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Welcome and background
1500 words are enough to tell you "that I love you", but to show randomness in the currency market with those words is a though test of restricting your writing, but I will try.
I have spend more than 2 years in research on randomness in financial markets. I was frustrated to have this invisible and disputed partner of randomness running around in disguise, in my price chart. I finally found this partner and it proved to be a friend instead of an enemy, you can use the randomness to your trading advantage, so do not fear it.
Terms
The time period I use for one move is one minute. The currency is EURUSD.
A move is either up or down. 1 denotes up and -1 denotes down. A move = 1 trading minute.
A run is a count of the consecutive times the price moves in only one direction. Runs can thus be up (positive) and down(negative). A "short" must perceive down (negative) in the context of my article and not as a trade.
Yield is defined as the difference between the next price and the present price.
Assumptions to be verified
IF there are traces of Randomness in the market, what might we expect to find, that could verify it's presence ?
a) If I accumulate all p…
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It all started with apesOnce there was this amusing experiment with two apes. A dominant male and his lower-class comrade were presented with two sets of bananas set 6 meters apart. The bigger gorilla went for the bigger cluster of bananas, while the others were left for his smaller friend. One would think they each ate their bananas and that was that. Wrong, the smaller ape gave his to the dominant male and waited patiently for his share.This would be very unlikely with, say, cats, but it works with apes, since their brain is developed enough to possess something academia calls The Theory of Mind. This means, that the smaller ape was able to guess what the dominant male might be thinking – that he knows about the second cluster of bananas and may come to "collect his due".Humans can go a step further and by adding another logical loop ask questions like "does he know - that i know - that he knows?" We are able to go even further and philosophize about life, love and other things. We wield the powers of hindsight, reflection, imagination and abstraction.In the light of this please consider the Forex markets, especially the most liquid FX pair of them all, the EURUSD. More than a tr…
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scramble avatar

i gave a quick read and i will certainly re-read again later. i find what you say very interesting. A bit long to read but for the argument is needed.
Imo a good article!

RobertBric avatar

I hope you haven’t lost your sense of humour if I correct two of your statements:
1. “there are two things that may happen”. The price can also stay the same :-)

2. “none of the big players have enough funds to influence the market singlehandedly” Check EURCHF and the intervention of SNB.
Joking aside: I agree with you on the topic of the collective consciousness. It is amazing to observe. The herd behaviour is so pathetic that is scary. The herd is always slaughtered in the end…
All the very best with your contest.

Victor avatar
Victor 11 May

worth reading. the content and intent is good but presentation is boring. hope to see more from you. rgds+

doctortyby avatar

"Collective consciousness" is a question that I keep in my mind all the time, and I see the connections from trading and the market psychology with the human mind. Most traders think that they are special, and that they think on their own in their decisions. Most traders try to run away from the crowd to keep the secret to themselves, thinking that they have to fight with the others, instead of fighting along their side. Fear and Greed...

alifari avatar
alifari 19 May

In trading - Just when u think u got it figured out - it changes….. +1

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