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Random Line Theory
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Created: by Big Mike Attachments:100

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Random Line Theory

  #11 (permalink)
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trendisyourfriend View Post
What are the positive aspects of placing a line on a chart at random or not ?

What are the negative aspects of placing a line on a chart at random or not ?

Can you answer these two questions ?

The object of the thread, for me, is to educate. I have made it clear the lines are random. Now if price seems to interact with these lines, you can imagine how people would feel if they did not know they were random. What if they were told it was an indicator with a fancy name and 200 lines of code? They start to "believe" it has predictive value.

That is the point. Education. Open your mind type thinking. Evaluate how you are looking at your own charts and how you describe the interactions of price and objects on your chart.

Mike

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  #12 (permalink)
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Big Mike View Post
The object of the thread, for me, is to educate. I have made it clear the lines are random. Now if price seems to interact with these lines, you can imagine how people would feel if they did not know they were random. What if they were told it was an indicator with a fancy name and 200 lines of code? They start to "believe" it has predictive value.

That is the point. Education. Open your mind type thinking. Evaluate how you are looking at your own charts and how you describe the interactions of price and objects on your chart.

Mike

Then let's take a real object people use every day in their trading, namely the MACD. Ask people how they interpret the MACD and next how they could get free of it and trade without it but still get the same results if not better results. What does this object show you that you can't see without it ?

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  #13 (permalink)
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trendisyourfriend View Post
Then let's take a real object people use every day in their trading, namely the MACD. Ask people how they interpret the MACD and next how they could get free of it and trade without it but still get the same results if not better results. What does this object show you that you can't see without it ?

You can start that new thread and discussion if you like, but I'd like to keep this thread about random lines or generalizations, nothing about a specific indicator.

Mike

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  #14 (permalink)
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Now a bit later, and price has seemingly bounced off another line (within 3 ticks). Amazing!

Mike

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  #15 (permalink)
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Big Mike View Post
The object of the thread, for me, is to educate. I have made it clear the lines are random.

I respect your goal very much and certainly don't want to be negative.

Unfortunately it won't be possible to demonstrate it this way.
It's just not possible to draw any lines "at random" regardless if the person that tries to do so is an educated trader or a newbie.

For some interesting discussion about this with the simpler topic of choosing "random" numbers:
Question on Randomness - boards.ie

Especially interesting the postings of cavedave ("Humans cannot pick random numbers". Don't miss Shannon's "mind reading machine": http://www.cs.williams.edu/~bailey/applets/MindReader/) and Capt'n Midnight (with nice cartoon and other visualizations).


To overcome the problem it might be worthwhile and good enough to use a simple random number formula in Excel if only a horizontal line is needed.

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  #16 (permalink)
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Amazing!

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
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4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
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  #17 (permalink)
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cool thing with horz lines is they dont have to end at the hard right edge
and an update

Attached Thumbnails
Random Line Theory-cl-02-11-12_27_2010-3-min-.jpg   Random Line Theory-cl-02-11-12_27_2010-2-3-min-.jpg  

Last edited by cory; December 27th, 2010 at 03:59 PM.
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  #18 (permalink)
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You clearly have a case of cabin fever


Big Mike View Post
Amazing!

Mike


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  #19 (permalink)
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Big Mike View Post
I want to test something. It's simple. Place some random lines on your chart prior to the day opening, and see if at the end of the day you feel like those lines were important (try to imagine they weren't random, but some expensive or complicated indicator instead).

Here is my 5m CL chart with my other stuff removed. This is before the open, so what you are seeing is from last week. But the blue horizontal lines are what I have added just now.

I picked the lines as randomly as I could. I only saw what you see on my chart (I didn't look at historical data).

Let the test begin... I will post again at the end of the day. If you guys want to participate please post a clean/empty chart prior with your random lines on it prior to the day's action, then make a second post after the fact so we can see if the lines had any "impact".

Mike

Mike,
Your lines seem close to pivot areas to me therefore they become support / resistance areas. Hide price the next time for more randomness.

Andrew

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  #20 (permalink)
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I had to close my eyes and plot the lines to make them random because I felt compelled to put them at "logical" levels . Ill check back after rollover tomorrow .

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