gb50k

Updated: The Random Walk (the story of your life)

AMEX:SPY   SPDR S&P 500 ETF TRUST
This is an attempt to predict future price movements.
The trend appears clear. But its an illusion created by aggregating random returns.
This is the random walk.
It can also be an allegory for life.

Comments

epic charts ^.^ underrated
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I think when Bobby Fischer got where he got he was so overwhelmed by the Great Randomness he progressively became aware of, he could not handle the regular "normal" life anymore and maintained seclusion for decades. In my opinion that is exactly it: randomness and illusion - the two majestic categories that define reality, including the reality of this funny game we call trading (lol). The whole human game of life is trading. Nice post.
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Great job! This is a very important truth every trader should reflect on and understand at some point in their learning process. Just don't make the mistake of dismissing technical analysis because you think direction and patterns are meaningless. What is real is the PSYCHOLOGY and RESPONSES to these patterns when observed. So instead of thinking about just the numbers, think of the herding behavior of all the humans reacting to what's in front of them. You hear experienced day traders talking about it all the time... they count on and try to ride the waves of trades that come in after certain patterns form. Also, I'm firm in the camp of experts that believe back-testing is a monumental waste of time. After you come up with a trading idea, trade it using simulated trades going FORWARD, not back. Put the time in and do it right, or just settle in with all the other sheep and let the experienced wolves eat you for lunch.
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That’s why when you get your trading system figured put, you run it through a monte carlo simulation to see if it will work in the real world. I would backtest against recession periods to see if it still performs, as well.
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