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Random Line Theory
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Random Line Theory

  #331 (permalink)
Patience my young padawan
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TRO's horizontal lines

This thread reminded me of a video I watched some time ago of a guy that I think was in this forum, "TRO", but got kicked out or whatever. Anyway below the link. He uses Horizontal Lines on his chart.

When you think about it, it kinda makes sense because at least I believe price is random and the only non-random thing I have found is the "continuation or link" between the current and the previous bar.

https://www.youtube.com/watch?v=bU3V3TbzAsE

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  #332 (permalink)
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ElChacal View Post
This thread reminded me of a video I watched some time ago of a guy that I think was in this forum, "TRO", but got kicked out or whatever. Anyway below the link. He uses Horizontal Lines on his chart.

When you think about it, it kinda makes sense because at least I believe price is random and the only non-random thing I have found is the "continuation or link" between the current and the previous bar.

https://www.youtube.com/watch?v=bU3V3TbzAsE


I think it is a good example for random lines.

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  #333 (permalink)
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spurious correlations


At the core of this thread and the nicely related Adam Grimes Discretionary Quant Webinar are the strange facts that
  • we tend to believe what we want to believe
  • we tend to believe what we see
  • and as evolving traders we tend to add crap on our screens to reinforce this potentially dodgey thinking

In the end the most random of things can be seen as correlated if we represent them in an abstract way with lines and graphs.

I must have been banging on about this too much at home as my son sent me this nice link about some pretty funny correlations.

spurious correlations


regards

p

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  #334 (permalink)
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Big Mike View Post
Just a follow-up, Adam Grimes did a webinar on futures.io (formerly BMT) here:

https://futures.io/traders-hideout/35189-webinar-quantitative-discretionary-trader-art-science-w-adam-grimes.html

This webinar is directly related to the content in this thread, but Adam has done a better job of explaining it. It is a must watch/required understanding.

Mike

Very good webinar. Somethimes I thought I see flashes of myself projected on his slides
Enlightning thread. Another good similar resource was Evidence Based Technical Analysis.

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  #335 (permalink)
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Big Mike View Post
I used the random number generator to prove a point. Pretend a vendor sold this as a magic SR indicator and naturally didn't tell you it was based on a RNG.

People would buy it like all the other vendor crap.

They get attached. They see it "work" then start planning trades based on how price interacts with the line.

Don't you get it? The issue isn't it being random, or the snake oil vendor, the issue is how traders view that information as useful when it clearly is not.

Sent from my phone

It's still happening.
Take for example isystems.com. I know not much about them, exept they sell access to systems with very steep and nice euqity curve, and they must be successful in finding customers, since brokers (at least one - well known) parter with them for additional services towards their clients.
Now, some of us, including the brokers doing it, will believe its a valuable service.

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  #336 (permalink)
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window of randomness

It is also a question of how much data one looks back to detect correlation and randomness.
Correlations may be present in random data for short term periods.
Eg. coin tossing leads to 50-50 but this does not mean you cannot get 10 heads in a row.. or say a "trend".

Thats the same why a daytrader don't use levels of past years while those may still look fitting.
(daytrading is just an example here but the same applies to any similarly related timeframes)

From a daytrader point of view random lines may look just as usefull or useless than lines drawn visually on the last some days.
But the latter may spot a local correlation in the data while the others are clearly random in the context of the recent days.

It is also true that money management is the only tool which saves the profits made in periods when we have found a trend (a local correlation) from the losses when we have just unknowingly played a game with a truly random market phase.

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  #337 (permalink)
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Sup guys,

It has not happened in this thread from what I remember but I do not know where else to ask.

I'm searching for a picture showing randomly generated charts. From my souvenirs, it was provocatively built by one of our "market wizards" but can't remember who and where it was posted.
I need it for documentation To educate friends.

Thanks for your help

pS: I did not find it in the "random markets" thread nor the "random entries" thread ....my guess is that it must be hidden in some random topic

PPS: thanks Mike was just seeking for immediate landscape (I remember it had a dozen charts paneled together) but will take the longer route. Cheers


Last edited by SARdynamite; September 5th, 2015 at 06:40 PM.
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  #338 (permalink)
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SARdynamite View Post
Sup guys,

It has not happened in this thread from what I remember but I do not know where else to ask.

I'm searching for a picture showing randomly generated charts. From my souvenirs, it was provocatively built by one of our "market wizards" but can't remember who and where it was posted.
I need it for documentation To educate friends.

Thanks for your help

pS: I did not find it in the "random markets" thread nor the "random entries" thread ....my guess is that it must be hidden in some random topic

You can create random data that simulates real input data here:

https://futures.io/elite-circle/19156-random-data-generator.html

Mike

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  #339 (permalink)
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Big Mike View Post

Mike


Mike, not sure exactly how to ask this, but do you have a max percentage that you believe indicators can accurately call a set up? Like let's say it has specific perimeters for a long set up and it's correct over 75% of the time or do you not believe an edge that big doesn't exist?

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  #340 (permalink)
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whtfr View Post
Mike, not sure exactly how to ask this, but do you have a max percentage that you believe indicators can accurately call a set up? Like let's say it has specific perimeters for a long set up and it's correct over 75% of the time or do you not believe an edge that big doesn't exist?

50% no edge with indicators alone

Sent from my phone

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.
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6)
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