Is it possible to predict forex markets - apparently not

[Steve C]

Hi Everyone,

Thought the article below may be of interest to some, basically the article states that technical analysis can't predict markets:

http://www.afrsmartinvestor.com.au/..._to_accurately_predict_JJcM9hsJDSGAWh9KYOg4lM

Steve

 

[pixel]

Hi Everyone,

Thought the article below may be of interest to some, basically the article states that technical analysis can't predict markets:

http://www.afrsmartinvestor.com.au/..._to_accurately_predict_JJcM9hsJDSGAWh9KYOg4lM

Steve

On Predictability of Exchange Rates
No use looking at one component in isolation and repeat running commentary of what may be around the next corner. Those that do have the clout to move markets (if they exist at all) will do their darnedest to keep everyone guessing. And if one published opinion comes close to the truth, there'll be dozens of others that throw us off the scent. Of course, if somebody finds an event close to a grain of their pet theory's prediction, it's "told you so. spot on!"
The more complex the influences and relationships become, the less likely it is that anybody's published opinion will last, and the more important it is to go back to charting basics: Support, Resistance, and Trends.

quote
Nonetheless, despite extensive efforts on the part of analysts, to my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin.
endquote
Alan Greenspan - 20/11/2003: http://www.federalreserve.gov/boarddocs/speeches/2003/20031120/default.htm

http://rettmer.com.au/TrinityHome/Trinity/Musings.htm#onFX

 

[Trembling Hand]

What a load of BS,

I'll bet these dudes any amount of money that you can trade a market better than a coin flip.



But I guess that's why they make a wage talking about the market and I make money out of the market!

 

[Steve C]

What a load of BS,

I'll bet these dudes any amount of money that you can trade a market better than a coin flip.

View attachment 48775

But I guess that's why they make a wage talking about the market and I make money out of the market!

Nicely said Trembling Hand - from what I have learnt so far about expectancy, you can lose more than you win and still make money in the long term.

 

[TulipFX]

Rather than prediction, I like to think of our systems 'statistically guessing'. When asked what direction I think a currency pair will move in I answer honestly 'I don't know'.

Once you lose humbleness the market will hurt you.

 

[wayneL]

But I guess that's why they make a wage talking about the market and I make money out of the market!

They suffer a fundamental misunderstanding of analysis.

 

[OGRooney]

That's ridiculous... I did this for my friend the other day... asked her "up or down?" she replied "up" so I bought her 500 AUDUSD. She lost her dollar.

If I had asked her "How will the Australian Dollar fair in relation to the American Dollar over the next day" AND showed her the appropriate chart, I think she would have been in a much better position to make an informed decision/trade/gamble. It's hard to represent the value of information in a mathematical format, but to completely ignore said information is just well, ignorant.

He groups all the stats he's collected together - which voids their value - those predictions are only valuable statistics as long as they are attributed to the parties that made them. A better experiment would be to compare the results of 100 traders who trade randomly to 100 who trade using the information available, I think he'd struggle to find 100 traders who trade randomly

I think this guy is more interested in discrediting economics than conducting useful experiments

 

[prism2]

The person who wrote the article has obviously never played a hand of poker in their life...or any game that is supposedly made up of chance. Predication is related to probability. You can predict the weather if there are signs making it highly probable that it will rain and you make your bet on the probability whether or not you take your umbrella that day. Just like, you can predict the outcome of a winning hand in poker and bet accordingly when you take into account the variables like the # of players, the cards in the flop, etc. which has a probability index in some poker handbook. Professional poker players memorize these probability #'s as well as practicing against opponents day-in/day-out to make a living out of "always being on top of their game".

Everything that exists in our lives have some measure of predictability based on events being highly probable or not. Why do people believe markets are any different? This is what makes our lives coherent and allows us to exist in our environments.

The real issue is not so much whether markets are predictable... but trying to measure what the "real underlying" cause is for events occurring. That deals more with chaos theory because in essence correlation will never provide absolute causation for any event.

 

[WestCoastWizard]

If the aim is to predict then the answer is no. It is not possible for retail traders to predict with accuracy and consistency of where the price is going.

If the aim is to profit then you would switch your mindset from predicting the market to following the market.