Random walk hypothesis

>random walk hypothesis
Name a bigger cope. You can't.

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>second time seeing this thread
Seems like you're coping OP

I take it this is meant to imply that a randomly generated chart still shows TA indicators which is meant to prove that TA is useless since any patterns we see are just stochastic noise?

The issue with this is that trading charts ARENT random, they are proven to be the actions of people buying or selling an asset. So in order to prove your hypothesis that TA is worthless since price is a random function, you would have to prove there is no behaviour behind whether an individual buys or sells a commodity. But since we know that individuals do not buy and sell randomly we can extrapolate that groups of individuals will also not behave randomly. The real question is whether the behaviour of a large group is so complex that it cannot be accurately predicted or modelled. But your image proves nothing.

SEETHING

I think OP means that random walk hypothesis is cope from academics who don't trade, can't beat the market and don't care to. People with no skin in the game who are coping basically.

I think the existence of places like RenTech BTFOS the entire theory of random walk hypothesis.

Veiwing price vs. time as a random walk doesn’t mean that you think it’s truly random. It’s just a strategy which, on average, does better than those who attempt to predict it. Meaning that predicting the future price of something is not possible for the vast majority.

Also, there is zero evidence that TA has ever worked better than a coin flip. It’s the silliest strategy that exists.

>It’s just a strategy which, on average, does better than those who attempt to predict it. Meaning that predicting the future price of something is not possible for the vast majority.
And that's cope.

>I cant beat the market so that means it must be random! No one could have predicted this!

TA helps. Luck also helps. Risk management also helps. Browsing Jow Forums also helps. FA also helps.

Its a combination. Stop being an autist and focus on gains.

I think you’ve misread. Random walk is a model. Not the actual behavior. Predictions are possible, they happen all the time. However, most people cannot predict better than the random walk.

Well, it's not exactly a cope because the distrubtion of intelligence within traders is there. Trading is essentially a sport, and for every winner, there is a loser. Having a bad strategy (TA) is worse than having no strategy at all.

Academics are right in sense that they correctly identified few trees in the forest. But you're right that they don't see the forest.

>blocks your path

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Take all of the investors in the world. Have them all flip a coin. Heads, you’re done. Tails, you flip again. The group is halved each round. In the end, a substantial group will have landed tails very many times.

Just because it works for some, doesn’t mean it works better than random.

Couldn't this be said of any successful person in any field? That it was all just extreme luck? Why attempt anything.

There's a difference between random-walk hypothesis in the sense that you use a random walk as a null hypothesis for strategy testing, and then there's the people who actually take random walk hypothesis as dogma as a coping mechanism. I.e. that stock prices are random and unpredictable aside from immediately pricing in information. The second one is absolutely bullshit.

Same thing as the Efficient Market Hypothesis, which is another cope closely related to random walk hypothesis. Old joke:

>financial economist and passionate defender of the efficient markets hypothesis (EMH) who was walking down the street with a friend.
>friend stops and says, "Look, there is a $20 bill on the ground!"
>economist turns and coolly replies, "Can't be. If there was a $20 bill on the ground, somebody would have already picked it up."

cope
you wish that zero sum meant that everyone was random
reality is that the best speculators take from the worst speculators

Some people carefully study the flipping physics so that their coin end up heads more often than random. From the macro perspective, it still appears random.

I was going to say the efficient market hypothesis. Biggest cope going by far

zoom out

There are plenty of patterns and situations that I've seen play out with probability much greater than .5


Double bottoms in an uptrend are practically a sure thing. When price has been reacting to a certain level consistently and finally breaks that level, it tends to go a good distance in the direction that the level was broken. When price starts to get sandwiched between two trend lines (a triangle) and suddenly breaks one of the trend lines, it tends to go further in that direction. I have some secret sauce involving the ichimoku cloud that works extremely well for bitcoin as well, as in it outperforms just holding Bitcoin substantialy for how simple it is. Etc. Etc.

The risk is that the patterns work until they don't. It's a yumi layered game. Holding is definitely the best choice in terms of reward vs risk.

For some.

No.

Agreed.

Trading is not a zero sum game.

Assume they’re not. Argument stands.

>Anecdotal evidence.

It could very well not be anecdotal. He could have bias-free back tests showing those patterns have probability greater than 0.5

Go look. You probably won't be able to see anything though. Hence all the cope.

based

I agreed here.
But, the joke is funny not accurate. Most trading is done by algorithms which are far quicker than people. But, ultimately, your point stands. The algos aren’t perfect.

>trading is not zero sum
go on

It is a random walk though. You can prove it by looking at the autocorrelation scores.

To a certain extent that joke is accurate, because sometimes the market is being completely oblivious to very obvious political movements. I made my first 10x buying weed stocks in 2014 and then selling them in 2017 when it became legalised.

Okay. Let’s argue on your level.

