Would you trade a coin toss?

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Tubbs

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I must say I'm beginning to have doubts about how possible it is to trade effectively. Everything I look at tends not to work very well & I can see no system that will work predictably.

Given the charts we always all look at I decided to create a chart in excel whereby the random numbers were added continuously just like the market. The results were waves just like we see all the time.

While I don't think the long term nature of the market is random, I'm beginning to wonder if the shorter term movement is. If so everything we discuss on here may all just be fooling ourselves/

So the question is - given that a coin toss is unpredictable - would you trade it. It would produce a chart just like any market - I don't see why we can't develop a model to trade this randomness either. I must say it really is amazing how the support and resistance levels are created when you see a chart created from random numbers - it's just mind boggling
 
tossing coins

Tubbs said:
I must say I'm beginning to have doubts about how possible it is to trade effectively. Everything I look at tends not to work very well & I can see no system that will work predictably.

Given the charts we always all look at I decided to create a chart in excel whereby the random numbers were added continuously just like the market. The results were waves just like we see all the time.

While I don't think the long term nature of the market is random, I'm beginning to wonder if the shorter term movement is. If so everything we discuss on here may all just be fooling ourselves/

So the question is - given that a coin toss is unpredictable - would you trade it. It would produce a chart just like any market - I don't see why we can't develop a model to trade this randomness either. I must say it really is amazing how the support and resistance levels are created when you see a chart created from random numbers - it's just mind boggling
Click to expand...

Here's one people did earlier :cheesy:

http://www.trade2win.com/boards/showthread.php?t=9827&highlight=coin+toss
 
Thanks for the link - I somehow missed it.

It kind of confirms what I've been thinking - really there is no point in analysing markets - you should just try to find a method that stays in a trend as long as possilbe. Given this is would be okay to test any system with an unlimited amount of furure information (possible future information)

Might look into that
 
Be careful. To disagree with charting as a visual form of the emotions of traders is to throw out the very thing that has made me and many others significant money.

If you want to flip a coin or throw a dart to decide your trading decisions I am afraid you'll be the very one that the 5% of successful traders victimize.

d-
 
Tubbs said:
really there is no point in analysing markets - you should just try to find a method that stays in a trend as long as possilbe.
Click to expand...
Slight contradiction in terms here, maybe? How do you propose to do that without "analysing markets"? :)
 
Tubbs, I've done the same - generated random charts in Excel and nearly all of them look entirely convincing - really obvious and repeating support/resistance, classic chart patterns, etc. I considered posting one to a TA board for comments/analysis somewhere else once as a hoax but didn't get round to it. Random price-only charts look convincing, but when you generate random volume on top it looks bogus.

Did you see the article in last month's Technical Analyst or Traders mag that talked about random entries with tight money management resulting in a profitable system?
 
No blackcab I didn't but would be interested. To the others - I'm not saying that we should throw out all of our charts - just that maybe we take these things for granted - and it may just be random noise - so let's get a system for random data.

I think it's quite funny that if someone suggests that technical analysis may not work it is disregarded - without discussion. The way i see it is this (short term at least)

The market is not 'predictable' - we are always told to trade what price is doing not predict the future.
So technical analysis can't predict the future. So why are we wasting our time. The best systems it seems don't work all the time - 'we shouldn't expect systems to always work' - to me that means we are trying to trade randomness again - by definition sometimes we win - sometimes we lose. I have not found any system that 'works'

I am partly playing devils advocate - as I have plotted the random data points in bell curve distributions for each day - and must say they do not resemble actual market action. - that said I still see no way to use this market action for my own gains other than to develop a system that would work on random data too.

At this time of year I think it's quite an apt comparison with religion. We are all expected to believe in the Lord without question - he is the answer to our prayers - literally - but we never see Him. Or do we. I think technical analysis may be a little similar.
 
Tubbs, just because you are not trading for profits does not mean that others can't.

If you want a basic free online lesson, catch me via 'traderpattern' on Yahoo Messenger during market hours and I will talk you through one of my trades.
 
I never said I wasn't trading for profits.

I don't really see why just because everyone follows nonsensical rubbish that it becomes self fulfilling. Everyone follows different indicators,

I'm sorry to offend people - just want a bit of healthy debate as I'm going through a crisis of faith. Please someone - show me the light...........please?
 
black cab and tubbs!!! , random trades & tight money management =profitable, i think i've been here too long , vegas is that way>!
 
TA is merely a way to analyze a probable outcome in the market over a period of time. TA will not trade for you. If you can find a good working combination of technical indicators you can give yourself a higher probability of success then 50% (flipping a coin).

From my experiences, TA gives you a general direction in which to trade. But if you choose to enter those trades at poor times, it doesn't matter if you are right 100% of the time, you are going to have to puke those trades out because you had to take too much heat.

The Euro FX is a great techincal market. And it is a great example of how using TA without proper timing will make you go insane. If you get in at the wrong time, you could have that thing go 10-15 points in your face before you can even say, crap, I need to get out.

My advice Tubbs. . . . never underestimate the need to make changes to your current TA setup. Markets change and so must our trading strats. However, look more toward how you trade rather on what you use to trade. My guess is the answer you seek might lie somewhere in there. Keep the faith in TA.

Ziggie
 
Just a consideration if anyone is seriously planning on taking directional trades on the flip of a coin - most instruments do not trend 100% of the time. The 50/50 expectation is quite badly flawed - excellent money management or not.

What is your Pw with a coin toss system in an instrument which trends say, oh I don't know, just 30% of the time?
 
Tubbs !!
Coin-flips, a subject close to my heart. :)

I understand your point about apparent randomness. But it depends on your frame of reference.
Pixels flickering colours across a screen - apparently random.
- Move back to see the whole screen - an episode of Eastenders !

10 separate Coin-flips - ostensibly random.
Do this 10,000 times, ( step back to see more data ) the probability is that they will fall 50/50 heads/tails.

A few days of observing the markets, apparent random.
But step back, and you see patterns.

I am having almost the same problem - I can see multi-day patterns, and can trade them.
But, intra-day seems to be untradeable.

Maybe its about ensuring we have the correct frame of reference.

I am glad someone else is trying coin-flips !!

Have you read Ed Seykotas Trading Tribe site ?
http://www.seykota.com/tribe/

Hope you had a good Christmas ( snow at last ! )
Have a prosperous New Year.
 
Isnt a breakout startegy a coin-flip ?

The coin is spinning - after several seconds it seems to falter and starts to topple over onto one-side.

The market is ranging up and down - after several days it seems to push either up or down outside its range.

All patterns are triggers to trade. A yes/no heads/tails. No pattern is 100% guaranteed.

Arent we all using patterns to identify a yes/no condition ?

Its just that the odds may appear to be better than 50/50.
 
I agree 100% percent trendie - the point i'm trying to make to others or even myself, is the sooner that it is excepted the sooner I can move on to just get methods/systems the follow trends - patterns - whether they are random or not.
 
There is of course one failsafe system which works with coin tosses.

Doubling up!

Presuming you have unlimited working capital, you are guaranteed to win.
 
what are you on ziggie? if your right 100% of the time you still lose? give me a break!!
 
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