How Do You Know the Markets Aren't Random?

[Adrian 10]

@TRADEZILLA What you are describing isn't randomness. By counting the cards, you are changing the odds from being random to not being random. That is why card counters can win. They know that a batch of big cardds is more likely when the count is very positive. And even if your wins are < 50%, you get a higher payoff for blackjacks. It would be like saying a biased (55H/45T) coin toss is random, when in fact it isn't. We know with certainty that the probaiblity of a Head falling will move towards 55%. Even though we have no clue what will fall next. If we get an even money payoff betting heads, then as long as we do not wager more than twice the size of our advatange, we will win in the long run.

 

So my question still remains. How does one profit in a market if we asume it has totally random price moves?

[TRADEZILLA 10]

@TRADEZILLA What you are describing isn't randomness. By counting the cards, you are changing the odds from being random to not being random. That is why card counters can win. They know that a batch of big cardds is more likely when the count is very positive. And even if your wins are < 50%, you get a higher payoff for blackjacks. It would be like saying a biased (55H/45T) coin toss is random, when in fact it isn't. We know with certainty that the probaiblity of a Head falling will move towards 55%. Even though we have no clue what will fall next. If we get an even money payoff betting heads, then as long as we do not wager more than twice the size of our advatange, we will win in the long run.

 

So my question still remains. How does one profit in a market if we asume it has totally random price moves?

 

By getting an edge inside the random movements like a gambler counting cards to change the odds. Though this is difficult to put together when starting out like someone lost in a jungle for the 1'st time trying to figure out how to survive and many just as lost trying to help out, it is possible.. the market has both a random and non-random aspect to it and it is possible to distinguish the 2 with a greater than 50% probability. Even a 3-5% edge can make a big difference in the total results.. For example, casinos have a very small edge, yet they are incredibly profitable with that small edge. Trading is abit more complicated than that but if you can get an equivalent edge of 3-5%, the rest is up to you(psychology/discipline) to give your edge a chance to kick in.

[Adrian 10]

@TRADEZILLA I feel you are confusing your own description. To a non-counter the cards fall in a random fashion. So he will go away and say the game is random and cannot be beaten. Then the counter comes along and says the cards fall in a manner that allows him to make a profit by counting cards. Therefore, to him, the cards do NOT fall in a random fashion. When the count is high we are more like to see TEN value cards fall. So this is NOT random.

 

The financail markets are no different. An academic will write a paper saying he could not see any pattern in the test he did, so therefore markets are random. Just because a person cannot see the non-randomness does not mean it doesn't exist. It merely comes down to how you analyse price behaviour.

 

So what you are describing is changing what is appears intrinsically to be a random process to one person, into a non-random process to another due to the way they look at the market.

 

Therefore, if he can do that then the market by definition is NOT random. Otherwise he would have ZERO chance of making a sustained positive return. This has been proven time and again mathematically. I don't know if that is any clearer TRADEZILLA?

[TRADEZILLA 10]

@TRADEZILLA I feel you are confusing your own description. To a non-counter the cards fall in a random fashion. So he will go away and say the game is random and cannot be beaten. Then the counter comes along and says the cards fall in a manner that allows him to make a profit by counting cards. Therefore, to him, the cards do NOT fall in a random fashion. When the count is high we are more like to see TEN value cards fall. So this is NOT random.

 

The financail markets are no different. An academic will write a paper saying he could not see any pattern in the test he did, so therefore markets are random. Just because a person cannot see the non-randomness does not mean it doesn't exist. It merely comes down to how you analyse price behaviour.

 

So what you are describing is changing what is appears intrinsically to be a random process to one person, into a non-random process to another due to the way they look at the market.

 

Therefore, if he can do that then the market by definition is NOT random. Otherwise he would have ZERO chance of making a sustained positive return. This has been proven time and again mathematically. I don't know if that is any clearer TRADEZILLA?