I’ve seen before that every TA strategy is garbage and underperforms a coin toss. Go look.

Say I sell at a loss to invest in a better opportunity. The buyer wins some and my opportunity pans out well. Win-win.

There is literally a mathematically infinite number of TA strategies. You have not seen that "every" TA strategy underperforms a coin toss because that is computationally impossible to evaluate. Don't bullshit.

I look every day. Do you?

>To some extent
Yes. The idea of a perfectly efficient market is just that; an idea.

You see now that anecdotal evidence has no use beyond small talk.

TA obviously refer to known strategies, not unknown ones. Yes, there are hidden strategies. Ultimately, there is a finite number within the set of TA, with infinite within the set of POTENTIAL strategies.

Someone with the empirical/statistical evidence isn't going to share it with rubes on Jow Forums cause it would make the indicator unprofitable.

But then two other people lose when you both sell. I think a better argument for why it's not a zero sum game is that money can enter or leave the market with people who just hold, and this raises or lowers most traders.

Fair. Also, I will not show you my recipe to turn iron into gold, using only baking ingredients.

Technical analysis doesn't exist. It's literally a set of arbitrarily interpreted "clues".

>TA obviously refer to known strategies, not unknown ones.
No, TA is any systematic trading strategy. Known or unknown because "known" is not well-defined.

This

>someone invents a method for more efficient crop production
>speculators invest in the company
>I use the money to develop my technology and mass produce it
>the stock value goes up when an agricultural conglomerate decides to buy out my technology
>the technology is then further mass produced and leads to crop yields improving by 8%
>this is used to feed more people who have more kids
>net resources have increased for all participants

It's an extremely idealistic hypothetical but it does demonstrate that there is no absolute reason why wealth is NECESSARILY zero-sum.

>selling when an indicator meets a threshold is arbitrary

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It's not technical analysis. TA is basically drawing lines and seeking support/resistance levels, which is all arbitrary.

>Thinking that two variables (price and time) is enough to predict human behavior.

Wut? EMAs, Bollinger Bands, Ichimoku, etc are not TA?

Also drawing support and resistance isn't arbitrary. You can define that mathematically

Mathematical definitions have no bearing on the real world. Rather, the other way around. So I ask, where is the evidence that this definition predicts future price more reliably than that of a coin flip?

Does price and time influence human behaviour?

>Mathematical definitions have no bearing on the real world. Rather, the other way around
Cringe non-platonist

Bunch of degenerate gamblers the lot of ya

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I would imagine so. What of it?

It's fucking well defined. If nobody is using it, then it's unknown.

That would make TA a useful part of an arsenal for predicting human behavior, wouldn't it?

>Your definition of the area of a square:
>A = x^4
>Ope! Must be correct. It’s a definition.

Does a fly on the wall influence human behavior? Yeah. Makes them chase after it, or at least look at it. Might piss them off enough to act irrationally. Might lead to them making a trading mistake.

Price and time are not enough. You need far more variables to predict human behavior. Hell, all the data Google has, and they still get my ads wrong most of the time.

Notice how price reacts to the middle the line. The level was defined by the low of the very first candle. Price halted and reversed every time it got close until the most recent movement, in which price halted at it before breaking through it fairly decisively, and now price is having trouble closing back below it. Every time it gets close, people start to buy it back up. Does this look like a random walk to you? This the is the furthest thing from cherry picked by the way, it happened this morning.

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You can back TA with fundamentals.

Great book about interpreting random data and distinguishing randomness from non-randomness (hint, sometimes you can’t).
“Fooled by Randomness” Nasim Taleb.

This post is beyond useless. One random example that just happens to line up with your arbitrary and predefined pattern is not an argument.

Random data has mean reversions so yes, it could be random.

user, besides the abundant studies done which conclude that TA doesn’t work. Just think about it. How will your meme lines help if, say, the CEO of a company is discovered to be a child rapist and, out of disgust, all of the employees abandon the company?

TA isnt useless with random walk though. In fact random walk means you can beat the market by being aware of deviation changes and being patient.

That only proves that fundamentals are more influential than technicals, it does not disprove the influence of technicals.

Wow get a load of how random this all is. Crazy.
So just to be clear, price is just randomly stopping at the arbitrary yellow line. It's just by incredible coincidence that it's stopping there. Right?

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>"Those who cannot remember the past are condemned to repeat it."

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It looks like price went through the yellow line no problem.

“Fooled by Randomness” Nasim Taleb.

I believe in technicalsust he backed by fundamentals. A candle stick chart in isolation is indistinguishable from random data. But add volume and add in fundamentals like earnings, world events, buy outs, products releases, only then can technicals can be useful.

And yet it seems to keep returning below it before the 15 minute segment is over. Every time. What a fluke.

The thing about crypto is that fundamentals play a smaller role than probably anywhere else. Who knows what a fantom coin is worth and why?