Adrian

@MM Trying to divert your personal problems onto me MM won't change the facts. My 'emotionally dirve' repsonse as you call it, is mertely responding to most of your childsh attacks, that contain zero evidence, which you still continue to avoid. I have zero intention of following up with any further information to satisfy your requests, as you are simply not a human being worthy of bothering with. It is ironic that all the comments you make are actually a very apt description of your own behvaviour, and no amount of posts will ever change that. Your attempts to try and paas blame to me is typical of your character, which I detected very early on. You arre merely a trouble maker trying to stir the pot. Frankly no one cares for your type, except perhaps to make fun of As I suggested early on, you really need to see a therapist, as your personal insecurities appear quite severe. Please do not bother to post on this thread again, as you have never posted anything of value to anyone. The people with brains and common sense, who have read my posts, have all the information they need to go away and prove to themselves the markets are not random. It is plainly obvious though that you are one of those idiots I refer to, who are incapable or wanting to see the obvious. You suggest I cannot deal with anyone questioning my evidence, even though the factual evidence shows the exact opposite LOL. You are truly clueless. Only the odd post like yours where you basically say I am wrong, make some silly and undefined reference to industry propaganda, which I'm sure no one has a clue what you are talking about, then provide zero evidence or even any logis or justification at all as to why I might be wrong. I think we must all ask the question why you have such a desperate need to prove to believe markets are random? Is it becasus you keep losing your trading accounts? Either way, your response are pretty much the worst kind of Neanderthal responses, that are of no value to anyone. This will be my last reply to you MM, as you have clearly shown to everyone here that you are not a person worthy of even validating your existance. If you continue to harrass me and others on this thread I will report you to admin and have you barred.

My pleasure (risk adjusted sarcasm)

@SIUYA You are quite right that most cannot cut their losses. It goes to the heart of this thread, where people have shown massive egos and a desire to dominate. It is these sort of people that need to be right that are never able to cut their losses and eventually fail at trading.Successful trading is all about being humble. You raise another excellent point about 'facts'. This is what makes trading tricky. Clearly if there is a non-random bias in a market and everyone takes advatange of it, that bias will disappear. The weird thing is, there are many obvious biases in the market that people know about, and yet they persist. It seems the forces that create them are so powerful that no collection of traders can eliminate it by taking advantage of it. Re your aside. I understand what your saying SIUYA, but frankly I have little time for people who have the wrong attitudfe. I welcome opposing views and information. As I requested to MM, but he backed away from providing any evidence at all to back his view that I was wrong. I respect those who respect others, but have no respect tfor those that don't. I fully stand behind my written word, unlike many others who will run when you put them under pressure of validating their words. I'm not here to 'endear' my self to people. The only people worth helping are those who are interesteded in helping themselves. Not those seeking a free lunch so to speak. You'll notice that occasionally there was a post from a reader who showed genuine interest, had genuine questions or comments. Those people received helpful and respectul responses. An adult discussion. I have no problem with people disagreeing with me, although technically they aren't disaagreeing with me, but the hundreds of research reports written by many different people over decades. And yet they attack me and disagree without providing one skeric of evidence to validate their disagreement. They are like the moron politician who isn't in power, and they see their job as attacking the policies of the one in power, no matter whether the policies are good or not. That's people for you. Mostly a seriously screwed up bunch.

Hi Bob, Money management is clearly critical to long term growth within a defined risk environment (which is something personal to each person). Problem is no money management method will allow us in REALITY to make money where the EV is ZERO or lower. This has been proven time and again mathematically. The real world of doubling our bet size each time will run into casino limits, will run into CFTC positon size limits, will run into liquidity issues no matter what instrument you trade, and will ultimately fail as well due to increasing slippage on each order. You would also need virtually unlimited funds as well to trade in such a way. And I dare say if you had unlimited funds, who the hell cares about trading? LOL

