100% random trading

Hello everyone. I’ve been messing around with a demo account for a while now trying all different kinds of things, honestly just having a bit of fun and not really trying to make money… Just testing the platform.

I wanted to ask your opinion of 100% random trading. So on my platform I have 9 currency pairs selected and I use a random number generator ranging from 1 - 9. Whatever number it lands on that is the currency pair I will be trading. Then I will roll another random number and if it’s 1 then I’ll sell, if it’s 2 then I’ll buy.

I will run this 3 times producing 3 different trades. Then I’ll set a stop loss of 50pips and a take profit of 150pips and just leave all 3 until the market takes them out.

So with my understanding if all 3 trades lose then I will lose 150pips but even if 1 of them win then I will at least break even.

I mean at the end of the day it’s completely random… I may get lucky and select 3 awesome trades that are doing amazing. I may select 3 trades that do terribly. Although over the long distance should this not make money?

This is purely a thought I it’s probably a bad idea otherwise everyone would be doing it but can someone tell me where the flaw lies because I cannot see one.

Thank you for reading and happy trading.

If there is a difference between Roulette and Poker then your way is Roulette :slight_smile:

OK speaking of roulette. Consider the following.

A roulette wheel consists of 50 numbers numbered 1 through 50. Every even number is a win and returns 3 times your money. Every odd number is a loss and takes your money.

So you have 4 attempts. This is massively in your favour.

Game 1: loss = -50
Game 2: loss = -50
Game 3: loss = -50
Game 4: win = +150

Break even.

Game 1: Win = +150
Game 2: Loss = -50
Game 3: Win = +150
Game 4: Loss = -50

+200 profit.

EDIT Actually I think I overlooked something… 0 is 3 times closer to -50 than 150 is so you’re 3 times more likely to lose? Which means that if you traded like this many many times you’d actually end up break even overall? In the long run?

I know a guy who traded based on a coin flip. Started with 12k went up to 53k after a month. The next month got wiped out.

Why randomly select a currency pair and not just stick to one?

I can understand that randomly selecting can give you winning trades and you can even make a profit, but as the FX market is not totally random you lower your changes of making a profit because you are randomly selecting a pair as well.

If you stick you eurusd and your direction number is 2 (sell) and this is a loser and the next draw is a 1 (buy) and this would be a winner, you can lose your profit because you trade it on another pair.

It is like randomly deciding to go black or red and than randomly deciding on which table you will place your bet. In the long term you will lose as sticking to one table will give you a draw (as roullette tables are only random in the short term.),.

Are you talking about yourself in the third person? :stuck_out_tongue:

Youre in right way

Yes you are right. That is a bad idea or even worse than that. It is more of a gambling than trading. You not seen a flaw means you are not educated enough and you are not even close to a trading strategy, so I would like to recommend you to start educating your self if you really want to achieve some success.

You’ve not told me why it won’t work…

In fact nobody has told me why it won’t work.

We think it won’t work because you are trading randomly in a non-random world. FX is not random, otherwise the price would be all over the place. There are patterns that people trade by.

You make it gambling. It is not up to us to say if it is profitable or not (so I don’ t). You can be lucky for a while with small loss days and big gain days that you luckily chose based on your method. Changes are that you run out of luck at some point of time. But that counts for a lot of traders to.

Heck, your system may be more profitable than the trading done by some of our obsessive technical traders and you hang in there longer. But it still is gambling and therefor not considered to be a smart trade strategy.

When you are of the opinion that it will work you may consider that this still doesn’ t explain it, but the point is that you will be ignoring all signals given by the market. If you don’ t see that Rambo35 has a point.

Let’s assume that the EUR/USD only ever goes up in price and never goes down. When I randomly chose buy or sell, there is a 50% chance I will select buy and win the trade. So it really does not matter if the market is random or not. What matters is the probability of me picking the correct outcome.

Besides on a daily chart I often hear the term “noise” being thrown around and I’ve read on many reputable forex websites that pairs can go up and down by up to 200pips some days just due to “noise” or “random movements” throughout the day.

Whereas over a week or month, the trend becomes apparent.

To make it even clearer, imagine that every single currencies price drops with respect to it’s partner. So EUR drops to USD, JPY and GBP. The USD drops to the CAD, JPY etc. So there is absolutely 0 randomness involved and a “skilled” trader could make 100% perfect trades just by shorting.

I will still win 50% of the time with random trades. Because there is a 50% chance of me picking the short option with respect to a pair. Then If I am wrong, I will lose 50pips but if I am right I will gain 150pips.

Over a long period of time you should expect to see 1 out of 3 trades win with an average pip gain of 50pips.

So after 3000 trades you should expect to win 1000 of them and profit 50,000pips. Which if you do 3 trades a day, every working day, that is approximately 50,000pips after 4 years.

I really do appreciate you taking the time to read and engage in this conversation with me, even if the answer seems inherently clear to you. I still need some clarification.

Like I said previously the only issue I see with this is that -50pips is easier to achieve than +150pips. Maybe it’s 3 times easier? I don’t know.

Kinda hoping for a mathematical proof from someone on this. Anyone good with statistics and probability can answer this question?

There have been studies on trading with a random entry signal.
Most of them (that I have seen) show that a random entry with solid money mamagement will end up in small but consistant profit over time.
There was only one side effect: it is not possible on low timeframes, as the spread would eat up to much to be profitable.
The studies showed only a few percent consistent profit over a number of years, so not much better than what the bank offers you.

My conclusion: random signall can be consistable profitable, but not enough to be worth it.
That’s why you look for sn edge, but still your money management is so much more importand than the entry.

Thanks for your post dutchtrader. I think I have the math down now.

Assuming 150pips is 3 times harder to achieve than -50pips is. We can say that 75% of your trades you will lose 50pips and 25% of your trades you will gain 150pips meaning…

Trade 1: Loss
Trade 2: Win
Trade 3: Loss
Trade 4: Loss

Loss: 150pips
Win: 150pips.

Break even.

So basically after a very long period of time, your actual net profit is £0. Actually with spread taken into account it would actually be negative profit. This is of course assuming that 150pips is indeed 3 times harder to get than -50pips… in a random system.

Random trading won’t work in forex market I’ve tried that for many years :wink:

Fortunately, no. :slight_smile: