Why do I see "Trends" in Randomly Generated Data?

Discussion in 'Data Sets and Feeds' started by Rahula, Feb 21, 2008.

  1. Yes, this is good. I only wanted to show a little more sophisticated way of generating random charts: OHLC data, not just a line chart of closing prices. :)
     
    #571     Nov 1, 2008

  2. Yes, I can post a few more later if you wish :)

    I think that when one thinks about "tradeable trends", he just fools himself by applying trend-following concept to the parts of the data and ignoring the rest of data where the trend-following concept fails miserably, especially when you include trading costs.
     
    #572     Nov 1, 2008
  3. Do you think you'd be able to modify this Excel worksheet to show OHLC?

     
    #573     Nov 1, 2008
  4. Jerry030

    Jerry030

    I'm curious. What value is there in the analysis of pure random data?

    What relationship does that have to a market where humans have money at risk?

    I'd say none and time spent on such efforts is a fools errand... unless one believes the market is random, and even if that is the case, why not look at real market data?

    I mean in medicine a lab test would involve the blood of the patient who is sick not the blood of random healthy people or "synthetic" blood.

    If you been analyzing this kind of thing it would explain why your efforts have failed.
     
    #574     Nov 1, 2008

  5. You just completely misunderstood my post. It was just a sarcasm.


    The next chart shows what happens when a tiny bias is introduced. It was generated using the same process (without gaps) and a 1% of upside bias, which means probability of up tick is 50.5% and down tick is 49.5%. In this case you see a real trend. Although the fluctuations "around it" are random, and "buying on dip" is as good as buying at any other random point.
     
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    #575     Nov 1, 2008
  6. Here's OHLC data for the above chart.
     
    #576     Nov 1, 2008
  7. filter, filter, filter...:)


    keep those charts coming!
     
    #577     Nov 1, 2008

  8. Here, only three charts, because creating random data charts is quite boring and dull work (I prefer video games) :D

    You can see there are lots of "tradeable trends", lol :D
     
    #578     Nov 1, 2008
  9. Well, I'm thinking here about generating more data for backtest purposes.
     
    #579     Nov 1, 2008

  10. Then you are assuming stationarity and the system will only work on the same market conditions that you are simulating. But market data is not stationary and distributions change over time.
     
    #580     Nov 1, 2008