An accident or an unrecognised pattern? - page 6
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If you don't know the pattern ahead of time, there is no such method.
If you do know it, no problem.)
Almost everyone in the discussion is persistently looking for market patterns, for some reason - by statistical methods, in order to simulate them. Do you need it?
OK, I'll get in on it: the market is non-stationary. All of them?
No, not all. Why do you need to model the market? Perhaps to understand where the price movement direction will change to the opposite and to change its direction in time. Where to place TP - the most unnecessary order parameter.
Limiters can also be set. This is better but it will not replace the signal in the dynamics.
You see what's going on (destruction in the head): instead of searching for market regularities in order to use them in trading, we are actively searching for a market model and, for some reason, a statistical one.
Meanwhile, it has been proven right in front of your eyes that even a random walk can make money, like a deterministic process.
So, what difference does it make to you whether the market is random or not? Your business is to make money from its patterns, not its models.
Randomness C and regularity H are forms of necessity. Therefore, it is never possible to predict whether the trading process follows a random or regular path at a certain moment in time. Consequently, when carrying out TS testing, we determine the correlation C and Z for a certain length sample, which is valid for the specified testing period. Attempts to adapt this ratio for other lengths and periods are doomed. The use of forward testing is a gross error in evaluating the TS stability. Testing of strategies on the tester is a tool to check the efficiency of ideas put into the TS theory. Nothing else can be required, and even more so, it is stupid to expect anything from the tester. Even the result with an 80/20 profit does not guarantee the stability of the TS. At the right moment a random 20 will overtake a regular 80. Not everything is as simple as it seems obvious.
I have a suspicion that even if we know which way the trading process will go, it will not help us in any way.
The fact that price movement has a mixed character as C-randomness and Z-law sounds quite logical.
If everything is clear with a randomness and it can be defined as a 50/50 probability (price going down/price going up), then the definition of a regularity as a distinctive feature,
at the very least, needs to be defined.
Well, if we distinguish regularity from randomness, then how it must differ from it qualitatively, except for the cause of the event.
The regularity - although it sounds nice and reassuring, but due to its duality, it will create with the same 50/50 probability
any event (price up / price down).
Example.
We know about the Central Bank rate hike, but we do not know how the market will react to it.
As a result, price movements following a rate hike will be natural, as a reaction to the event, and the direction of the price will be random,
as a manifestation of the mixed market reaction to this event.
As a result, the value of the definition - Z- regular, is not entirely clear other than the reference utility that it - Regularity exists).
Example.
We know that the central bank rate will increase, but I don't know how the market will react to it.
As a result, price movements following a rate hike will be natural, as a reaction to the event, while the direction of the price FOR ME will be random,
as a manifestation of the mixed market reaction to this event.
As a result, the value of the definition - Z- regular, is not entirely clear other than the reference utility that it - Regularity exists).
Because your TS won't explain that direction - for your TS it will be random, not a pattern.
And the other trader's movement will be explained by his TS - for him it will be logical, and those movements that can be explained by your system, for him it will be random.
Regularity and randomness are the functions of a particular TS.
Thought I could estimate the proportion of non-randomness in the market.
For my TS it is 5-10 trades per day - from 10 to 18, i.e. 8 hours = 480 min. Suppose the pattern for an entry exists for 2 min (a pattern is not necessarily some combination of candlesticks)).
Then the non-randomness part of the market for my TS (5...10)*2/480 *100%= ~2-4%.
Thought I could estimate the proportion of non-randomness in the market.
For my TS it is 5-10 trades per day - from 10 to 18, i.e. 8 hours = 480 min. Suppose the pattern for an entry exists for 2 min (a pattern is not necessarily some combination of candlesticks)).
Then the non-randomness part of the market for my TS (5...10)*2/480 *100%= ~2-4%.
"... Well, if we have distinguished regularity from chance, then how should it be qualitatively different from it, except for the cause of the event itself. ...". A random event has no cause but has a consequence. Consequently, there is no causal relationship. There should be a comma after "Well".
"...We know about the Central Bank rate hike, but we don't know how the market will react to it. ...". You don't know, we're guessing. But there's no problem with punctuation.
"...The definition of a pattern as a distinctive feature,at least, requires definition. ...". On the basis of the above, I give the definition: the presence of cause and effect relationships indicates the non-accidental nature of the process, i.e., the presence of regularities in the process. By the way, two commas are missing.
They differ in the way test results change when the input parameters change or the algorithm itself changes insignificantly. If they seriously change, it means that we deal with randomness, i.e. fitting with the history. If even with significant changes there is an underlying tendency to increase - it means that it is quite possible that it is not a fluke. Although there is no guarantee anywhere - we are dealing in principle only with probability here - but it is within our power to bend it in our favour.
I agree with one of the authors that the market is dynamic and it is illogical to look for static patterns. If we look for the trend, it will change as and when it wants, and the question is which timeframe it really is. That leaves volatility (volume) and the correlation of currency pairs, which is where we need to look.
Without statistical patterns, it is impossible to find anything at all. However, it is also impossible to find the 2-4% by statistics themselves.
There is only one way: observation -> hypothesis -> statistical test of the hypothesis. Then it is a matter of luck - it will either be confirmed or not).
Without statistical patterns, it is impossible to find anything at all. However, it is also impossible to find the 2-4% by statistics themselves.
There is only one way: observation -> hypothesis -> statistical test of the hypothesis. Then it is a matter of luck - either it proves to be true or not).
It can only be disproved. Or not.