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Are markets random?
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Are markets random?

  #1 (permalink)
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Are markets random?

New site-wide poll created on forum homepage. Please cast your vote, and then use this thread to discuss.

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  #3 (permalink)
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I don't see how they can be random. Price moves because of the interest of buyers and sellers. When one party is being more aggressive than the other, the market moves as a result. I think it can easily be interpreted as being random but it's a direct result of the majority sentiment of market participants. If price is perceived as expensive, selling will most likely be the dominant force as buyers aren't as interested in price at that particular level and vice versa.

If you only look at small interval intra-day charts and not step back and understand the big picture, it could easily be perceived as random. This is why it's so important to keep a close on eye on what's unfolding from a big picture perspective.

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Some have said that HFT is generating a lot of "noise".

Let me ask you: what is the difference between noise and randomness?

BTW, I believe markets are not random.

Mike

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  #5 (permalink)
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I don't think they are random either.
Probably a lot of confusion is caused by the fact that price can't be predicted to stop at an exact number but an area or zone instead. HFTs certainly play a role in this ("probing "areas) as does the fact that humans have emotions/feelings.

The big guys push the market around to certain areas but getting it to an exact number is where the randomness to whatever degree comes in. Regular retail guys see the market chopping around and not respecting to the tick S/R numbers and get caught up in the weeds and miss the big picture and then come up with randomness and chaos to explain it.
I think that pretty much sums it up.

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Big Mike View Post
Some have said that HFT is generating a lot of "noise".

Let me ask you: what is the difference between noise and randomness?

BTW, I believe markets are not random.

Mike

To the hourly chart trader, the 1 min is noise. To the yearly chart trader, the daily chart is noise. Noise is a market fractal level that is beyond what a particular trader's methodology takes advantage of. I trade what most typical traders consider noise. The difference is, there are patterns in noise, there are none in randomness.

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Imperfect Order

Psychology > Strategy ≥ Money
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There is random, and there is randomness.
Markets are not random, but they have elements of randomness.
For example, let's say you are a fund manager buying Japanese stocks, and now you have currency exposure.
So now you go and short the Yen because you want to hedge.

At the exact same moment a trader is buying the Yen, and the short moves forces him out.
For the trader, the stars could have lined up, so he might call it random.

The key to remember is that the market is serving many purposes, and the complexities bring moves that night look random to one. But, they are not.

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I do not believe in randomness. Yes there are many elements of randomness but those elements are often proved orderly once evidence not previously know surfaces....I am not scientific nor am I dogmatic about it, but there is to much order in the universe to believe in randomness.

Therefore, I do not believe the markets are random. There are random moments during periods of indecision but not randomness.

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris
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  #10 (permalink)
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Market goes down down down, then you short, all a sudden market rally...of course random
Market rallies, up and up, you go long...market reverses..random of course.

On the other hand....

Market goes down, you short, you are happy...markets are in perfect order and G-d does exist because he is on your side.
Market start to reverse to the upside, you catch a break, and 20 ticks on CL are in your favor..now technical analysis works, price action works, Elliot Waves hello and you invite Fibonacci to a pizza and some Vino. Who said the markets are random?

Random just depends on the day.

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