 

I think we have a different premise. You assume the market is 100% random and I assume the market is less than 100% random. If the market is 100% random, it will not be possible for 5% of traders to be consistently profitable because they should not experience a different outcome than others over the long run, and yet, 5% of traders beat the odds repeatedly and I know for certain they exist. If your assumption is correct, how did they get an edge to be consistently profitable? In addition, you can even be profitable with a 50% success rate if your wins are bigger than your losses, but that also requires an edge. There are consistently profitable traders from both scalping and buy and hold methods so an edge does exist in the market in more ways than one.

[TRADEZILLA 10]

"The financail markets are no different. An academic will write a paper saying he could not see any pattern in the test he did, so therefore markets are random. Just because a person cannot see the non-randomness does not mean it doesn't exist. It merely comes down to how you analyse price behaviour. "

 

Also, do not overestimate the academics when it comes to trading. Almost always, they know less than you believe they do. Not every thesis is absolute just because they have a PHD. Often for every academic argument that sounds good, there is an opposing argument equally convincing especially when it comes to something as obscure as trading.

[Adrian 10]

@TRADEZILLA I think you have come in half way through this thread, or the tail end actually, and missed most of the point that was being discussed. I NEVER said markets were random. Please go back and start reading from just before you started posting again. We are not talking a different premise. I am talking from exactly the point of view that I explain if my words are read. I was responding to a post made by SIUYA and offered a scenario of assuming markets were 100% random, and how would people profit. Then you came along and now clearly started a discussion which has been completed pointless as you never understood what transpired right before you posted. It is important one read the posts before posting.

 

Also you misunderstood my reference to academics. You seem to miss the point that this whole discussion is discussing a theoretical scernario, and I was just giving an example of someone doing research and not finding anything. It could have been anyone. So once again TRADEZILLA, please familiarise yourself with the thread BEFORE starting a line of conversation which turns out to be completely misinterpreted.

 

My question, following on my SIUYAs post, is how does one go about creating a profitable model if the markets are in fact 100% random, and random in every sense of the word i.e. no study is able to find a bias of any kind. SIUYA believes it is possible. Do others? On what basis?

[TRADEZILLA 10]

@TRADEZILLA I think you have come in half way through this thread, or the tail end actually, and missed most of the point that was being discussed. I NEVER said markets were random. Please go back and start reading from just before you started posting again. We are not talking a different premise. I am talking from exactly the point of view that I explain if my words are read. I was responding to a post made by SIUYA and offered a scenario of assuming markets were 100% random, and how would people profit. Then you came along and now clearly started a discussion which has been completed pointless as you never understood what transpired right before you posted. It is important one read the posts before posting.

 

Also you misunderstood my reference to academics. You seem to miss the point that this whole discussion is discussing a theoretical scernario, and I was just giving an example of someone doing research and not finding anything. It could have been anyone. So once again TRADEZILLA, please familiarise yourself with the thread BEFORE starting a line of conversation which turns out to be completely misinterpreted.

 

My question, following on my SIUYAs post, is how does one go about creating a profitable model if the markets are in fact 100% random, and random in every sense of the word i.e. no study is able to find a bias of any kind. SIUYA believes it is possible. Do others? On what basis?

 

You're right that I didn't read the threads in the middle, I only answered the original/1'st post and that was my intention and my post is consistent with both the intent and the subject of the thread so I am familar with the topic of the thread.. IT is you who has changed the subject but that's fine and I don't find it inappropriate.

 

IMHO from your question, I believe you cannot in a meaningful way if you cannot increase your odds without just random luck. The reason I believe that is because have you ever seen a consistently profitable gambler that has no edge? I think the answer to that one is easy..

[Adrian 10]

@TRADEZILLA Glad to see you back on track My question though wasn't a change of subject all. The thread is titled "How do you know the markets aren't random?". The exact reason we want to know the answer is so that we can design models that have a chance of making a sustained profit. Then SIUYA comes along and suggests he doesn't care whether a market is random or not, and that a profitable model can be made even if markets are random. So my question was how?

