How far into the future can we really predict? - page 2
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I wasn't talking about backtesting.
I mean something much broader.
Not taking old data and applying it to new data. And not simply projecting the past into the future.
No, something different.
Humans naturally think with time moving forward. But try to follow this thought.
Imagine running the film backwards.
At first glance, it seems that predicting the past should become easier.
Surprisingly, it doesn't.
Even when moving backward, we can keep adding more and more information—information that we now know but wasn't available before. Yet there are many studies showing that this still does not allow us to reconstruct the distant past perfectly.
So my point is broader than trading.
Long-range prediction appears to be fundamentally limited in both directions: from the present into the future, and even from the present back into the past.
As for the market "robbing" people...
I think that's a bit too pessimistic. 🙂
Yes, an overwhelming majority of retail traders lose money. Depending on the study, it's often more than 90%.
But "more than 90%" is still not "everyone." There are exceptions, and those exceptions are exactly what make the subject so interesting.
Well the moment is all we have and all we have to react to, nothing that came before is real as you fill in blanks that did not exist ,Selective memory and nothing can predict what comes next with much accuracy .
I agree with you that we only exist in the present. And the farther we try to look, the less we can actually "see."
I've always thought the same way. I also believe reality is fundamentally non-deterministic.
The more interesting question, in my opinion, is about the winners.
Are that 5–10% always the same people?
Or do they simply take turns?
My own view is that, to a large extent, they are the same people.
As for the other 90%... yes, for them the market and a casino probably feel almost identical.
But I don't think they actually are.
For me, the market is not a casino. Mathematically speaking, it simply isn't. That's not an opinion—it's a consequence of how these systems are structured.
What turns the market into a casino is random trading.
If someone trades without a genuine edge or understanding, the process becomes effectively random. From that perspective, it naturally feels like gambling.
But that's a property of the trader's approach, not of the market itself.
I agree with you that we only exist in the present. And the farther we try to look, the less we can actually "see."
I've always thought the same way. I also believe reality is fundamentally non-deterministic.
The more interesting question, in my opinion, is about the winners.
Are that 5–10% always the same people?
Or do they simply take turns?
My own view is that, to a large extent, they are the same people.
As for the other 90%... yes, for them the market and a casino probably feel almost identical.
But I don't think they actually are.
For me, the market is not a casino. Mathematically speaking, it simply isn't. That's not an opinion—it's a consequence of how these systems are structured.
What turns the market into a casino is random trading.
If someone trades without a genuine edge or understanding, the process becomes effectively random. From that perspective, it naturally feels like gambling.
But that's a property of the trader's approach, not of the market itself.
The quality of any forecasting method is ultimately measured by its win rate.
Essentially, they observe price movement, manage exits well, and occasionally let winners run.
You appear to temporarily acknowledge that failure, only to dismiss it again.
What is its win rate?
Slightly above 39% for both longs and shorts. Were you expecting over 50%?
Profit factor?
1.28. Profit Factor doesn't amount to a hill of beans without taking Relative Drawdown nor Maximal Drawdown into account. Equity Drawdown Relative is 4.98%. and Balance Maximal Drawdown is 4.34%. Hint: When you have such a conservative strategy, use a self-adjusting percentage of account balance that feeds itself over time for position sizing... or simply make a larger deposit and trade heavier (if you can afford to do so).
How many instruments does it trade?
One.
How frequently does it trade?
3488 round trades over the course of 5 1/2 years.
On what time horizons?
Average position holding time is 7 hours, 40 minutes, and 9 seconds.
I'm a firm believer in data forecasting, and there is no better data forecasting tool than the MT5 Tester for my purposes. You get out of it what you put into it (be careful─the GIGO principle applies).
Regarding randomness and determinism, I completely agree with you. That was actually the point of my very first post.
I don't believe in reliable long-term forecasting either. So if someone believes they can consistently predict the market weeks or months ahead—good luck to them. 🙂
Where I disagree is with the statement that the market is a casino.
