Randomness of index

[fe2008]

Hello all...

I'm starting to study the futures market (I think it's import to tell that the Brazil futures market has the same rules as the US markets).

One of my main concerns is about the randomness of stock index. I think as it's actually an "average" of different stocks (a lot of them) there's no way to be profitable over the long run trading minis.

Could you please share your thoughts ?

Thanks a lot

 

[Rhody Trader]

An index is indeed an average of many stocks.

As for the rest, an index may appear to be random (especially in the very short timeframes), but you can be assured that it isn't and quite a few folks here will make strong arguments that trading minis can be quite profitable over the long run.

 

[Splitlink]

An index is indeed an average of many stocks.

As for the rest, an index may appear to be random (especially in the very short timeframes), but you can be assured that it isn't and quite a few folks here will make strong arguments that trading minis can be quite profitable over the long run.

I believe that it is random---sorry!

Trading can be profitable but it is never an easy matter to decide on direction. Trend following is the safest way to trade an index, IMO, but entering on pullbacks? Always a problem on the direction of breakout.

The swing traders on a long term policy get it wrong very often, too. Of course, when one has started the trade successfully and has a profit locked in everything in the garden is rosy ,but my point is that, if it is not random, why are so many stops used and triggered?

 

[fe2008]

So even it it's "random" one can find a profitable pattern in the backtest, right?
I'm backtesting a system based on the first hour breakout. So If I find a system with positive expectancy, can I trust its result will perform at least with the same positive expectation as the backtest?

 

[arabianights]

There are different definitions of random; for some of these definitions of course it is impossible to make money... for others it is very easy.

Think about what I may mean by that and you may come up with some ideas

 

[Splitlink]

So even it it's "random" one can find a profitable pattern in the backtest, right?
I'm backtesting a system based on the first hour breakout. So If I find a system with positive expectancy, can I trust its result will perform at least with the same positive expectation as the backtest?

Yes, I believe that you can, provided you realise that you are using a pattern to give you
an entry point because experience tells us of the probabiilies . This is something that most of us do but, if I decide to use any point on a chart I have the same chance of making money as you do. That is because I do not hang around if the trade goes against me.

I know that a lot of traders are going to say that they use breakouts, horizontal lines and other things, just the same as I do, but trading is based on keeping losses small and waiting for a trade to make a good profit. If anyone thinks that they are being clever, well, let's keep them happy.

 

[fe2008]

It's a interesting concept Sliplink. But how do you decide if you're going long or short?

 

[fe2008]

btw You gave me an idea... enter at the opening in a stock option and carry to the close... the stop could be 1/2 or 1/3 of the average win. hmm I think I'll do some backtests ehhe.

 

[Splitlink]

It's a interesting concept Sliplink. But how do you decide if you're going long or short?

That is the whole point. It's random. You make a choice and get out if you are wrong.

 

[Splitlink]

btw You gave me an idea... enter at the opening in a stock option and carry to the close... the stop could be 1/2 or 1/3 of the average win. hmm I think I'll do some backtests ehhe.

Options are a different animal. IMO, the time wastage is stacked against the purchaser. There is little random about that.

 

[kimo'sabby]

Hello all...

I'm starting to study the futures market (I think it's import to tell that the Brazil futures market has the same rules as the US markets).

One of my main concerns is about the randomness of stock index. I think as it's actually an "average" of different stocks (a lot of them) there's no way to be profitable over the long run trading minis.

Could you please share your thoughts ?

Thanks a lot

You've got to have an eye for a price.

If not, you are just tossing coins.

How does it all work? Hahaha, it's always changing, but you can stay on top of it.

Accuracy? You bet, we are talking pin-point.

What am i trying to sell?....It can't be sold.

 

[fe2008]

that's why I trully believe the only way to beat the market is following a rule-based system. unless you're gifted of course.

 

[DashRiprock]

nothing in the markets is random, everything is pre-meditated by the originator.

Saying they are random is "pulling a howard" simply because you can't make head nor tale of what you are seeing and need to "box it away" in your mind before you can carry on.

 

[kimo'sabby]

that's why I trully believe the only way to beat the market is following a rule-based system. unless you're gifted of course.

No. Absolutely no! A person just needs to do a little bit more. There is no 'giftedness', there is no 'edge'.

There is 'precision', there is 'accuracy', there is being 'particular'.

It's all there, you just have to see.

 

[fe2008]

No. Absolutely no! A person just needs to do a little bit more. There is no 'giftedness', there is no 'edge'.

There is 'precision', there is 'accuracy', there is being 'particular'.

It's all there, you just have to see.

there's something called "statistics". And I believe in it.

 

[kimo'sabby]

there's something called "statistics". And I believe in it.

People, in general, are always a bit off guard. They are not stupid, just not ready.

 

[Splitlink]

nothing in the markets is random, everything is pre-meditated by the originator.

Saying they are random is "pulling a howard" simply because you can't make head nor tale of what you are seeing and need to "box it away" in your mind before you can carry on.

As you wish. It's all opinion, anyway.

 

[kimo'sabby]

As you wish. It's all opinion, anyway.

Split,

When the market turns, it turns because of a reason. A multitude of opinion perhaps?

 

[DashRiprock]

As you wish. It's all opinion, anyway.

hi

sorry but its not a question of opinion at all.

Every trade that occurs in all of the markets I have traded (most western legacy markets) occurs for a reason. All trades are instigated by market participants, either directly on an exchange or through some agent or automated process.

Consider this: if it were true that, on a transactional basis, price changes were truly random, then that would translate into random price movements on any scale.

Random + Random == Random.

 

[arabianights]

hi

sorry but its not a question of opinion at all.

Every trade that occurs in all of the markets I have traded (most western legacy markets) occurs for a reason. All trades are instigated by market participants, either directly on an exchange or through some agent or automated process.

Consider this: if it were true that, on a transactional basis, price changes were truly random, then that would translate into random price movements on any scale.

Random + Random == Random.

One definition of random is that while every trade happens for a reason, those reasons happen randomly