[TRADEZILLA 10]

@TRADEZILLA Glad to see you back on track My question though wasn't a change of subject all. The thread is titled "How do you know the markets aren't random?". The exact reason we want to know the answer is so that we can design models that have a chance of making a sustained profit. Then SIUYA comes along and suggests he doesn't care whether a market is random or not, and that a profitable model can be made even if markets are random. So my question was how?

 

I think we're on the same page on that one for sure.. I don't believe that is possible and the burden of proof falls upon anyone claiming otherwise. I have never heard of it done before and I don't even think a good sensible theory is possible. I would love for someone to prove me otherwise, and if they make such a claim, they need to make a good argument for it and not just say it is so..

[SIUYA 11]

Adrian....and Tradezilla....a few points I would make for the discussion..

 

1.... I would suggest that talking about the markets and prices being random and then saying that trader returns are not random (in that 5% of traders consistently win) are two completely different things.

We all know that you can give a bunch of traders the exact same rules and some will win some will loose......the outcomes of their returns are different to the price moves (which remain the same for all participants). So again I think that this is not the best way to approach the issue.

This is the same for benchmarking.....yes it makes sense if you only trade the SP500 to benchmark your self against a buy and hold, can you outperform it, and yes it also makes sense to not pat yourself on the back when you loose 10% and the market is down 20%....unless of course you really outperform on the good up years.

Again - this is a different issue. This is more an issue around the question of - am I better off just giving my money to an index fund and sitting on the beach, or is this a viable business to expend my time on. (plus there are the issues that some might say they want the lifestlye and the money while good is not key -so long as they make it)

We also know there are a lot of people who cannot/will not make a sufficient return from trading as they simply dont have the capital base to do so without taking excessive risks, These promises of 100% returns - rubbish for 99% of the 5% profitable.

 

2....market price randomness........IMHO markets are nothing like gambling in the sense that market prices are largely dependent on other factors...humans,( context, fundamental issues, prevailing mood, emotions etc) and more so on previous prices. Whereas gambling each outcome is independent - (except maybe for some card games, and even then you require card counting, reading others etc etc) So comparing random outcomes like the toss of 50/50 coin to a market price again I think would lead to a nice theoretical PHd paper but we all know most papers consist of a lot of assumptions which a...dont exist in the real world, and b...are used to build the model on a theoretical basis in order to make it work. Plus when it comes to models....why aren't there more models that replicate and profit from gambling - the odds are clearer, the context clearer, the rules are set.....(maybe there are and they are called the casino)

(not that these models are not valuable for thought and insight, but Economics is not a science)

 

3....when it comes to edge models and randomness....I work on the premise that the edge is not necessarily in the model but in the trader to execute, understand and implement the model, the money mgmt and trader mental toughness.....this is why the same model given to different traders gets different results. the edge may not be in the model. If trading is mainly money management and trader psychology then how many models to you see taking this into consideration.

Most models work on the basis, you buy 1 you sell one. They dont allow for pyramiding, they dont allow for context, they dont allow for any discretion - they are two binary.....I am talking about the robots many talk about. (and most of these robots are done by either people who combine robots or run businesses to sell the models.....and how much discretion goes into those, how much do they possibly under perform, and yet still provide maybe an uncorrelated place for investors, and hence still perform a function as a business....who knows - again a different issue)

 

Tradezilla mentions it in the rumpled ones thread....he provides post #1090 "All I see is levels. How do you know which side of the level have the better odds? I have not read through every post but from the earlier posts, it appears that the thesis is that there are many simple ways to get your levels to trade off, but which side should I be trading from? Is that discretional?"

 

For me the rumpled one provides a possible good entry level - after that he basically says get what you can from it after that.

 

Point is you are unlikely to get a computerized model that will allow you to close the garage door and come back and collect the money. You need to make inputs into that whereby you minimise the issues if you are wrong and maximise the returns (and not just give yourself the opportunity to take quick profits) when you are right. It is just that often an input into the model is the trader - their experience, their ability to know when to avoid the model, when to know when to go for it.