@MM It is not about proving anything to me. I merely made my original post on this thread to help answer the person who asked the original question. It has been almost every post since then that everyone else has tried to attack and divert the thread elsewhere. No surprise to me as I have see it so many times in so many situations. Part of the flaw that is being human. I'm sorry I even bothered trying to help. I should have known that it would end up this way. I'm done posting. This has been a vast waste of my time. I hope at least one or two quiet lurkers have benefited in some small way from the factual information I provided. I wasn't providing opinion, but verifed fact from any number of research reports that have been published many times over the years, and from many different sources. So clearly not industry propaganda as one clueless idiot suggested. Yes, they are clueless and they are an idiots, as only those two types of people would even attempt to disagree with such simple concepts that I presented, that have been verified time and time again in the real world. I suggest readers analyse carefully what has transpired in this thread, because it gives you an insight into the market particpants you are trading against. You are witnessing a lot of angry and insecure people out there. People who think they know more than they do. People who only have an interest in attacking, creating controversy, and generally trying to show how much better they are than everyone else (ego issues). It is these sort of people who will fund your retirement as wealth is transferred from them to you, by carefully trading market characteristics that have shown to have some degree of non-randomness.

@MM I understasnd people, so yes it is pretty easy actually understanding where people are coming from. Markets are merely people interacting. If you do not understand yourself, and others, and understand the most basic of human behaviours, then you likely won't succeed in trading. 'Accept the information offered to me'? You have offered none, except to say I am wrong. LOL You seem to be living in a fantasy world MM. I askedyou to present evidence of your stated claims and you conveniently backed away, as you are doing now. Then you go on to to suggest am am merely spouting forth industry propaganda LOL OMG that is truly funny. Now I know exactly the type of person you are. Very sad indeed. I am EXTREMELY familiar with people who are unable to accept the reality in front of their eyes, presented in factual academic well researched documents. Not to mention my owning trading research (how would that be industry propaganda?). Your type always need to believe in another reality. Let me say, that if you try to live your life outside of reality, you will die a very sad, angry, frustrated and disappointed person. The information I have presented is anything but industry propaganda, what ever that may mean in your eyes. Your attempt to point out that my information was BS was no doubt considered laughable by most on this thread, as you provided ZERO evidence, except to say 'I was wrong' LOL You seem really angry that I have released such basic information actually, as though it really meant something to you. I know I am not misleading others on the thread, so you can't be angry aobut that. Then finally to completely destory any credibility you have you attempt to align me with people marketing penis enlargement pills LOL What can I say? You are one seriously deranged person. I strongly sugrst you see a therapist very quickly MM, as you have some seirous personality flaws. I have done nothing but be helpful on here, providing good starting points for people to follow up with, to easily show in some small way how markets are not random. I'm sorry you can't handle that. I would suggest you sign off from this website and have a rethink of your life before coming back here, and for heavens sake, please stay away from trading. you wil lose all your money.

@Mighty So what you are saying is you are all hot air with zero evidence. Why am I not surprised This is another classic. Everyone has a view or opinion, but when you question them as to how they came by that view, they struggle to find an answer. they struggle to present any evidence on which they based their opinion. Try it yourtself next time with someone when they express a view. I dare say 80% of th etime you will have them struggling. I does get pretty boring running into thee sort of people over and over again. It should really be no surprise then why so many lose in the markets. This just becomes another reason. People trade based on some flawed belief ('oh I read it in some book somewhere') they have, never really wanting to admit to themselves why they are losing.

@dangermouse Avtually I have explained in various and simple ways that people and go away and prove to themselves that markets aren't random. If you had actually read my posts and had your brain switched on, then you would know this. But this is the crux of the problem. Like so many people in the world Danger, you represent so many, who want something handed to them on a platter, but even then that is not enough, as so many people are simply non-thinking zombies, incapable of using the measgre intelligence they have. Sadly there is nothing I can do about that. I try to get people to think for themselves, but I have found throughout life I am fighting an overwhelming level so of voluntary ignorance.

