Terrible analogy. The outcome of each coin toss is (for the most part) independent of previous results. People very often enter the market based on what has already happened- so it *is* very often dependent upon previous outcomes.
agreed. worst analogy i have heard in a while by your statement, surfer, it makes me believe that you fall into the category of traders who attempt to time the tops and bottoms.
If you believe that there is absolutely no relationship between current prices and previous prices, as your coin toss analogy suggests, then there is also no basis for trading on statistical or mathematical criteria either, as your trading guru, VN, seems to do. Further, your much loved gann wheels (and/or squares) would have flat tires by now. (Which they probably do, anyway. Sorry, but I am not a fan of mysticism.) Finally, charts would then have absolutely no information value whatever aside from the current price. May I assume that you use no charting package, then? I would hate to think that you might be a hypocrite. As for your constant haranguing about the worthlessness of trends, have you not yet figured out that one man's trend may well be another man's countertrend? Therefore your glib conclusions hold about as much water as a spaghetti strainer. As for your comment that trends only exist in the past, that must have been quite an epiphany for you. In fact, they also exist in the present moment, as we all do. Nothing and no one exists in the future, and trends are no different.
Further, I doubt that market complexity can be explained as simply as referring to mere joint probabilities associated with coin flips.
i certainly do not wish to clutter this journal with the statistical/real life basis of my statement--UNLESS ofcourse runtrade wishes more------ with that said---- let me know.. best, surfer ps. ALL the tests i have seen indicate a negative correlation, in all time frames, between past and future movement in the stock indexes. but please, don't allow that to stop you from trend trading.
sorry that the coin flip analogy was over your head. perhaps, looking at this way will help you--- look at the coin flip as the second you enter the trade--- not as a market analogy per se. surfer
Over my head? I studied statistics in university at both the undergraduate level and as part of the MBA program which I completed in '84. Did you? While I am certainly no statistician, I think I have the coin thing down pretty well.
All those tests would have to assume a uniform working definition of a trend. In the real world, I doubt that we all assume that a trend starts at the exact same moment, even if we happen to be looking at the same data in the same time frame. Further, we would not all agree on what constitutes a sufficiently profitable trend, because we use different sizes of protective stops (reward-to-risk criteria). And that is even assuming that you are using price as the only variable, which is hardly always the case. You are trying to draw glib conclusions based on glib definitions.
I interpreted your coin-flip theory to mean that the markets are totally random- meaning each tick is completely random- its result (whether it is an uptick or a downtick) is not at all influenced by previous ticks. If that is what your metaphor was- then I think you're are wrong. If you meant something else, I apologize.