(Soros - was clearly in the 95% who made money - and he did not think day trading was a great way to do it....but thats by the by. He had a great ability to know when to go for it, and yet minimise his losses. Paul Tudor Jones was similar.....now not everyone trades the same, or can do that....but then mabe not everybody needs to or should be...Lind Bradford Radske (as I understand it looks to put her edge into number of great entries...)again does she have a single model....no she has a series of viable patterns based on what else is happening.)

Models are just that - models. There are not the real thing, they will provide a framework. But they wont often prove anything. All to often people are looking for the single indicator, the model, the ultimate money making scheme.

If markets are random - the single model wont help, if markets are not random - the model will have too many inputs and these inputs will change - so a single model will not help.

 

You know the old marble game Van Tharp uses.....what happens when the risk returns for the marbles in the bag change - only your model does not know that....but you can see it.

eg; case in point EURO - would you rather be taking longs, shorts or both way bets in that at present? Tomorrow maybe different of course.

 

(anyways...my two cents about my thought process and why I see the world the way I see it. I hope it makes sense and does not contain too many inconsistencies and things people wish to pull apart rather than discuss....because if they do, get a life.....however I am always happy/open to have my mind swayed and changed.....Plus its possibly my longest post ever)

Edited December 2, 2011 by SIUYA

[Adrian 10]

Hi SIUYA,

 

Not sure what all the points are you are listing. There is a million things there which you have said which can branch out into a million other topics, and it all is largely irrelevant to this discussion thread. A model is a model. Whether a good or bad traderis executing is is not relevant here. It has no bearing on whether markets are random or not, and no bearing on how to create a model is the markets were random. You seem to have completely avoided your own s in your prior post. You said you dont care whether markets are random or not. And that it was possible to create a model that was profitable even if markets were random. It seems to me the latter is impossible, as it has been proved many times by many people over the years. but you seem to think otherwise. so my question was what sort of model do you create that can overcome a randomm market and make money? The discussion is a theoretical one clearly for obvious reasons.

 

Market are EXACTLY like gambling outcomes. You have a trade win% and you have an average payoff. The only difference is the unit loss can be bigger than you progject, but it can also be smaller. but the same formula and theory all apply, such as optimal bet sizing etc. you say gambling outcomes are independant. Only if you have no skill. At poker and blackjack they aren't independant, otherwise it would not be possible to win. Tha tis th epoint I kept trying to make in prior posts, but clearly neither you nor Tradezilla seem to understand what is obvious. Exactly the same concepts apply to markets. If you have zero skill, then it is 50/50 whether markets rise or fall, but to a skilled trader he can wager in certain circumstances where th eodds are well above 50% while maintaining a reward/risk > 1. So clearly the price are not independant. So this is exactly the same as in poker and blackjack. If you never get past this point and understand it, all that follows in your line of thought will be wrong.

[SIUYA 11]

Hi SIUYA,

A model is a model. Whether a good or bad traderis executing is is not relevant here.

It has no bearing on whether markets are random or not, and no bearing on how to create a model is the markets were random.

 

agree...then why do people require models to prove or disprove a market is random

 

You seem to have completely avoided your own s in your prior post. You said you dont care whether markets are random or not. And that it was possible to create a model that was profitable even if markets were random. It seems to me the latter is impossible, as it has been proved many times by many people over the years. but you seem to think otherwise. so my question was what sort of model do you create that can overcome a randomm market and make money? The discussion is a theoretical one clearly for obvious reasons.

 

maybe I did not make myself understood in point 3....it is possible to create models that work well on randomly or non randomly created data.....it is then up to the trader to apply context and experience. As I said people who create models and then think they can just collect money I think are dreaming. (possible yes/maybe ...).

why do models have to be some purist thing of being able to make money in all markets, going both long and short?????

