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Chuck,
Your statements are interesting. I've read this several times (that
markets behave more randomly than not) over the years but could never fully
validate it. For example, I would look at a chart and see the market
stopping at specific points (support/resistance) time after time. I mean,
to the tick! How could you call this random behavior? It didn't matter if
the market was sideways or trending, real time or daily. Support and
resistance points give me clear points to trade off of that more times than
not resulted in winning trades. Trading these points tipped the odds in my
favor becase more often than not the balance of buyers and sellers becomes
skewed. Buyers are less willing to buy through resistance and sellers are
less likely to sell through support clearing the way for the other side to
take over. This is well known and gives the trader more than a 50/50
chance. This kind of predictability flies in the face of the idea that
markets behave randomly. If they did then support/resistance would fail as
much as it held and it would have no meaning in technical analysis. Yet,
we know this is far from the case. Also, price patterns that resulted in
follow through more than 50% of the time would not exist. Yet we (I) know
they do.
There are patterns in the market that have a high degree of predictability
because people are creatures of habit. Habitual creatures behave in
predictable ways and will exploit markets in the same way as long as it
works. This, in my mind, is far from random behavior.
Also, the self-fufilling nature of markets tend to reduce the element of
randomness too.
Brian.
-----Original Message-----
From: CLIVFG [SMTP:CLIVFG@xxxxxxx]
Sent: Friday, April 17, 1998 6:17 PM
To: njb@xxxxxxxxxx; kschr@xxxxxxxxxxx
Cc: omega-list@xxxxxxxxxx
Subject: Re: Re: Supreme Order in Markets ??
If there were any supreme order in the markets the futures markets would
cease
to exist. The markets exist to protect us from unknown price fluctuations.
If everyone understood how little order there is in the markets there would
be
a lot fewer traders. The markets are so close to random it is scary.
Therein
lies the challenge and the opportunity. After studying the markets and
trading for more than thirty years all I can say with any certainty is that
they sometimes trend and money can be made when that happens (if you have
good
exits).
Chuck LeBeau
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