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Random Line Theory
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Created: by Big Mike Attachments:100

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Random Line Theory

  #241 (permalink)
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trendisyourfriend View Post
Do you see the dancer turning clockwise or anti-clockwise? clickme

I see her turning clockwise. Only once was i able to make the switch and see her turning anti-clockwise.

I can make her switch by my imagination. To do that I focus a point below her feet such that I still notice the rhythm of her movements. Then I imagine that she turns anti-clockwise, and she will.

Once my eyes are attached to her, I cannot make her change direction. I have to repeat step one, unlock and then I can make her turn clockwise.

Maybe it works because I am patient enough after many years of marriage.

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  #242 (permalink)
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This is a fun post...Thanks Big Mike.... You should sell your line generator to some expensive trade site....Funny.... use a random # generator to come up with 4 new lines every day bounded by 2x daily ATR or something....

Bob


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


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  #243 (permalink)
Curtis
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check out this 20m fork that i drew months ago

2012-03-02_1542 - CurtisM64's library


check out the lines i drew on gold 6 months ago theese lines were drawn on daily chat watching them on 60m
2012-03-02_1408 - CurtisM64's library


here is the origins of them gold lines
http://screencast.com/t/JvyITDwYOIm

Nothing so Impressive as Simplicity
D.G. Watts
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  #244 (permalink)
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Moving averages: digging deeper - Adam H Grimes

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  #245 (permalink)
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That trend indicator, is it helping or hurting? - Adam H Grimes

Mike

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

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
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)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
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  #246 (permalink)
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What works? - Adam H Grimes

Mike

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

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
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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  #247 (permalink)
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Random Line

Plotted this random line weeks ago and it comes into play today:

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  #248 (permalink)
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Random Line Theory, Revisited

I've been meaning to write something for a long time about this thread.

It's taken me a while to figure out what to say about it, because it's taken me a while to understand it (or to think I do .) This is just a brief comment on what I take to be the whole idea, not necessarily a continuation of the original discussion.

The random line examples do not, in my view, say anything at all about whether "all" lines (or indicators, or whatever) are in fact random, which would mean that they are intrinsically meaningless. I don't think the point really has anything to do with lines or indicators at all; rather, it has a whole lot to do with revealing the working of the mind that is perceiving them.

I completely agreed with @Big Mike when he showed his random lines: I could "see" very clearly that price was taking them as support or resistance, and I would have accepted the charts as containing valid information about price action, when in fact the levels were found by a random number generator, and were, quite literally, meaningless by definition.

So the meaning was supplied by me alone. The value here, I believe, is that by completely removing any meaning from the lines themselves, Mike demonstrated that we (or I) still "found" meaning in them -- which can only mean that we put it there, not that we found it there.

Now, my original reaction to this thread was very different: I was insulted to think that @Big Mike was saying that some of my favorite things were just random -- or no better than random, which was even more insulting, somehow.

Whether he had that in mind or not, I don't think I care. What is important to me is that I was applying an interpretive process to try to understand something I was seeing, and that process found patterns that I felt I could act on. But what I was seeing was not anything real at all; my mind just wanted it to be, because my mind is a pattern-finding thing.

Now, let's say that we assume that there is something that can put lines or whatever on a chart, and that it is not random (maybe it's VWAP or volume profile, or <insert your favorite here>.) Let's even say (which I am not sure we can prove, so let's just assume it for now) that an objective, computer-driven backtest shows that it actually works, at least for a given sample of data. So we say that it's meaningful, too.

The mind that is looking at whatever this thing is, is still finding patterns and assigning meanings to it. Maybe they are real; I hope so. But they are still not coming from the stuff on the chart all by themselves. They are still being assigned to what is on the chart, whether rightly or wrongly, by the viewer of the chart, and that is where at least some of the value or meaning is coming from. Even if the meanings work out, and the person can trade profitably using them.

This does not mean that everything is subjective, or that nothing actually works. Just that there is an aspect here that is not on the chart at all.

Or, we could use the analogy of a lens focusing on different things. The point is that there is a lens, not just the things.

We know that two people can look at the same price action and see very different things. In fact, that's what makes a market. It may also be why there are about 52 billion different indicators and trading methods, and, aside from the exploiters who are just looking to sell stuff, there are many people using each of these methods and swearing by them -- and, more importantly, people who are earnestly trying to use them and getting nowhere, except slowly broke.

Now, the Random Line Theory experiment does not really prove anything about any of these methods, because it just dealt with a "method" that was obviously meaningless. But it leads me to think that the success or failure of any method has less to do with what the method is, and more to do with the person applying it. This does not seem to be earth-shaking: obviously there will always be differences in skill and understanding and so forth.

But I am inclined to think that it is more fundamental than that. I think that each person brings a unique perspective -- and perhaps invents one -- to the market and to the "method" he/she is supposedly using. And that this personal viewpoint is what makes the difference between, let's say, someone who is using something as simple, even crude, as trendlines and support/resistance and is very successful (say, Al Brooks), while the next person gives up on it in disgust.... and has to find something else that they can put to use.

Well, I don't know how much else can be gotten out of this experiment, but I think it helps in understanding why some people succeed or fail, or succeed or fail with one approach but not another. Unfortunately, it doesn't say much about how to be successful, but I think it does help to understand the situation a little more clearly. Including the situation I face when I'm looking at a chart and trying to decide what to do.

It certainly explains why searching for the new ultimate method when things aren't working is usually not going to work out that well.

Bob.

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  #249 (permalink)
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@bobwest, thank you very much. I hope more people will understand thanks in part to your post.

This is a major milestone people need to deal with and overcome, it's an obstacle to most people's trading in my opinion, especially technical traders.

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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2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
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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.
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  #250 (permalink)
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As an options trader, I stopped using charts years ago. Now, exclusively relying on first and second order greeks for market information. Unsurprisingly, I found this is the most interesting and thought provoking post you and the community have ever addressed. The absurdities and sensibilities of one's own mind are paradoxically challenged and rewarded by participating in the experiment itself, regardless of one's speculations. Without ever testing these possibilities in such a pronounced and definitive manner, my hypothesis is consistent with the question posited. My conclusions are that the market operates somewhere in the middle. Our challenge arises in determining when, and when not, to apply "rules" to market behavior, interpretation, and prediction. In other endeavors, history is a great teacher. When applied to market "theory", not so much!

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