I have always enjoyed debating this question as it gets close to the heart of why one can potentially be profitable in what appears to be a random environment. My opinion has always been that the market is BOTH random and non-random at the same time. It usually falls somewhere in between. Trying to put any market in one camp or another forces expectations and our will on that market. That can cause us to view market information from a non-neutral position.
At any particular point in time, I try to view the following events or situations as follows:
1) the next tick or price level
2) the reaction of the 'market' participants to that price level
3) the outcome of my next trade
Non-random (therefore implying some degree of predictability):
1) the reaction of the 'market' participants to a series of price level changes ... especially as they reach extremes
2) the outcome of a series of trades that conform to a consistently profitable setup
3) my reaction to my last trade and incoming market information
The following user says Thank You to DaxSkalpr for this post:
What I would like to know is what helps the people here (who make their living from trading futures) to make the markets seem less random.
I have found there is no better way for me to day trade with a good gut feeling on which way the pattern will brake (and recognizing its formation in real time) than pinpointing a longer term up or down trend - based on fundamentals - and following the charts with that in mind.
I started with mostly silver futures in 2010 (with stock experience) leveraging my long multi-day holdings to near max and made inter-day trades with the day rates. I did very well (making some big mistakes), which gave confidence moving forward, because silver is so illiquid and leveraged. (ie. if I can do well in silver I will shred crude ect.)
Once the monster trend ended interday became less clear (started using indicators) and I gave back first 5% of the profits made, then 10%, and then up to 40% (stupidly trading on heavy doses of pain killers for a broken ankle that took a plate and 10 screws to bolt back together not walking for 7 months).
I have not been cued into a monster trend since and have only re-cooped 30% of what I gave back. Its enough to live pretty well - but far from being indicative of a good retirement any time soon.
Rounding bottoms/tops, three line bounces, bollinger band piercings, overnight support becoming resistance (or vice versa), diagonal triangles, adam and eve tops/ bottoms - in charts 15 - 2 min. (eyes on time and sales..)
Andrews pitchfork (classic and 50%), 50% retracements, trend lines, A B C D patterns - in charts mostly 30 min or more.
alright, y'al who believe markets' nonrandomization....
per current poll results in ref to market and randomness, i am in a very much minority camp here.
what continues to intrigue me to no end is....
there must be tons of coders and programers here and everywhere else around the globe, who are trying as if their lives are on line....
to discover and to attempt to code--certain similarity of patterns in daily price fluctuation between and among same or different or correlational products.... with only very limited fleeing success.
had the market not moved and fluctuated randomly with very little interference from once in a while nonramdom injection or withdrawal of liquidity from the market....
sharp as tack coders and programers like so many of you on board, would already have achieved the ultimate formulae or formula and/or leading indicators toward the one and only exclusive holygrail....
the very fact that no one, not a single trader, coder nor programmer.... here or elsewhere--in europe, asia, australia, africa et al on this planet.... to date.... has yet able to claim exclusivity on any single trading formulae, setup or contraption....; is mostly due to the randomness of market price fluctuation.
my trading friends, to me anyway, the only reason that the brightest mind amongst us fails to marshall to own the whole market around the world per se is due to....
no one is able to put his/her finger on WHAT OR WHICH MAKES THE MARKET TICKS from minute to minute....
otherwise, one or several of us surely would have come up with the one and only key, formulae, ossi, indic or whatever.... to corner each and every market here and around the globe already.... like the hunt-brothers (?) almost did with silver at what--10 usd (?) per ounce....? some decades ago....!
to my limited and finite mind and body.... market appears to move and fluctuate randomly and ultimately fools everyone who dares to think or dares to trade on the idea that market is exclusively biased one way or the other....
most traders trade successfully on statistics and probabilities of market randomness and/or nonrandom depending on whence, wherece and how the market is affected by whatever at that moment in time....
know anyone trying to trade exclusively on market nonrandomness and succeeded over a long haul....?
just a one man opinion on the market randomness or nonrandomness, K? rebutt if you like, i always keep an open mind for matters of this sort.
thx for your time, patient and indulgence, all my highly respected traders.
cheers everyone. humbly submitting to influence you to think otherwise, successfully or unsuccessfully.
What if I have solved it...and only take a percentage out of the market each day ... so the markets will continue to function ... like stopping fishing when you catch your daily limit... and no one talks about it ... because I don't tell anyone so I can continue to live a quiet and unassuming life .... and not have to deal with bodyguards and security systems ... and continue to post in threads saying the market is random so no one will suspect that I have solved the da Vinci Code of trading ..... Ooops ... I really didn't mean to admit that... Never mind....
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
The following user says Thank You to ThatManFromTexas for this post:
1) Market is driven by market players - looking for the best price at any given time, investing or deinvesting positions and it does not matter how "big" the players are invested - thesum over all transactions defines the price
2) Patterns in every market do exist
2a) in a daytrading market where money flows in in the morning and flows out in the evening
2b) in a weekly sight monday to friday - with exits on weekends
2c) before main events / to cash in gains and to reduce RISK at the same time
3) As an individual player to invest with minimal risk AND to be profitable...
------>>> You need to learn the PATTERNS of THAT DISTINCT Market
If you know them inside out (programmer or not) one may find the consistent profitable trading plan.
The following 2 users say Thank You to GFIs1 for this post:
you are very wise just being content with filet mignon....
you surely are amongsts several on board here whom i admire immensely and always look forward to your words of wisdom.
also you are amongst several who are wise enough to be satisfied and are contented with just choiced filet mignon and to leave the top and bottom picking to the more adventurous traders whose trading fortunes rise and fall with the market randomization or should i hasten to also mention, market nonrandomizaton, whichever suits whomever.... lol
wishing you even more prosperity in the future, so many more traders would reap the benefits of your contributions and wisdom, alright, friend?