What if I think the Market is totally Random

Discussion in 'Trading' started by IdontGoogle, Sep 25, 2006.

  1. markets are chaotic and wild, but definitely not random.

    read this:

    The Misbehavior of Markets
    by Benoit Mandelbrot (Author), Richard L. Hudson (Author)
     
    #41     Sep 26, 2006

  2. Sometimes there are 90% probability trades available. Maybe always if one understand how to read them. But if there is a shock with for example a news then a new future is created.

    But maybe that news event was highly predictable as well.
     
    #42     Sep 26, 2006
  3. Basically.

    Nothing is really random when you think about it. For example, the weather. Years ago (without the weather channel/technology) it seemed random. But now that we have some data we can predict the weather to a certain extent. With ALL the data, we could predict it with 100% accuracy.

    But with the markets (assuming that they are weak and strong form efficent...) everyone has the same set of data at the same time. And soon after something new is discovered that is not known to the general public then the market becomes more predictable to one than another. That's until everyone else graps a hold of that knowledge and the markets become "random" again...

    So that's why you need to ask how the market's aren't random and trade there. Everything looks random until it's discovered. There is nothing in this world that is random. But that's a whole other philosophical debate.
     
    #43     Sep 26, 2006
  4. Cutten

    Cutten



    Yes, but only if your trading system is inconsistent with your beliefs, AND the market is actually nonrandom, AND you are able to avoid psychological screwups as a result of the obvious conflict.

    Looking at the number of great traders who believe the market is truly random, your odds of success are not good.
     
    #44     Sep 26, 2006

  5. I think I see what you're saying. Most trades are placed for a reason and can be attributed to some belief about the stock. Wether its a technical reason, a complex or simple buy/sell program, a stop order..etc. Its not like people are putting on a blind fold and hitting the buy/sell button here and there.
     
    #45     Sep 26, 2006
  6. What great traders think that the market is truly random?

    TNG
     
    #46     Sep 26, 2006
  7. Hmm.

    I think I'm paraphrasing another poster, but if you think the market is completely random, you should use a strict rule based method-

    And if you think it is highly ordered and structured, you should use a close- enough to random method for best results.

    Thoughts?
    I doubt this applies to quants though.



    :confused:
     
    #47     Sep 26, 2006
  8. fletch2

    fletch2

    Define "totally random." I believe one glance at the Dow from inception to date should provide some evidence that it is not entirely random.

    Fletch
     
    #48     Sep 27, 2006
  9. Exactly! :)

     
    #49     Sep 27, 2006
  10. RhinoGG

    RhinoGG Guest

    The market is a "tool" best used by those skilled, often used by those that are not. Each instrument is like an arrow in one's quiver. Find target, aim, shoot!
     
    #50     Sep 27, 2006