I just watched brain games, and there was an experiment conducted on a group of participants to guess the number of gum balls in the jar. All of them guessed incorrectly.
To make a very close guess to the number of gum balls, the host averaged the guesses of the number of gum balls, and the final result was shocking.
There were 2447 gum balls in the jar, the average of their guess was 2425, just a difference of 1%.
Look up more on wisdom of the crowd in wiki.
The experiment has inspired me to apply this technique to forex and I’m very excited to see how this turns out.
We need a minimum of 20 guesses for this to work. I’ll try out with 3 currency pairs first.
It’s very easy to take part in this.
You will just need to guess the closing price of the currency pairs below on 22-Apr (Friday)
If we have atleast 20 guesses, I will average and post the result on 20-Apr.
I think the main difference between guessing the number of gumballs in a jar versus trying to predict the closing prices of Forex pairs (or any market) is that all information is available in the first scenario, whereas there is missing information in the latter.
With that said here are my predictions:
EUR/USD: 1.1320
GBP/USD: 1.4300
USD/JPY: 108.30
Interesting concept, unfortunately, one fatal flaw. You gumball jar is an example of a closed system Whereas the market is an open system. The difference between the two?
Well, a closed system is exactly that. Closed. No external force can influence or effect the count. However, many balls that are in the jar is never going to change. Predictions of results from closed systems always fit a bell curve with the mean correlating to the actual result.
The market is an open system. The result of market processes (price) is directly influenced by all and any external forces. Thus making prediction nearly always impossible. There will not ever be a correlation between predicted and actual results. Which is why many academic technicians look to chaos theory to help explain why such predictions never eventuate.
One common theme accepted by traders is to never give a rats toot about what anybody else thinks. The only opinion that counts is your own. You base your predictions of learned examples from the past and how you apply that learning to your own processes. In that sense trading is a very very lonely experience.
For sure my particular style is a very unique process and I hope no-one is dumb enough to do the things I do :51:
I am not sure what a “rats toot” is but I learn something new every day!
I fully agree with BBB’s comment here if one trades on a technical basis. The assumption being that all the information and opinion that is (a) available and (b) will be acted on, is in fact present in the actual price where the market is right now. And if this total input is not in equilibrium but biased towards up or down then the price will move accordingly. It is precisely the average of the sum of all the opinion and activity available that forms the equilibrium point towards which the price is constantly driven. On occasions this process is visible where the market settles into an equilibrum, such as the close of business before weekends and holidays, etc. Technical trading strategies are designed to identify these imbalances and the moves that result from them. In this respect any additional informational input beyond what the strategy is telling you is superfluous and can even distort its message. In this sense, a technical trader is indeed a very lonely person and requires a deep trust in his/her relationship with their own strategy.
However, a fundamental trader is in a rather different situation, in that he/she will form their own opinion based on informational input. Since there is always more information than one can ever possess, the trader always has an incomplete picture of the total situation and will always embrace new sources of wisdom and opinion.
[QUOTE=“bobbillbrowne;761130”]Interesting concept, unfortunately, one fatal flaw. You gumball jar is an example of a closed system Whereas the market is an open system. The difference between the two? Well, a closed system is exactly that. Closed. No external force can influence or effect the count. However, many balls that are in the jar is never going to change. Predictions of results from closed systems always fit a bell curve with the mean correlating to the actual result. The market is an open system. The result of market processes (price) is directly influenced by all and any external forces. Thus making prediction nearly always impossible. There will not ever be a correlation between predicted and actual results. Which is why many academic technicians look to chaos theory to help explain why such predictions never eventuate. One common theme accepted by traders is to never give a rats toot about what anybody else thinks. The only opinion that counts is your own. You base your predictions of learned examples from the past and how you apply that learning to your own processes. In that sense trading is a very very lonely experience. For sure my particular style is a very unique process and I hope no-one is dumb enough to do the things I do :51:[/QUOTE]
If we consider Forex market through fundamental analysis it’s definitely an open system. And if it is technical analysis prism the system is not so close as we see. When we do thech analyze we don’t allow external influence, cause in this case it’s apparently a fundamental analyze. So my opinion - this theory has a right to exist applying to forex market. At least give it a chance.