Mathematically, it is not. This has been studied extensively.
A trader can certainly turn the market into a casino for themselves.
If you place trades randomly, it becomes gambling.
If you trade believing "I knew," but in reality there was no measurable edge, then again it becomes gambling. The problem is not the market—it is the illusion of knowledge.
Whether an edge exists is not a philosophical question. It can be tested statistically.
If the edge isn't there, the numbers will eventually show it.
So I would say this:
The trader, through their own approach, can make the market a casino.
But the market itself is not a casino.
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Thank you, Vlad.
Regarding randomness and determinism, I completely agree with you. That was actually the point of my very first post.
I don't believe in reliable long-term forecasting either.
So then you believe in the Random Walk Theory of financial markets?
Whether an edge exists is not a philosophical question. It can be tested statistically.
Oh wait... isn't statistical testing the basis of data forecasting?
Data forecasting is directly opposed to Random Walk Theory.
Hello everyone,
I would like to ask what I believe is a very interesting question about the predictability of the future in financial markets.
As far as I know, there is still no definitive scientific consensus on whether the market is fundamentally a probabilistic system—where probability-based forecasting is the most appropriate approach, much like weather forecasting—or whether there exist relatively stable market structures that persist long enough to allow reliable prediction of specific future price levels.
Without going deeply into the mathematics, I would like to ask a practical question:
How far ahead has anyone here been able to forecast market behavior with consistent confidence?
One important clarification.
A pip is simply a unit of price movement. However, the number of pips that can realistically be expected is naturally limited by how prices actually move. In other words, expecting a market to move hundreds of pips within a few minutes is, in most cases, an extreme event rather than the norm.
Therefore, if someone aims to capture large moves using only one or two positions, the forecast must often extend over many hours, days, or even weeks.
So my main question is:
Does this actually work?
Has anyone here been able to make consistently successful forecasts several days ahead from a given moment (t_0)?
Personally, I suspect that predicting the distant future with certainty is impossible simply because of the nature of reality itself.
In other words, the future is probably emergent rather than deterministically computable over long time horizons.
At the same time, this does not rule out the existence of local stable structures, where the probability distribution of future outcomes becomes significantly biased toward certain scenarios for a limited period of time.
I would be very interested to hear your thoughts.
In my view, expecting deterministic long-range prediction is a utopia.
Hi there, this is a fascinating discussion. Certain patterns exist not only in intraday trading but also in positional trading. Here are a few of them:
- A recent high or low is highly likely to be breached.
- Before transitioning from an extended consolidation phase back into a trend, the price will pull back to establish a launchpad.
- Price action is inherently more range-bound than trend-driven.
- And there are others.
By leveraging these tendencies, one can manage long-term positions with a win rate exceeding 50%. These patterns also allow for the timely liquidation of poorly timed entries, which are bound to happen. After all, we are only human :)
However, that doesn't mean the market is UNPREDICTABLE!.
I think this is the central question: what exactly is a forecast?
Is it the continuation of a structure that already exists in the present and simply extends through the "plane" of the current moment?
Or is the future always generated through randomness, with only limited forecasting horizons?
Personally, I lean toward the latter. I think randomness plays a fundamental role in shaping the future.
Consider something outside trading.
Even the most rigorous statistical calculations have limits. No engineering model is considered perfectly reliable for hundreds of years. Every calculation has a validity horizon because new factors eventually appear that were not part of the original model.
To me, markets are no different.
The reliability of any forecast seems directly related to how far we can reasonably account for future sources of randomness and their probabilities.
That's why I keep coming back to the same conclusion: from an initial point in time, genuinely long-term forecasts—days, weeks, and certainly months—ahead are fundamentally limited. Not because we lack intelligence, but because reality itself keeps generating new information.
And that's exactly why traders who survive for years don't simply make one prediction and wait. They continuously adapt as time moves forward, incorporating new information. Quite often, the original forecast has little resemblance to the final outcome.