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Thread: Random Trading: Does it Happened in Reality?

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    Lightbulb Random Trading: Does it Happened in Reality?

    Random reinforcement is a contentious issue in the trading world at the moment. When it comes to trading, random reinforcement happens when a trader incorrectly correlates a random outcome to their expertise or inexperience. This can be harmful because a trader may learn to think in their abilities when they do not really exist or even excessively underestimate them when they do.

    Several traders devote considerable time to refining their entrance requirements. Select the most appropriate combination of glitzy signs to pique their interest. Then, almost without thinking, they place their take profit level at the nearest arbitrary support or resistance line. Despite this, they can make money.

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    The trade entries in the simulations in this section are based on randomization to an extent, with some up to the majority of them being dependent on chance. Also, That is, a stock position is formed based on the result of a skewed coin flip. The logic is that if a large number of trading indicators perform randomly.

    What is Random Trading?

    Random Trading is focused on making an overall profit that the investors can gain no matter when or how they enter the market. They enter the market on a random basis and this makes them acquire overall profit thus, it is not determined by the direction of the transaction but by how the investors managed the transaction. For this reason, it is happening to the traders and investors upon using this method.

    A solely random system is concentrated on buying and selling at a particular time of the day and through the competent use of following stops, breakeven stops, and even target and stop sizing and also managing the transaction after it is being entered in the market. If the investors and traders manage the transaction over time they will eventually be successful that is why for them random trading is considered as reality.

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    On the other hand, random entries are about entering everywhere within the market and putting some stop loss and acquiring profit as it can significantly highlight the importance of exit rules which several investors do not have sufficient knowledge. For this reason, random entry can be a strategy that traders can use upon advancing to the trailing exit of the market

    Is Random Trading Entry Profitable?

    Several prospective traders place a strong emphasis on setups as well as entrances. I'd estimate that 90% of their time is spent polishing entries.

    On the other hand, Tom Basso and Van Tharp published scientific studies on the relative insignificance of entries non creating a strong trading performance in the the 1990s. Their "Coin Flip" analysis revealed that a randomized entry with such a trailing stop generated money across ten futures markets.

    Why Random Trading is Applicable Today?

    Even though one of the best books on trading provides no real market guidance, it still analyzes price movement better than a thousand investment managers might be.

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    In connection, Leonard Mlodinow's book, The Drunkard's Walk explores how randomness governs almost every element of existence. Randomness has a significant role in market price behavior. It was one of the primary reasons why practically a single backtest under real market conditions fails horribly.

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    This is also why, when it comes to generating money day trading the market, investors believe techniques to be far more essential than strategy. Thus, single entry strategies are indeed the epitome of hypocrisy, particularly in day trading, where the limits are minimal and the error margin is razor-thin.

    Day trading strategies, on the other hand, are built for better outcomes in a genuine market setting that resembles the rolling waves of the water rather than the firm assuredness of a hard floor. These ideas have earned more pips than all of the investor's day trading systems which have merged throughout the decades. In addition, random strategies can help traders improve their efficiency and proficiency in the market and because of their strong reliance on expectations, analysts and investors have attempted to develop methods that can anticipate future asset values.

    How Does Random Reinforcement Affect People?

    Because of randomness and noise, the market periodically rewards bad habits as well as punishes good habits. This could be particularly damaging if a novice trader succeeds in just a few early deals with no strategy and attributes their success to intrinsic skill or "gut instinct."

    On the other hand, veteran traders who have had a streak of losses and perceive they no longer own their inherent expertise may be harmed by random reinforcement. Hence, random reinforcement can lead to the development of long-term poor habits that are difficult to stop.

    In some aspects, it is indeed similar to addicted gamblers who keep playing since they earn just about enough to help them survive, but they are losing money over time. A skilled card counter may sometimes face a significant loss, forsake a tried-and-true approach, as well as hand the advantage back to the house at the same time.

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    In connection, for some traders, the concept of random reinforcement is difficult to comprehend, yet grasping it might be the distinction between effectively progressing as a trader and simply assuming.


    The markets are incredibly volatile and constantly changing. This introduces randomness, which can result in profits for novice traders as well as losses for experienced traders, and it occasionally happens. A trader must therefore distinguish between how a string of gains and losses is due to their expertise and when it is due to chance. Only by approaching the markets with a trading plan but instead risking a minuscule portion of their cash on each trade can achieve this while learning. As a result, the trader can evaluate how a method works overtime when the chance is less of an influence.

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    It is indeed noteworthy that even the best traders and trading strategies have losing streaks, which is also not necessarily a reason to abandon the approach. Isolating why the strategy is no longer functioning, on the other hand, may assist reduce the size of the losses if comparable adverse situations occur repeatedly.

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    Last edited by zyramaybriton; 22-10-2021 at 04:01 PM.

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