But on this point, I thought you did not believe markets are random....yet you say...."It seems to me the latter is impossible, as it has been proved many times by many people over the years"

 

 

Market are EXACTLY like gambling outcomes. You have a trade win% and you have an average payoff. The only difference is the unit loss can be bigger than you progject, but it can also be smaller. but the same formula and theory all apply, such as optimal bet sizing etc.

 

historical outcomes of a series of trades yes.....but markets are not like this. Markets are formed by prices based on human action.....not the roll of a dice....this in lies the difference. On one hand people are talking about OUTPUT, when we are in fact dealing with the INPUT.

Backtested results, and trading outcomes will not give you anything more than an indication of what to expect

 

you say gambling outcomes are independant. Only if you have no skill. At poker and blackjack they aren't independant, otherwise it would not be possible to win. Tha tis th epoint I kept trying to make in prior posts, but clearly neither you nor Tradezilla seem to understand what is obvious. .

 

I think I did mention that some card games may be slightly different, and are different to a coin toss, roulette etc - games of pure chance....so no we do not miss the point....and maybe if its that obvious, you could elaborate on the point in a clearer manner? Gambling is gambling, life is gambling, poker does require a skill, and most gambling analogies dont as one outcome IS independent of the previous ones.

 

Exactly the same concepts apply to markets. If you have zero skill, then it is 50/50 whether markets rise or fall, but to a skilled trader he can wager in certain circumstances where th eodds are well above 50% while maintaining a reward/risk > 1. So clearly the price are not independant. So this is exactly the same as in poker and blackjack. If you never get past this point and understand it, all that follows in your line of thought will be wrong.

 

it is late Friday there so i understand if you miss that we actually agree that markets are not random....as traders can use skills to take into account context/ risk reward.. etc

But the point you cannot seem to get is that of the definition of a random market.

 

Clearly to me markets are not random - they are not made up of prices that magically appear with no context to previous prices and within a range (eg; a roulette table, or deck of cards)

If markets were completely random no one would trade or exchange. One day the price would be 20cents the next day $20.

 

Why is it you think markets are not random? Apart from saying people can make money consistently and beat the markets (and this hedge fund evidence is highly fraught with holes ) why dont you think markets are random?

[Adrian 10]

This conversation is getting too messy and heading in too many directions so I will try to keep things simple and in point form.

 

1. We both agree that markets are NOT random. From my point of view I am convinced of this with 99.9% accuracy based on 30 years of experience in every aspect of market analysis/system testing & design/live trading & model trading/endless numbers of research reports that have passed my eyes, and simply through common sense. One could easily write a book showing how markets are NOT random.

 

2. There are many ways of showing markets are not random. Whether it be good mangers consistently out performing the markets, or via simple trading models taking advantage of small biases here and there ( some of ewhich I have discusse din this thread) or via technical analysis and the intricacies of how each swing is mathematically related to some prior swing.

 

3. I believe I fully understand what random means. It means totally independant action from one event to the next (i.e. no memory). Whether it be card games, financial markets or even any series of events in life. Question is, what if red at roulette paid 2/1 instead of even money, would that change the randomness factor? Here's how I see it. It would still mean it was totally random as to whether the ball landed on red or black, but we now have a bias. We know that playing red has a +EV. So I think this is what you mean perhaps when you say you can make money from a random process. From that point of view every game of chance is random or a series of probabilities for each outcome. The thing is we don't care aobut that, or shouldn't. We should only care about EV. If we discover a bias, by definition one side of it must be positive. so we trade it, even though we have no clue as to whether the next rtrade will win or lose. It might win only 30% of the time (longer holding period)or maybe 70% (short term trade), but if our research shows a bias of some kind then we make the trade. So in summary I can see how a person might say even if the markets are random, it is still possible to make money. It depends how you define random. I do not consider just half the equation (the win%) when considering if something is random or not. Only beginners seek trading models with high win% without consdering risk too much.

