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skater68 · 29-10-2003, 01:15

based on my past education of math and my current research on the internet after reading the initial post about Random....

i think there is some confusion

Just because something is random DOES NOT mean it CAN NOT be predicted......

PREDICTABLE - if something is random...its ability to be predictable is affected by the number of variables involved with an actual outcome.....

so you cn identify the variables...measure/quantify them then you can devise a behavioral pattern that allows for you to come to a conclusion (prediction) with RELATIVE certainty......

it should seem that the more variables involved in an EVENT the less predictable or the more random it may be....thisis true...

So lets look at some of Mishaks questions:

Whatare the chances the EUR will go up in the next hour?

OK..what are the total number of possible outcomes
1. Go up
2. Go down
3. Stay same

so just to answer your question of up or down use simple probability math 1/3= 33.3% chance

I performed the following test: Pulled up 1 hr EUR chart and randomly selected 30 bars and looked at open and close price

30 randomly selected
12 ups 40%
14 downs 46%
4 same 13%

then i selected 30 bars in a row
13 down 43%
14 up 46%
3 same 10%

i would venture to say that if we took a larger sample the numbers would converge on 33%

So only three possible outcomes...there are the numbers

next question

Say, EUR/USD is 1.1650. Which chances are better:
A. The Euro will reach 1.1700 (+50 pips) during next 24 hours or
B. The Euro will reach 1.1600 (-50 pips) during next 24 hours

this adds a different dimension and more variables to the mathematical probability equation ... WHY???

the first question just dealt with direction with 3 possible outcomes....easy to measure

your second question not only has direction...but has amount.....
One way of predicting this chance is looking at the variables that will push the price.....ie # of buyers/sellers....volitility...news...etc...

AH!!! techinical analysis..fundamentals....

you would build a formula using indicators that would help you PREDICT with a level of certainty which had a better chance of going up or down by a CERTAIN number of points....

whether they know it or not...this is what all you successful traders are doing.....with your sytem.....based on certain variables you make a prediction about direction and amount and you enter a trade.....

those truly interested in this thread should read about probability and randomness on the web or in a math book...dont get to caught up in the equations..to complex ...just try to understand the theory.....its what we are doing here in FOREX

good luck
dave

29-10-2003, 01:15	#14
skater68 level 2 Join Date: Oct 2003 Posts: 82 Downloads: 0 Uploads: 0 Rep Power: 0	Probability based on my past education of math and my current research on the internet after reading the initial post about Random.... i think there is some confusion Just because something is random DOES NOT mean it CAN NOT be predicted...... PREDICTABLE - if something is random...its ability to be predictable is affected by the number of variables involved with an actual outcome..... so you cn identify the variables...measure/quantify them then you can devise a behavioral pattern that allows for you to come to a conclusion (prediction) with RELATIVE certainty...... it should seem that the more variables involved in an EVENT the less predictable or the more random it may be....thisis true... So lets look at some of Mishaks questions: Whatare the chances the EUR will go up in the next hour? OK..what are the total number of possible outcomes 1. Go up 2. Go down 3. Stay same so just to answer your question of up or down use simple probability math 1/3= 33.3% chance I performed the following test: Pulled up 1 hr EUR chart and randomly selected 30 bars and looked at open and close price 30 randomly selected 12 ups 40% 14 downs 46% 4 same 13% then i selected 30 bars in a row 13 down 43% 14 up 46% 3 same 10% i would venture to say that if we took a larger sample the numbers would converge on 33% So only three possible outcomes...there are the numbers next question Say, EUR/USD is 1.1650. Which chances are better: A. The Euro will reach 1.1700 (+50 pips) during next 24 hours or B. The Euro will reach 1.1600 (-50 pips) during next 24 hours this adds a different dimension and more variables to the mathematical probability equation ... WHY??? the first question just dealt with direction with 3 possible outcomes....easy to measure your second question not only has direction...but has amount..... One way of predicting this chance is looking at the variables that will push the price.....ie # of buyers/sellers....volitility...news...etc... AH!!! techinical analysis..fundamentals.... you would build a formula using indicators that would help you PREDICT with a level of certainty which had a better chance of going up or down by a CERTAIN number of points.... whether they know it or not...this is what all you successful traders are doing.....with your sytem.....based on certain variables you make a prediction about direction and amount and you enter a trade..... those truly interested in this thread should read about probability and randomness on the web or in a math book...dont get to caught up in the equations..to complex ...just try to understand the theory.....its what we are doing here in FOREX good luck dave