This is a great thread sans the bickering..take a look... http://www.elitetrader.com/vb/showt...25224&highlight=chart+patterns+in+random+data
I haven't read this thread, but I think it's more interesting (and hopefully lucrative) to find deviations from random walks in real data instead finding trends in artificially generated random walks
I don't think the edge in the ACD system is derived from the fact that the opening 5 min bar tends to be the high or low more often then randomness would suggest. I think Fisher used that to show that markets are indeed NOT random. It was his thesis paper at Wharton. Form that general idea, that the markets are not random, he created ACD. The whole idea of believing in trends or breakouts violates the random walk hypothesis. So you can't even have ACD if random walk is valid. So first he set out to prove that markets are not random. Once he did that, he built a methodology around the idea that there are edges in the market.
there is more going in the thread than that, but I know what you are saying. That said if you found a "pattern" in seemingly random data, traded it, made money, bought an island, etc. would it matter? Read thru it when you get time there is some good "food for thought" there.
Mav my thesis has always been there are trends in the mkt which can be exploited, random or non random is irrelevant to me.
I believe he used the term statistically significant, I don't personally believe the mkt or the universe is truly random, but a simple monte carlo of a coin flip will show "trends" ie. 10 heads in a row. Anyhow this is a topic for the other thread. Looking for a touch of 114.20 on spy.
Of course trends exist. The debate in the academic community has been whether or not they can be "predicted". I have yet to find anyone who can predict when heads will come up 10 times in a row using a fair coin.
Feedback for Flip. Flip. ACD is about RISK management. There is no edge in ACD, other than a viable method to control your risk. ACD is about knowing where to get out more than knowing where to get in. Where to get in after a market makes an A is your business. But, when a market makes an A you are not allowed to trade counterbias unless it makes a C. This alone will keep you from being hacked to bits, which is the fate of too many traders. Death by a thousand cuts. ACD eliminates that. Myself I am a currency trader, profitable, but my equity swings were HUGE! Up 300% one month, only to give it back over the next three. ACD gives traders with a system a way to qualify their signals. ACD guarantees you lose small and win big. At the end of the day, this is all you need to really learn to be an Elite Trader. Also ACD, if you already have a system allows you to follow many many more markets. Thanks to ACD I can now follow every pair Oanda offers, and normalize my risk. What that means is that I can wait for exactly what I want price action to do, and not just close enuf. If you have not watched the videos Mav put up, please do that. For me, it was like going from a Bachelors to a PhD. Fish gives traders who are breakeven or slightly profitable the tools to turn the corner. Seriously, watch those videos. Do not skip anything, and watch them all.