 

4. You don't believe people can create trading models, run them and make money? I'm guessing you aren't overly experienced in that area, but I can categorically state that you are wrong. If the model is properly optimized to true market characteristics (i.e not curved fitted) then there is no reason whatsoever that a mechanical model cannot continue to work for years into the future. In fact some of the most successful hedge funds in the world do exactly that. Many of the quant funds do just this. Many of the CTAs do just that.

 

5. Why do people require models to prove or disprove a market is random? Well, they don't, but why waste time doing market research if you aren't going to create a trading model from it? Kill two birds with one stone. Either way it doens't really matter. You can do mathematical research to test if a bias exists(i.e. such as th eyearly seasonals). Then once you have shown it does exist, you can then create a set of rules to take advantage of it.

 

6. Unless you can create a formula to replicate human action, then the fact that price changes are caused by humans as distinct from a ball rolling around a spinning wheel where red pays 2/1, is all largely irrelevant when it comes to detecting non-randomness, and creating trading models. We merely seek something that is reliably +EV. Why would I care if it occurred in poker, blackjack, a biased roulette game, or financial prices? The main advantage of the latter though is that a person can wager almost unlimited amounts of money. In a casino you'd be lucky to last a week before being kicked out LOL

 

Hope this clears up some points.

[SIUYA 11]

2. There are many ways of showing markets are not random. Whether it be good mangers consistently out performing the markets, or via simple trading models taking advantage of small biases here and there ( some of ewhich I have discusse din this thread) or via technical analysis and the intricacies of how each swing is mathematically related to some prior swing.

 

1 and 3 yes....we see it the same way. Just with slight variations of wordings.

 

2.....I dont necessarily agree this provides a a great reason for believing the markets are not random, mainly due to survivor ship bias in managers, and the fact that maybe we have not gone through enough periods to properly test for when people come back to the mean.....plus a lot of managers change styles over time, and also change models.....this could be for another discussion..... Maybe the bullmarkets have been kind to them.....

 

4. You don't believe people can create trading models, run them and make money?

No....I just dont believe they are robust enough to set and forget. But just because I have not seen one does not mean they dont exist. Generally the ones that seem to offer it, usually have other issues or need to be tweaked.

 

I'm guessing you aren't overly experienced in that area

......mildly but more experienced than you might imagine. I have seen and developed models that work in certain periods (other than market making arbitrage models etc) and get chopped in others. My conclusion is you either need human input to switch them on or off or ratchet them up or down, OR a wide spread of models that maybe diversification smooths returns, but also probably limits returns....its a trade off.

 

but I can categorically state that you are wrong. If the model is properly optimized to true market characteristics (i.e not curved fitted) ....

 

so in other words the model changes and/or is not robust enough to cover all periods....OR what are true market characteristics?

(maybe again a whole other new thread re curve fitting and optimization....a never ending thread for debate.

 

then there is no reason whatsoever that a mechanical model cannot continue to work for years into the future. In fact some of the most successful hedge funds in the world do exactly that. Many of the quant funds do just this. Many of the CTAs do just that.

 

I know I invest in some of them.....they have not all been doing too well of late, but I like them over the long term ...the issue is always do these get arbitraged out, or do they just work under certain market conditions.

 

Q5...6.... we agree except the casino would probably kick you out before the end of the week.

 

have a good weekend.

[HARDMAN_GAZ 10]

By getting an edge inside the random movements like a gambler counting cards to change the odds. Though this is difficult to put together when starting out like someone lost in a jungle for the 1'st time trying to figure out how to survive and many just as lost trying to help out, it is possible.. the market has both a random and non-random aspect to it and it is possible to distinguish the 2 with a greater than 50% probability. Even a 3-5% edge can make a big difference in the total results.. For example, casinos have a very small edge, yet they are incredibly profitable with that small edge. Trading is abit more complicated than that but if you can get an equivalent edge of 3-5%, the rest is up to you(psychology/discipline) to give your edge a chance to kick in.

 

 

Casinos are profitable because 99.9% of the punters in the casinos are in there for entertainment reasons.

 

If a serious punter is detected they are generally told to enjoy the rest of the night, but don't come back. Having the right to refuse entry into the casino is one hell of an edge.

