this: If I showed you a bike and a motorcycle, would you conclude that they are equals because they 'sorta look the same'? No, after testing each, you would just conclude that although they are similar in appearance, they actually function differently and have radically different drivers. This fact has trapped many a weak mind in finance, including his majesty E Fama et al.

    I highly recommend you think twice about the above before responding.

    ES335
     
    #53     Nov 4, 2005
  4. ES335

    ES335

    You beat me to it. Similar idea. :)
     
    #54     Nov 4, 2005
  5. I gave up arguing about this a years ago once I had figured this all out. I'll do the best to explain myself and will not respond to questions or get into discussions about this. I will give you all the facts and you figure it out. Traders are stubborn, hardheaded and impatient by nature so some will think I'm nuts because they are too lazy to spend any time looking into what I'm saying and some will sit back and ponder the possibilities.

    All tradable Market's price action is random in it's movement. That is a definable FACT! No one can predict price action with any long term consistency because of the randomness that DOES exist. Up to this point Odd and I agree.

    The Random Walk Theory is dying though because we have the technology to see and gauge the consistency in that randomness that we could not see even 10 years ago. You are now saying, " How can the Markets be random AND consistent. Isn't that a contradiction?" No, and I will explain.

    Living creatures like humans are a good place to start. No two people are alike, even identical twins. Each of us are unique and random in our creation but there are flawlessly accurate consistencies that we can create a data set to track. Snowflakes are another example. No two snowflakes are alike but yet there are flawless consistencies; they are all crystalline in their creation, they all have dimensional structure and they all exist only at temperatures below freezing. Now lets look at price.

    Price is totally random in its movement but let's look at it's flawless consistencies.

    1 - Price continuously oscillates creating tops & bottoms. (waves)
    2 - Once price creates a top it will oscillate to create a bottom.
    3 - Those price tops and bottoms occur sequentially, one chart at a time.
    4 - Those price tops and bottoms occur at both extreme levels (High Tide/Low Tide) and levels that aren't extreme (waves). [Tracking those levels create definable, readable and tradable trends]

    These are just a few example of price's consistencies. Now set up a controlled environment where those and other flawless consistencies can be read as price moves in real-time and you will see price's flawless flow. You see I said read and not predict. I state it this way because one can't predict price movement but can read it's movement within fixed environments (chart increments). I will add that one can not use minute charts or tick charts to read price action accurately because those chart increments are not accurate assessments of true price action. Minute and tick charts are variable charts and one can't use a variable chart to read flawlessly varying price increments (flawlessly random).

    {Do not be misled - Elliott is wrong in thinking that there is flawless consistency in the number of waves in overall Market price action.}

    Inside this controlled environment, TRENDS EXIST and ARE READABLE! This controlled environment is not a manipulated environment because all one is doing is eliminating the variable in all situations from the trading environment EXCEPT the pure randomness of price.

    Odd's opinion of the Market's movement is accurate for his environment so his is absolutely correct in HIS assessment of price movement. He is unaware that anything else exists so to him it doesn't exist.

    This is why I don't argue with people any more regarding trend. Trends exits if you know how to set up the environment, where to look and how to read it but if you don't know this you will still see snowflakes as flawless unique entities with absolutely no consistencies.

    The Hubble telescope has overturned theories we held as irrefutable for decades. Computers and intense charting technologies has done the same thing for evaluating price action.
     
    #55     Nov 4, 2005
  6. Dude, Cool handle. You just reminded me I should get my Cherry-Red 335-Dot out (that I have owned since I was a kid) and jazz-the-joint, as I've been playing the M-series steinberger lately (I alternate between that and the L-series).

    Maybe some random Holdsworthian scales - played legato at hypersonic speed ala Holdsworth - are the order of the day, considering the thread :D
     
    #56     Nov 4, 2005
  7. ES335

    ES335

    Equalizer

    Consider Allan's 4 note per string scales, in G for instance, starting on 3rd fret of low e, g a b c with pinky fretting the b.... scary stuff. He truly was a modern Listz on guitar. I really admire his harmonic ideas, so original, and easily misinterpreted as random, :)

    I envy your Cherry Red 335, how bout you play us some Kid Charlemagne?

    ES335
     
    #57     Nov 4, 2005
  8. Definitely could not have said this any better. What a great post...

    MAK!
     
    #58     Nov 4, 2005
  9. nimrod

    nimrod

    Not sure go along with that entirely

    For example, and reverting to the coin toss sequence again: The outcome probability of every toss is the same but, if a series were constructed based on betting results that included feedback from the developing outcome of bets (trades) on SUCCESSIVE tosses with no requirement for those involved to bet on each toss, it would produce a different curve to random betting on each toss. So, if such a curve were to become the basis 'price' for 'trades' it would likely fluctuate even more wildly. Consider, would there be any takers for a continuation trade after say 5 heads - or 10? and if not, where would that send the price? Those involved may well be mathematically illiterate, but people do what they do for reasons that are better than randomly predictable to the astute researcher/observer.
     
    #59     Nov 4, 2005
  10. Thats way Cool, a fellow Holdsworthian!
    Yeah, all my ex-girlfriends thought his stuff sounded random - but they thought the same of John Coltrane and Mike Brecker, they didn't mind Scott Henderson and Eric Johnson, or Mike Landau (those 6 guys are my major influences).

    Funny how it sounded random to them, (but to me Allan's music is some of the deepest stuff out there. He is my fave.)
    Kinda like people's perception of prices! :D

    Kid Charlemagne? I never really learned any of Steely Dan's tunes - probably since I was too busy working on perfecting all sorts of stuff like that opening guitar/Synthaxe line on Holdsworth's "Non-Brewed Condiment". A finger buster!

    I'd better get off before the chit-chat Nazis attack us :D
     
    #60     Nov 4, 2005