@zdo If readers didn't understand my simple examples, they certainly won't have a clue what you are talking about LOL The question on this thread is "are markets random or not". Simple question, and it deserves a simple and easy to understand answer. Only those trying to pretend how good they are, or how little they know, will respond with answers that are so complex that no one can discuss what was said. Your conclusion that because hedge returns might not show randomness, does not prove that markets aren't random. Actually it does I believe. As I said in a prior post, if we take a simple game like roulette where there are only 18 black and 18 red numbers, and we assume a totally mechanical process for throwing the ball, then we have an EV of ZERO, and we know with certainty that there is no mathematic way to make money in the long run. If we assume the markets are the same process as routlette (i.e. totally random outcomes), with no memory bias in any form, then, fund mangers would not be able to make excess returns. Now we can't analyse returns of traditional equity fund mangers because it is their function to invest long only at all times. To them, being 70% long is the equivalent of us being ssquare or short, as they simply do not have the option of going to cash in most cases. So this is why we look at something like hedge fund managers who have more flexibility. Anyway, we know as a group they make money with less risk than the returns created by the S&P500 index (let's ignore the idiots who want to argue and disagree for the moment). Now if the markets were random, then the returns the hedge fund mangers create would not be possible. Sure some would make money and some would lose, forming a normal distributiuon curve, but we both know that isn't the case. So it seems to me, the fact that hedge fund mangers can make excess returns implies the markets cannot be random. This was just one of a zillion different ways of showing how markets aren't random. Also, it shows that because many people can make money consistently, then you can too.

are you talking to yourself horace?

Hi Horace, I'm not sure I understand what you mean. If I understand what you are asking, is it possible to tak a number of seemingly non-random situations and wait for them all to align to theoretically get a slam dunk trade. If this is wrong, please correct me. This idea is largely flawed. It assumes that each of the situations is additive (there is a stats term which I cannot think of right now which decribes it) but it does not work that way. It is a bit like saying I have 5 different oscillators, I will wait till they all get overbought before I sell. This doens't work either. Perhaps you could do research on whether the daily lows forming in the first hour of trading in Nov-May period occur more often than in the June-Oct period. That might be interesting to see. I think you would find though, as a guess, that the differences weren't as great as you might think. But any statistical bias is a bias none the less. I would also suggest the yearly seasonal bias means you should pay more attention to buy signals in the Nov-May period and sell signals in the June-Oct period. If you do the research Horace you will also find a seasonal bias WITHIN each month. People have done research in line what what you are suggesting but it has been quite a while since I saw any.

@MM You believe your words are clarity. That may be the case in your own mind, but if you decide to make a public post, the thoughts need to be clear in the readers mind as well. And that clearly wasn't the case on so many levels and points with your post. If you believe hedge funds as a whole underperform the market on a risk adjusted basis over the long term, then I would be happy to see the facts upon which you draw this conclusion. I also assume that because you state this that you believe markets are completely random, as that is the whole point of this thread right? To suggest otherwise means you wqere simply being argumentative and going off topic. We all await your evidence MM.

@SIUYA I generally agree with what you say. The thing is there are almost an infinite number os ways of looking at perofrmance comparison. That is NOT the purpose of this thread. I have merely been trying to give very simple and obvious examples of real world situiations where it is shown conclusively that the markets are not random. Problem is people want to argue and fight and try and prove me wrong. Perhaps they are academics who can'rt handle reality of the real world. I do not know. Nor do I really care. I know with 99.9% certainty of what I am talking about because it is based on 30 years of observation, reading, personal study and research and testing. I suggest people who are still undecidfed if markets are random or not, to start working harder and create a simple trading model that worked in the past, then do a walk forward test and see if it works in the future. A trading model that is well designed, and NOT curve fitted (as distinct from optimised) will perform similarly into the futre as it did in the past (assuming similar market conditions). The more it underperforms the more you have curve fitted your model. It is basically as simple as that. Here's another though that just came to mind of a report I read recently. Sell in May and go away. I'm sure you have all heard of that before. Are you aware that virtually all of the S&P500 returns over the past 100 years has come in the Nov-May period. Not most of, but virtually ALL the returns. That is truly an astonishing and powerful piece of information. If the markets were random, surely the money returns would all be roughly similar over the long run? Let's see how long it takes for someone to attack this piece of fact as well LOL.

