Making Money If the market were random it would be possible to make money with proper risk management and trade sizing. In a non random market with this same risk management the sky is the limit. It really comes down to TRUTH (reality) as UNIVERSAL truth more and more approaches ULTIMATE truth. Although in this situation your opinion or perception nor my opinion or perception of TRUTH has any influence on ULTIMATE TRUTH. It is what it is. However, if your believe and approach the market as though it were random, whether it ultimately is or is not, for you I suspect it may as well be. As I mentioned earlier (I was being serious), when I get time I will write a book with my market formula(s) which show logically and prove mathematically the market is not random. Many people equate an outlier as being a black swan. But as I recall a black swan is used in proving all swans are not white. I have discovered a black swan as it relates to market randomness and RANDOM I assure you it is not. Although, I will admit to most it would appear so. This doesn't mean many random walk believers may not be able to make money in or from the market. What it does mean is that many non random walk believers will be and are able to make consistently HUGE amounts of money in or from the market. I certainly don't mean to flame you. I wish you well with your research (keep an open mind and keep looking for that black swan) and also luck and success in your trading.
Yes, the inability to understand order in chaos is always and everywhere the product of a lack of understanding and wisdom, or in your example, music appreciation skills. I'll pm you regarding guitar stuff. Cheers ES 335
You're on the road for the Nobel Prize in Economics... ...and perhaps the one in Physics as you just demonstrated how easy it is to go against the entropy principle...
To unfamiliar eyes, musical notes on sheet music might appear random. The same can be true for people looking at words written in a foreign language.
Given that there are traders who built billions in personal wealth. If the markets were random, guys like Stevie Cohen and Covner would have to call a coin flip right 500 straight times to build that wealth. There are random facets to the markets, but skill and foresight supercedes it.
I'm sorry, I tried, but I couldn't let this go... I think your definition is self- fulfilling Since if you define a top because price has subsequently moved lower...what will it next create but a bottom...and following on from your definition - if to see a top we need a bottom of course they will sequential... And I'm not too surprised to learn that we get highs and lows at extreme level either... I'd love to discover some deep insight in what you said, but I'm not sure there is one.
The epiphany comes with the realization of trading in a flawlessly accurate environment that is completely contained. Everything I look is taken for granted in trading circles, I just put them all together in a controlled (not manipulated) environment. The deep insight is the environment not the price action outcomes.
If the markets were truly random in all time frames then I am inclined to disagree, even ignoring transaction costs (slippage and commission). However, I am willing to consider evidence to the contrary and revise my opinion if necessary. Have there been any such studies performed using, say, Monte Carlo simulation incorporating truly random price changes? If so, what sample sizes were used and how often was the test repeated to ensure the reliability of the outcome? Further, if you truly believe what you say, then may I suggest that you find a time frame that you consider fairly random and blindly enter markets at random intervals with the direction to be determined by the flip of the coin. Then work your risk management magic and report back to us. I would be pleasantly surprised if you had anything positive to report, but I will try to keep an open mind.