Random?

[That One Guy 10]

I don't, understand why folks think the markets are random. What is the real definitions of random in the markets? I really don't know, but often when I view stocks and put random lines of support and resistance they seem to go back for years and be in play. If the markets were really random, would these lines really be in play for 30 or so years? I dunno, more I follow these markets, the more I learn to love VSA. It, just seems so right, it makes me giggle. If, I had millions, why wouldn't, I take advantage of the f*cking idiots? Follow my post in the Docs, thread and you will see my thinking to this. Happy holidays and a happy new years.'

Ps. I, am, intoxicated!!!

[brownsfan019 17]

JW - it's easy for people to say the markets are random b/c from a bird's eye view they are - sometimes up, sometimes down, sometimes makes sense, sometimes doesn't, etc. etc. It's also easy for the random theorists to put holes in your 'see this trend line hold' ideas by saying you just cherry pick the obvious times a line may have held.

 

And the other side of the coin technical trader can point out many times a trend line, support area, etc. held over and over and over again.

[Anonymous 11]

Trading is a curios game. It attracts some of the smartest minds there are. Yet, most traders loose. So, if the best and the brightest can not figure it out, it most be random. Or so the thought process of the 90% who fail to make money goes. Most people spend their time trying to conquer the market, rather than learning how to surrender to it. Guess which group doesn't even care if the markets are random or not ? And they aren't.

[BlowFish 10]

Chaotic not Random is my guess. There are several observable, exploitable tendencies that suggest non randomness to me.

[ckait 10]

Remember back when you first started trading? Or at least if your trading the minies, buying tops and selling bottoms using the wonder of indicators out there and wondering why every time things lined up your way and you took a trade you lost money.There is no answer to to the question of rondom vs chaotic, in my opinion the word is logical.The market will trade higher until no more buyers are willing to buy ,then sellers will sell until there is no one left to sell.Over and over the cycle goes . If your not using some way of reading order flow and volume ( market generated info not indicators) you will be forever in the dark and at the mercy of those who have taken the time to learn how to determine these things. After all the name of this game is for my account to get larger at the expense of your account.Screen time with real info will do you more good than any course or indicator,save your money for trading when you're ready. Happy holidays to all and good luck.

[mister ed 10]

Remember back when you first started trading? ... buying tops and selling bottoms ... and wondering why every time things lined up your way and you took a trade you lost money.

 

Are you bugging my house?

[james_gsx 16]

You have to understand that the markets can move because of just one person. That's why they are random, because one person can disagree with a trendline and bid up/down the price and then the trendline is broken. If that makes sense.

 

But in all honesty, I don't believe it's random just like I don't believe anything is random. I think there are some complex mathematic equations that can predict the market and be right 100% of the time. I don't believe that will ever happen, but I think it's possible.

[Sparrow 10]

Somewhen maybe James, but I don't think that will happen any time soon, it's difficult to accurately model a complex system. We certainly haven't figured out how to do it e.g. for the weather.

Remember markets are not only driven by price action alone but also by other events like wars etc. etc., basically fundamentals.

[james_gsx 16]

I know, and that's why I said I don't think it would ever happen. But I do think it's possible. I don't think it will be a formula that you could just plug in a few numbers and get the answer. Maybe I don't explain what I'm talking about properly, some will understand and some won't.

 

If we have come as far as we have with physics and math, then I think it's entirely possible it could be used with the markets. I believe everything can be broken down into math and physics, but that's just my opinion.

 

But for the time being, a single trade can offset the market and make it random. But we have trendlines, support and resistance, market profile, and all those other tools that helps us rule out some of the randomness. Those tools help us break the market down into probabilities which is why trendlines work. That's also the same reason why sometimes they don't work.

[Anonymous 11]

In chaos theory chaotic implies a higher form of order. In other words, non-randomness on a higher level. An example of this would be the fractal nature of the markets. A 5 min. chart looks like a 15 min. chart looks like a 240 minute chart. The higher timeframes tending to influence the lower ones. If markets were random this would not be the case.

 

As far as saying the markets are logical, this can't be the case. In that markets are driven by FEAR and GREED two emotions that defy all logic.

[james_gsx 16]

And I think we need a definition of random before this thread goes on anymore.

 

I agree exactly with what PP says but when I'm trading I know that anything can happen therefore I believe it's random. And by random I mean when I enter my trade it could go up or down, and I don't know and that's what makes it random. Hopefully that makes sense.

[darthtrader 10]

And I think we need a definition of random before this thread goes on anymore.

 

I think the problem is we have a bias in everday life towards randomness being like a coin flip and not the more precise definition of a stochastic process:

"A stochastic process, or sometimes random process, is the counterpart to a deterministic process (or deterministic system) in probability theory. Instead of dealing only with one possible 'reality' of how the process might evolve under time (as is the case, for example, for solutions of an ordinary differential equation), in a stochastic or random process there is some indeterminacy in its future evolution described by probability distributions. This means that even if the initial condition (or starting point) is known, there are many possibilities the process might go to, but some paths are more probable and others less."

 

It just seems like the popular financial literature on this gets these two mixed up. Shows a chart of coin flips and how it looks just like a stock chart, hence the market must be just like flipping coins. That would only make sense if each market participant were making a buy/sell decision with one piece of information on both sides. The reality is its thousands of participants each making decisions on thousands of pieces of information. I think the markets are random as I can't think of a better definition than a stochastic process but the reason you can trade is because of the bold part in that definition.

[MrPaul 10]

And I think we need a definition of random before this thread goes on anymore.

 

I agree exactly with what PP says but when I'm trading I know that anything can happen therefore I believe it's random. And by random I mean when I enter my trade it could go up or down, and I don't know and that's what makes it random. Hopefully that makes sense.

 

Random:

 

Having no discernible structure or repetition. An uncertain or equally probable choice or outcome, without pattern and dictated by chaos or chance.

 

Perhaps if anything can happen you mean unpredictable?

 

Financial markets are not random. Chaotic systems maybe (I'm not qualified enough to give a definitive answer), unpredictable yes.

 

Weather forecasting is a great example someone else mentioned earlier.