@danger It is quite amusing hoqw quickly threads go off topic. I've seen it a million times, so It is of no surprise to me. I tried to keep it on topic but people are simply incapable of doing this for various reasons, largely due to their personal flaws. I respect those who can keep it on topic, and have little respect for those that can't. I can't speak for other, but it has nothing to do with persona thought processes that determine if markets are random or not. The mathematical proof is either there or it isn't. I cannot quote you major sources simply because I do not keep copies of research reports, or store a web page etc for something that I learnt to be true a long time ago. To anyone who has studied the markets for years and actually traded them, it is also obvious they are not random, and not random by a long way. I made one reference to Edgar Peters book. Do a Google search for Momentum studies. These are the most common in showing how easy it is to outperform the market over time. Do a search on the correlation of daily highs and lows and when they occur. I;ve mentioned all this in prior posts. Why do people keep asking? Can they not read? Can they not do their own research into finding the information required? Not starting from scratch, but I simply mean reading research of others. Much of it gets publish by stockbrokers or hedge fund managers, and occasionally by academics. There must be hundreds of papers out there showing that the markets are not random. If it is not 'obvious' to you that the markets are not random, then I say to you that you have not spent enough time studying them. Once you have, it will be 'obivous', Opinions are a dime a dozen and count for little UNLESS they are based on solid research and facts.

@MM You seem to be trying to pretend to talk high level, but all your comments are contradictory, wrong, and simply confusing and distorting for other readers of this thread. The comments add nothing, and just ceate confusion. You need to gather your thoughts and express yourself more clearly, as your interpreations of what I write are just amazingly bad an erroneous. Of course I am comparing apples to oranges. Hedge funds aren't replicating the S&P500 index. Hedge Funds trade all sorts of things. People invest in them as a diversification away from long equity only investments. And in some cases people invest in them exclusively because of their tight risk controls (in the better managed ones anyway) and their return/risk characteristics. So your completely wrong to say I need to compare hedge funds that only trade the S&P. Our goal is to establish if markets are random or not and can hedge fund mangers out perform our main investment vehicle of long equities. Clearly they do. End of story. Only a fool looking to create an argument would suggest otherwise. Of course you can also do as you suggest and just look at those hedge funds tha tonly trade equities. That would not be a flawed approach bby any means. Then you go on to state that if ALL hedge funds outperformed with lower volatility I would have something LOL. Are you kidding? I'm sure I am misinterpretating your statement as only an idiot would ever expect every hedge fund to outperform on a risk adjusted basis. And if you bothered to read my commentary properly you will se eI made mention of survivorship bias. Why I waste my time replying to these comments from people who pretend to know what they are saying, but clearly don't is beyond me. You know it is not a bad thing to adm it ignorance on something. A person will gain a great deal more respect than someone who pretends to know. In fact the latter type, get zero respect from me. And lastly, you quote a passge from the URL article I gave.. Why did you quote it? I am sure you are trying to prove you are right and I am wrong LOL. If you believe that showing hedge funds underpeformed in a massive equity bull market proves that hedge funds cannot outperform and therefore markets are random, you truly are an insecure fool, desparate for attention to cover up your own poor trading record. When a market, any market, goes into a massive bull trend, then is no strategy (assuming no leverage) that can outperform a buy and hold for the length of the bull trend. These are generally rare events though, that by definition do not last. It is hilariously fascinating that you put the quote in but never commented on it. Backk to you MM. Pelase write a new reply that shows you don't understand what you are saying. Amuse the followers of this thread. SIUYA will be laughing as well, as you attempt to look for every excuse under the sun to prove that the factual research out there is all wrong and you are the only one who is right. LOL secretly though, we both know you agree with what I right, and that markets aren't random, and that enables the better investment managers (whatever their specialist area) to regularly generate excellent risk adjust returns. If you don't believe in this, put your money in a range of funds that have underperformed for at least 5 years, and share with us which ones you chose, as you wil now tell us that these funds should return towards a mean return of zero. Of course even if markets were random, that logic would be wrong as well, as the law of large numbers takes hold. But that is another disscusiion altogether that has no relevance here.

