Random trading vs technical analysis

I want to focus your attention for a while on this paper entitled: “Are random trading strategies more successful than technical ones?

Well, I encourage you to read it whole.
However, I bow myself pardon to the authors if I take just two significant pictures and explain them briefly.

First one
This is the DAX. I won’t explain as much as it is all very clear. Focus your attention onto the histo charts at the bottom.
The first one is “Average % of wins” by trading the DAX with five different methods:
– random strategy
– momentum
As you may notice, they are pretty all the same. You get approximately the same trading results playing with this strategies at “infinitum” (50% wins).
But the second one is much more important. The second one is the standard deviation of wins. It means the average distance of each win from the mean of the winning trades. The greater, the worse.

Second one
This is even clearer. This is, again, the standard deviation of winning trades.
Given that each strategy reaches 50%, what would you trade?
I would, I will, definitely trade the random.


1 thought on “Random trading vs technical analysis

  1. Pingback: short short short - Pagina 9 - I Forum di Investireoggi

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