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Random or not?
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Member Since Nov 18, 2009 735 posts
speki
Mar 05 2011 at 17:37
I wanted to import historical stock prices to MT4 for charting. I found a script which does that, but I started to think, what if I put random numbers in it? How would a 'price chart' based on random numbers look like?
Well, I created random M1 data for the hypothetical WFT currency - USD/WTF, EUR/WTF, AUD/WFT and CAD/WTF. The charts have all the characteristics of a real Forex chart - trendlines, patterns, volatility, trending, ranging ... I attached some random WTF charts and real FX charts - I can't tell the difference, really. Can you? Is price random? <a href='  '/></a><a href='  '/></a><a href='  '/></a><a href='  '/></a><a href='  '/></a><a href='  '/></a><a href='  '/></a><a href='  '/></a><a href='  '/></a>
Surround yourself with people whose eyes light up when they see you and who have no agenda for your reform. |
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Member Since Nov 18, 2009 735 posts
speki
Mar 06 2011 at 07:21
..how about Technical analysis of a random chart? Sounds like fun? It sure is! Let's have a look at USD/WTF hourly (attached)
The WTF appreciated versus the dollar but the strong oversold RSI readings anticipated reversal. Price began to rise again and formed an upward channel. Yesterday's better-than-expected GDP figures caused the WTF to gain versus the dollar again: price broke out of the channel and fell to the previous monthly low - just below 950. The level proved support again - with institutional buyers rumored. Technically, the massive hidden bullish divergence on MACD and the double bottom formation was a screaming buy signal, with logical profit target at the Fibo 50 retracement of the latest swing down. LMAO <a href='  '/></a>
Surround yourself with people whose eyes light up when they see you and who have no agenda for your reform. Attachments:
ta1.gif
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Member Since Jan 14, 2010 261 posts
James_Bond
Mar 06 2011 at 07:49
That's a great question and assumption!
This begs the following question - if you were to provide a random price feed to a successful trader, would he be able to remain profitable? I wonder if we can somehow test it? |
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Member Since Nov 18, 2009 735 posts
speki
Mar 06 2011 at 08:48
Well you can see that random charts look like real ones. And you can see that many of the technical analysis tools can be applied to random charts too - do you think my analysis above is nonsense? The oversold, the divergence, the support, the double bottom, the Fibo 50, the channel - they're all there and trust me, the chart is randomly generated.
So how can you tell it's not random? You just know, that's it? 
Surround yourself with people whose eyes light up when they see you and who have no agenda for your reform. |
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Member Since Aug 05, 2009 73 posts
to_ul
Mar 06 2011 at 11:06
very interessting.
but what does this tell us? trading is passion |
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Member Since Nov 18, 2009 735 posts
speki
Mar 06 2011 at 13:12
It tells us that most of the TA stuff can be applied to random charts and we can find wonderful patterns, price levels and indicator signals. So we can fool ourselves that we found something that works in the markets. Yeah, it works, but it also works on random charts.
It tells me that most of the TA stuff I used to believe in, is Mickey Mouse. Big time. Nothing less, nothing more. Ah, I have a headache from all this thinking. Thinking always gets me into trouble. Let's play some music - warm and slow tunes. Kylie is wonderful - I'm looking forward to seeing her new show this year - Surround yourself with people whose eyes light up when they see you and who have no agenda for your reform. |
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Member Since May 30, 2010 64 posts
Voffi (Voffi)
Mar 16 2011 at 15:22
who knows... perhaps there is an unknown mathematical force that does this.. just hasn't been discovered yet?
meh.. all speculation at this point. A person is only limited by the thoughts he chooses. |
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Member Since Jan 14, 2010 261 posts
James_Bond
Mar 16 2011 at 15:42
Voffi posted: who knows... perhaps there is an unknown mathematical force that does this.. just hasn't been discovered yet? meh.. all speculation at this point. Well, if that's correct, then there's must be a mathematical formula to crack it! Who's got it? 
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Member Since Nov 18, 2009 735 posts
speki
Mar 16 2011 at 16:04
I wouldn't complicate it with unknown forces, theories or anything. Just look at the random charts and real ones - even TA works wonderfully on random charts. I for one have seen a few charts so far but honestly I would mistake any of the above random charts for real FX charts - all of them go up and down like a hookers knickers.
You know what? Generate charts for yourself - and if you can tell what's random and what's real, you're the winner. 1. copy the attached scripts to the Experts/Scripts folder of your MT4 2. drag randomcharts.mq4 on some open chart, will generate M1 data 3. when finished, open offline chart with MT4 and drag period_converter script and change 3 for 60 (H1) or 240 (H4) or 1440 (D1), or whatever you like 4. now you have the chart in other timeframes too I think there could be a bigger share of randomness in price movements than most of us would like to admit. Random or not ... you decide, I'm not trying to convince you... have fun fun is good 
Surround yourself with people whose eyes light up when they see you and who have no agenda for your reform. Attachments:
randomchart.mq4
, period_converter.mq4
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Member Since Jan 14, 2010 261 posts
James_Bond
Mar 16 2011 at 16:25
Are you sure technical analysis works on random charts? How do you define 'works'?
Do you have an EA which works on both real and random charts? |
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