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Hi Rob,
Yes - random numbers can look like a normal chart. If you read some of the
technical analyst books this matter is quite often debated. In my view, that
doesn't sober me, being a technical analyst. In fact, that fact makes me do
the opposite.
A note though: If you look in newsgroup you will see numerous examples of
errors in the random function to Excel. In fact, it is not random.
Having said that, the concept of Randomness is quite an interesting one.
>From what I know there has never been a successful attempt to create 100%
RANDOM numbers, because simply in order to create something "random" you
need to relate to something.
BRGDS
Frode
xxx.xxxxxxxxxxxx.xxx
-----Original Message-----
From: Rob Marsh [mailto:dartingriver@xxxxxxxxxxxxxxxxxxxxx]
Sent: Saturday, February 09, 2002 10:08 PM
To: omega list
Subject: Random Walk alive and well.
While fiddling about in Excel today, quite by chance I found something quite
sobering (from a classical chartist's point of view anyway)
If you have a couple of minutes try creating the following simple Excel
spreadsheet ( to generate a random walk 'price chart')
In cell A2 :
=rand()
In Cell B2:
=if(A2<=0.5,1,-1)
In Cell C2:
=C1+B2
Copy this down (say) 3000 rows and plot a line graph of column C.
Then keep regenerating the random numbers using F9 to get a freshly
generated random walk each time.
What do you see?
Trend lines, retracements, consolidations, breakouts, Support,
Resistance, Head and Shoulders, double tops, V-shaped
bottoms...........etc....etc.
Any pattern you like in fact.
They are all there if you have an eye for them.
AND ALL ON CHARTS THAT ACTUALLY ARE RANDOM WALK!
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