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# Trends in random data

Discussion in 'Data Sets and Feeds' started by Ciatronic, Nov 20, 2010.

1. ### Ciatronic

Hello

I made a random generator number in excel (range between -1% and +1%) and then I summed up this numbers range starting from a value of 1000.
The result? Trends in random data. Isn't weird?

I attached a graph example generated by the random gen. function in excel and the excel file.

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graph

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3. ### Moderate

theres no such thing as a true random number generator on a computer

4. ### nLepwa

Why are you surprised?

In a RW you should expect the price to deviate from origin by sqrt(2*N/pi) where N is the number of steps in your walk.

5. ### Ciatronic

But this make me to question the validity of different technical analysis patterns that many 'traders' are using it. My conclusion is that from this type of TA, you can't extract an edge if you rely only on TA. (ps: I trade fundam.)

Yes, I agree. There is no such thing as a "true" rand. gen. but it's better than nothing.

6. ### logic_man

But isn't it possible that your experiment is a "false positive"? Yes, there are "trends" in random data in some, maybe all, instances, where the data set is large enough, but that isn't sufficient to prove that market movement is random, which is what it would need to be for your "proof" that there are trends in random data to matter.

The real proof of what you are trying to say, it seems to me, would be to prove the market's movements are random.

7. ### nLepwa

Good!

You've got it.

(fundamental is not the only way however)

Ninna

8. ### DacamicGuest

Would fundamental analysis work if prices are random?

9. ### Visaria

What has he got?

10. ### nLepwa

This:

"
But this make me to question the validity of different technical analysis patterns that many 'traders' are using it. My conclusion is that from this type of TA, you can't extract an edge if you rely only on TA"

Ninna

#10     Nov 20, 2010
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