Thread: Is the market random or not ?

Originally Posted by ;

Wow not bad. Care to edue us? If I understand correctly, you say you can tell me on the price-action i.e Asia session if the day will probably be ranging or not?

Within a certain percent, obviously nothing is perfect. Nevertheless, you can make an edued guess. As the day progresses further you can then refine that discard the guess. Still, it is a good way to filter out the least predictable times. Having a good way to determine if you should stick out of the market is useful in and of itself.

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Now was another classic Moment. We had an early day imbalance over yesterday's high, but dropped back in range. That speaks plenty to volatility and orders you to watch for a potential range expansion which may stick. Price did exactly that, it rallied in the hourly rate 21 EMA and re-extended up to land right on the weekly R2/R3 midpt (also happened to be the 50% retrace of the big move down).

If you had any questions about the daily move they would've been clarified when price came over the daily high, retested for support and broke higher. This was the closing lifeless give-away, but there was a hint to be discovered earlier when the underside did not extend further.

I don't wish to come off seeming like a guru here, I'm fairly new in this style of trading and it's been around since the 80s in one kind or another... so I'm the new kid on that particular block. Most of what I've heard so far comes from a combination of the CBOT substance, some stuff out of Linda Bradford Raschke, the publiion Mind over Markets and a lot of pattern study.

Originally Posted by ;

Absolutely. The market is random, except if it's not. Understanding when those chances will appear is the complete definition of edge.

I enjoy this.

Allow me to breifly explain my faith.

In a generalized perspective, I think that the markets are not random, but it can often appear they are. Please follow my logic. Every time price moves down or up by one point, then a person just engaged in the market for a reason. Reason opposes randomness, and as such discounts it. To anybody who had been informed of who determined the market to move that 1 pip, or better yet WHY they entered the market, the move was reasoned, not random. However, this exact same motion may be perceived as random by anybody who does not understand why price only acted as it did. A person a million miles away watched price go up 1 pip, had no idea why, and says, The markets are somewhat random. The difference between the two observations is advice, or understanding. Therefore, randomness can be perceived via unawareness, ingnorance, or from any other means lack of knowledge.

So, my opinion is that markets are random if you do not understand why price is behaving exactly the way it is. This concept applies to other areas too, take baseball such as. If I'd been exposed to the sport, never played with it or watched it, and has been taken to a match, I might create an assumption that the players are behaving out of randomness. To me it would look like they are only throwing the ball for no reason, running in circles, and people are clapping all of the time. I would not be in a position to make any predictions about future behavior of the players currently. If, however, a person next to me explained the principles of the match and why people were behaving as they were, then it would make much more sense to me and no longer be random. It could be reasoned, and I really could make assumptions on what players will do next, based on this rationale.

So, to reevaluate the market, it's my view you have to understand why price is shing, otherwise you are trading randomness. Might it be possible to understand why every pip moves how it does? Of course not. But in the event that you're able to understand even 1 reason why price will probably act a certain way at a specific point or at a specific time, then you can profit from this, as it's no longer considered random.