[TRADEZILLA 10]

Casinos are profitable because 99.9% of the punters in the casinos are in there for entertainment reasons.

 

If a serious punter is detected they are generally told to enjoy the rest of the night, but don't come back. Having the right to refuse entry into the casino is one hell of an edge.

 

It certainly is, and nobody can refuse your entry into the trading arena. However, in all fairness, trading has much more variables than gambling so the edge is more complex and more difficult to locate but the same theory applies nevertheless..

[HARDMAN_GAZ 10]

However, in all fairness, trading has much more variables than gambling so the edge is more complex and more difficult to locate but the same theory applies nevertheless..

 

 

The markets are a series of squeezes on liquidity at different levels/prices, that's about it. Probably easier to learn how to spot a squeeze than to guess the colour of the next spin.

[MightyMouse 12]

Casinos are profitable because 99.9% of the punters in the casinos are in there for entertainment reasons.

 

If a serious punter is detected they are generally told to enjoy the rest of the night, but don't come back. Having the right to refuse entry into the casino is one hell of an edge.

 

I have never heard the term punter, but if the .01% of the punters that come into the casino for anything other than entertainment, they are 100% fools.

[TRADEZILLA 10]

This conversation is getting too messy and heading in too many directions so I will try to keep things simple and in point form.

 

4. If the model is properly optimized to true market characteristics (i.e not curved fitted) then there is no reason whatsoever that a mechanical model cannot continue to work for years into the future.

 

 

 

That is a VERY big if.. most models will not have an edge in all conditions, as they will have their favorable and unfavorable conditions. I have not seen a model that will maintain its edge in all market conditions, and that's where a live trader can have an edge in recognizing market conditions before a model can.

[Adrian 10]

@TRADEZILLA Any decent model will work in all market conditions. That being said, 99%+ of publicly available models don't work. I must also add that when I say working in all market confitions, that simply means you are smart enough to know the conditions (which will be in your model) of when to switch it off. Pretty basic really. Most models don't work in really low volatility, so simply put a filter in there to prevent it happening. So it isn't an IF at all.

[TRADEZILLA 10]

@TRADEZILLA Any decent model will work in all market conditions. That being said, 99%+ of publicly available models don't work. I must also add that when I say working in all market confitions, that simply means you are smart enough to know the conditions (which will be in your model) of when to switch it off. Pretty basic really. Most models don't work in really low volatility, so simply put a filter in there to prevent it happening. So it isn't an IF at all.

 

Y, by knowing which model to apply in advance is the key and I believe it is possible with an accuracy greater than 50%. I can usually get the market conditions right with up 80% accuracy but that doesn't mean I can trade with an 80% accuracy, but its an edge nevertheless and helps me plan the day..

[HARDMAN_GAZ 10]

Y, by knowing which model to apply in advance is the key and I believe it is possible with an accuracy greater than 50%. I can usually get the market conditions right with up 80% accuracy but that doesn't mean I can trade with an 80% accuracy, but its an edge nevertheless and helps me plan the day..

 

 

After the first half hour on the ES, market conditions are usually always the same.

[Adrian 10]

@Hardman You mean there always seems to be people wanting to buy and sell? Yeah. I find the same too. Don't the markets ever change?

[TRADEZILLA 10]

After the first half hour on the ES, market conditions are usually always the same.

 

I often need less time than that, but that's not the method.. Not sure how reliable that would be, my guess is not very..

[HARDMAN_GAZ 10]

Looking at a 1hr candle chart that covers 120hrs of price movements is how most come to the 'random conclusion'..."Yeah it's random".

 

But, the chart action is just a trail, it's a track.

 

Do you make trails and tracks throughout your day? Of course you do. Is your day just aimlessly meaningless and random? You don't have to answer this.

 

Behind the apparently random daily tracks of everyone or anyone there lies a story, a job, a meaning. It all only becomes non-random once you know and see a little more than just the tracks on a map.