you can't predict the market but you can still profit from it, what this means?

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mrluck1
926
mrluck1  
some people say you can't predict the future, so the market is a random walk,but then how can one profit if it assumed you can't predict the future?
fxstrategist007
108
fxstrategist007  

It is not a matter of predicting. We cannot predict the future, but we can react to what the market is doing. Dont try to predict, just prepare yourself for different scenarios that may develop and act if any of those scenarios happen. If none happen, then you do not do anything, just stay on the sidelines. Trading is about statistics and probabilities, a lot of back testing is necessary to obtain those statistics, it is not an easy task. Good trading.

Carmine Pinto
6217
Carmine Pinto  
fxstrategist007:

It is not a matter of predicting. We cannot predict the future, but we can react to what the market is doing. Dont try to predict, just prepare yourself for different scenarios that may develop and act if any of those scenarios happen. If none happen, then you do not do anything, just stay on the sidelines. Trading is about statistics and probabilities, a lot of back testing is necessary to obtain those statistics, it is not an easy task. Good trading.

Totally agree with you.

In fact some other people say also that trading is more an art than a science and this sentence is a great truth.

The "art" is not an art in the "prediction field" but it is a mixture of an "eye of expertise" and trade management to react in the best manner when you are under preassure and when things are not going like in your ideal scenario.

Technicals and fundamentals aspect will give you a guidance for your trading activity but your "eye of expertise" will act as a discretional filter to make the difference between your style and the style of other traders that is the reason of price moves talking in simple terms (the question is a lot more complex)

Hope this help to understand the core nuance about mrluck1's question.

Amir Yacoby
1219
Amir Yacoby  

predict the future implies 100 percent, this is what leads to mischierfs like testing all moving averages combinations.

Not predicting implies applying odds. For instance,  if you find a pattern that has some statistical edge (more then random - 50 pct) then you can play without predicting.

And if you want some more, a pattern should have a logic you can understand why it works (while ma combinations and looking for the one and only by back testing will have no logic, just coincidents).

Waseem Raza
9997
Waseem Raza  
mrluck1:
some people say you can't predict the future, so the market is a random walk,but then how can one profit if it assumed you can't predict the future?

You can predict market when looks in bigger time frame, and when you looks bigger time frame you learns how much risk you bear so it turns into MM. This all the system 

Carl Schreiber
Moderator
7073
Carl Schreiber  

I think it's gambling with marked cards!

But to recognize the marks you have to know the market, the symbol, the participants, your instruments, ... and you have to be able to stay cool all the time.

Michael Maggi
1854
Michael Maggi  

We are not drivers for the market. The big banks, central banks with different fiscal policies, trade deficits, institutions, and the give and take of world trade drives the markets.  This gives a back and forth move in the markets that is constantly adjusting the position in the market with big and small sales of currencies for these reasons. These institutions also trade for their own account.  This is the "randomness" which is partially normal commerce and part adversarial moves to take advantage of the market.

If you have an understanding and humility about the markets and understand they are not out to rob you then then you can see short term patters that give you an opportunity to trade for a potential profit. 

Longer term trends are due to adjustments in the market due to bigger trends in the national and sector economies.  It is easier to trade the longer term trends but you have to allow for greater swings due to the issue of short term counter moves for short term reasons. 

I find the ENTRY the easy part.  Calibrating the money management strategy (size of stop loss levels, variation of lots sizes, etc) to get a good EXIT is the bigger challenge.

All of this sometimes looks like randomness and chaos from our perspectives because we are the little, little fish trying to swim in the ocean.

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