@SIUYA The answer to your question is because we are human, and humans are fundamentally flawed emotional creatures. Creatures that have egos and belief systems that they feel they need to protect, even if they know they are wrong and have been proven so. Most people's belief systems are wrong in so many different ways, but if you attempt to question them on it they will become defensive or simply run away. I have observed this for decades. I would suggest that less than 1 in a 100 people are capable of questioning their own belief systems, and changing it if they discover they are wrong. Most people think they are open minded, but they aren't. So this is why a topic can so easily head off in a tangent for all the wrong reasons. Actually you should care if the markets are random or not. If they were truly random, no method would ever be able to make money consistently, and you definitely would not have a chance of reliably achieving good risk adjusted returns, which ultimately should be the goal of every trader/investor. It would be like playing routlette with 18 black and 18 red numbers only. There is no mathematical way to make money in such a situation. Since we do thankfully know that markets aren't random, we can say that is is possible to make money over time.

@MM I never pass along misinformation as you call it. But happy to let you drift along with flawed knowledge of the facts. It took me 5 seconds to find this URL: Hedge Funds: Higher Returns Or Just High Fees? Outcome? Hedge Fund returns 1994-2009 8.93% vs SP500 6.46% Volatility? Hedge Funds 8% versus SP500 15.5%. Of course numbers vary widely within that time frame, and individual funds vary even more, but as a whole, over a fair amount of time, the outcome is as expected. Even if we adjust for those funds which dropped out of the index, hedge funds generate a quantum better risk adjusted return. If you wish to continue to to hold your view so your ego and belief system are maintained, feel free to do so. Know though that ultimately only you will be the one to suffer.

People act in ways that are anything but random. That is why a huge disproportion of daily highs or lows are created on the open. Emotion rules.

??? LOL You just contradicted yourself MM. When did I say we should plot selective hedge fund returns of those who were only long gold? That is the silliest thing I have ever heard, And even more absurd is your attempt to suggest that that was what I was suggesting. Then you go on to effectively agree with me by saying the results are only meaningful if you plot all hedge fund returns. I think you have lost the plot. The only reason I gave the simplistic hedge fund exmaple is to make it easy for readers to relate rather than going into some high level quant discussion which is a bit beyond me anyway. Read Edgar Peters book as a start. It seems though that even dumbing things down isn't enough.

@MM I'm not doing any data mining. I'm merely relying on the brilliance of others and their research that I have witnessed over the past 30 years. I'm not interested in 'comprehensively examining the hedge fund industry'? Why on earth would I? And what has it got to do with this thread? I just gave it as an obvious real life example which largely proves that markets are not random. Plot the monthly returns of hedge funds and see for yourself. Don't take my word for it. Plot the volatility. Plot the trends of hedge fund returns versus the market. There are many ways one can prove markets are not random. Its been done before. I'm not an academic or any kind of genius, but I know what I know, based on solid research of others, my own eyes and experience, and facts (factual fact...not opinions). Simply because you read a research report that says markets are random does NOT mean they are random. It merely proves that that person was unable to find non-randomness in the way they tested. I've finished posting guys. It is obvious from everyones posts that they 'need' to believe markets are random, perhaps to justify their own failings, who knows. I responded to the original poster who asked if markets are random or not. I can tell him, with 99.99% confidence that markets are anything but random, and it can be shown in hundreds of different ways. You can either benefit from that knowledge or choose not to.

