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Just because something appears random over time does not mean that it does
not cluster. Try rolling two dice and see how often they trend and congest.
Trying
throwing darts at a dartboard while blindfolded. Or go out on a lot of dates.
Things will tend to be in bunches. ("We always remember our first love with
great tenderness. After that they just appear in bunches." H.L. Mencken) What
you are seeing is the bunching. Short term markets are also very random due to
unequal information dispersion, differing goals, blah blah blah.Gas molecules
in a ballon. How does THAT make you feel :)
In a college physics class, (I think it was with Archimedes) we discussed
randomness and its generation. The only way known, at the time, to generate
true randomness had to do with using quantum uncertainty (Schrodingers Cat?).
Which is not too hard to do actually. If I remember correctly, reversing the
polarity on a simple transistor and reading the output was a quantum random
even. Do that in series and you have a bit generator! You can even buy a chip
for it from Radio Shack. Or, have a three year old throw a pair of dice a bunch
of times for you. (I'll take the chip thank you.)
Try, "Fooled by Randomness" by Taleb Nassim.
alexander the not-as-random-as-he-would-like
>
>
>
>
>
> --- Rob Marsh <dartingriver@xxxxxxxxxxxxxxxxxxxxx> wrote:
> > While fiddling about in Excel today, quite by chance I found something
> quite
> > sobering (from a classical chartist's point of view anyway)
> >
> > If you have a couple of minutes try creating the following simple Excel
> > spreadsheet ( to generate a random walk 'price chart')
> >
> > In cell A2 :
> > =rand()
> >
> > In Cell B2:
> > =if(A2<=0.5,1,-1)
> >
> > In Cell C2:
> > =C1+B2
> >
> > Copy this down (say) 3000 rows and plot a line graph of column C.
> >
> > Then keep regenerating the random numbers using F9 to get a freshly
> > generated random walk each time.
> >
> > What do you see?
> >
> > Trend lines, retracements, consolidations, breakouts, Support,
> > Resistance, Head and Shoulders, double tops, V-shaped
> > bottoms...........etc....etc.
> >
> > Any pattern you like in fact.
> >
> > They are all there if you have an eye for them.
> >
> > AND ALL ON CHARTS THAT ACTUALLY ARE RANDOM WALK!
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