Actually my findings do support the theory (and btw it isn't my theory). Even when we take into consideration the funds that fall by the wayside and out of the track record of th ehedge fund indices. The fact they trade different markets is irrelevant. IF they trade futures markets, how can they be underperforming a zero sum market? And if they trade equities, well, how can they not outperform when you see the S&P basically having gone nowhere in 10 years. Have hedge funds done the same? LOL I do not mean tobe rude, but if someone wants to believe markets are random then good luck to them. My advice is to them is to unsubscribe from this website (why are they even here to start with?) and put all your money in a zero risk, zero interest tbill. It has already been proven statistically that positive hedge fund returns (the ones that actually do some good trading research) are not a fluke. Like begets like in statistical talk. If you truly believed in random markets then here's some more investment advice. Put your money into all those hedge funds that are in drawdowns equal to or greater than any they have seen in the past. See how you go : )

@JS999 the discussion on whether markets are zero sum is all very interesting but offtopic to this thread so has little relvance. As to your view that equity markets are zero sum, the same futures markets, is simply wrong. End of story. Most people, as you put it think in this manner because well, it is fairly obvious that it is zero sum, whether you are a buy and hold or just a trader. Really is irrelevant the time frame being held. But as I said this is offtopic to the htread and has no relevance here. The topic is are markets random. The question has been asked a millions times around the world. Economists will give you one answer, simply because they do not know how to look at a market. Research by traders shows a completely opposite viewpoint. The answer as to who is right is obvious, because the hedge fund industry are the ones generating the postive returns year after year based on their research that markets are not random.

@Avarice Yes it ha. End of story. My question to you is, why are you here? Why are you commenting on this thread? Clearly you believe markets are random in which case trading is a pointless exercise for you. Therefore, why would you waste your time being here on this site? @fugu Even if the markets were random, there would still be a distribution curve of big winners and big losers in the markets. Mind you the chance of making money every year for 10+ years is so far at one end of the curve as to be an alm,ost statistical improbablility. And this is what the research constantly shows (despite Avarice's ignorance). It shows the markets regularly have moves that go well beyond the normal gaussian distrtibution, allowing trend followers to make money, when statistically they should not be able to. There are countless studies showing the benefits of using momentum to make money. Fascinatating that Avarice can't find any of them, and naively thinks more research is showing the opposite. Clearly he is reading research by people who are already disbelievers and want to prove their point. Simply because a person cannot find non-randomness, does NOT mean markets are random. @cw30000 That is the most absurd statement ever and shows a fundamental misunderstanding of what noon-random means. The markets are full of noise, enabling a good trader to only have a small advantage on balance, and generally prevents them from achieving 100% winners. Take blackjack. In the old days it was possible to make money by card counting, but only a fool would think it meant being able to win 100% of hands. One only needs to win > 50% of the time to create and advantage. Same goes in poker. Professional winning players regularly lose hands simply because of the randomness of the cards. But even though the cards are totally random, they still win due to applying their skill. @JS999 Markets are NOT z zero sum game. In futures is is negative as their are trading costs. In equities, well when the markets go up the vast majority of people win, and when they goes down the vast majority lose when wealth is destoyed. The short positions represent only a tiny fraction of the longs here. So once again, please don't make statements saying something is proven when you clearly don't understand what you are saying. This is much of the problem in the world today. Everyone thinks their opinion is fact, when much of the time is isn't.

We know the markets aren't random simply because it has been mathematicvally proven. We also know because anyone who has studied markets long enough knows it is obvious. Perhaps the easiest way to show markets aren't random is to look at a simple distribution of daily highs and lows and where in the trading day they occur. If the markets were random, then each hour would have roughly the same nnumber of daily highs and lows. We all know that isn't the case, and isn't the case by a huge margin. So bottom line, markets aren't random. That is just one of a zillion ways markets aren't random. Only economists think markets are random.

Who is the crazy person who is trying to take the topic off thread by asking about copyright? LOL Seriously. This is a topic on system testing and optimisation issues. A topic discussed and written about by hundreds if not thousands of people around the world for more years than I care to remember. There is no copyright on such a topic. This person should be asking themselves why they even broached the irrelevant subject of copyright, and cannot bear to talk about what is really important? We all know, that you know copyright is not relevant here, but it gives an insight into peoples personal hangups and why they fail at trading.