Friday, June 13, 2025
  • About us
  • Economic Calendar
  • Price Predictions
  • Coins Alerts
  • Crypto Portfolio Tracker
  • Exclusively from Our Partners
Cryptheory
  • Cryptocurrency List
  • Cryptocurrency
    • Cryptocurrency Exchanges
      • Top exchanges for trading Bitcoin derivatives
      • How to buy bitcoin without KYC
      • How to Trade Bitcoin – best platforms
      • Best platforms to buy Bitcoin by debit or credit card
      • Platforms for Grid Trading
      • BYDFi: Review and Guide
      • BingX: Review and Guide
      • Kraken: Review and Guide
      • Bybit: Review and Guide
      • Bitpanda: Review and Guide
      • Phemex: Review and Guide
      • Huobi: Quick Guide
      • Binance: Review and Guide
        • Binance Futures Guide
    • Bitcoin
    • Tether
    • XRP
    • Dogecoin
    • Avalanche
    • Stellar
    • The Open Network
  • crypto news
  • Crypto Exchanges Info
  • Analysis
  • Attractions
No Result
View All Result
  • Cryptocurrency List
  • Cryptocurrency
    • Cryptocurrency Exchanges
      • Top exchanges for trading Bitcoin derivatives
      • How to buy bitcoin without KYC
      • How to Trade Bitcoin – best platforms
      • Best platforms to buy Bitcoin by debit or credit card
      • Platforms for Grid Trading
      • BYDFi: Review and Guide
      • BingX: Review and Guide
      • Kraken: Review and Guide
      • Bybit: Review and Guide
      • Bitpanda: Review and Guide
      • Phemex: Review and Guide
      • Huobi: Quick Guide
      • Binance: Review and Guide
        • Binance Futures Guide
    • Bitcoin
    • Tether
    • XRP
    • Dogecoin
    • Avalanche
    • Stellar
    • The Open Network
  • crypto news
  • Crypto Exchanges Info
  • Analysis
  • Attractions
No Result
View All Result
Cryptheory
No Result
View All Result

You Could Trade Profitably Even In A Random Stock Market

by cryptheory
March 28, 2025
in Guest Post
Reading Time: 3 mins read

Some academics have argued that stock movement is random, and that investing in the stock market is nothing but a gamble. These people hold that even if you buy a stock that is in a well-defined up-trend, it is just as likely to trend down as up after you purchase it. Professional traders, on the other hand, believe there are inefficiencies in the market. They hold that it takes time for stocks to move up or down in order to reflect the changing realities of business. They would also argue that stocks often exhibit momentum in their adjustments to those changing realities.

The problem with the former position is that it does not adequately account for the experiences of traders. For example, a trader will buy a stock that is in a “setup” configuration because there is a high probability that the stock will surge in price shortly after the stock’s pattern completes a setup. Much more often than not, it does. Traders buy stocks that are trending because, more often than not, the trends continue and they will be able to sell at a higher price. That could only be explained by the idea that a trend has “momentum.”

However, let us assume that the “random-walk” theorists are correct. Assume that the odds of a stock rising or falling are always 50-50. Even if we agree to that, no one would argue that when a stock moves it can only move a defined amount. That is, to be consistent, the “random walkers” must also assume that the extent of a move up or down is also random. Some stocks will rise or fall only 1% (more or less) and others will rise or fall 25% (more or less).

If we assume that whether a stock rises or falls and that the percentage gains or losses of any extended move are all random, then we would suggest that it is still possible to be a fairly consistent winner in the stock market. The following is just one example of how it can be done. Let’s assume that you consistently sell any stock that drops 3% below the highest low the stock reaches after its purchase. This will be too active for some, but it will illustrate the point. Let’s say that a stock rises to a gain of 3% at its high point and at that moment its low price is also at a high (let’s assume it is up 2%). Then the stock drops so that its low price is 3% below its highest level. You would therefore sell the stock for a 1% loss (if you sold at the low). Assume another stock’s low price rises a maximum of 12% before declining 3% from that level. That one will be sold for a 9% gain. Since the percentage gains before a 3% drop must be assumed to be randomly distributed, then there will be a significant number of stocks that rise 5%, 10%, 15%, or more after their purchase. If no stock is allowed to decline more than 3%, then 3% is obviously the maximum amount you will lose on any position. On the other hand, the upside has no limit. That means you will sometimes make gains of 2%, 7%, 12%, or even more on some of your trades. The result is that, over time, you are much more likely to make a profit than suffer a loss. That has been the experience of expert traders.

The bottom line is that even if stocks moved in an absolutely random way, you could still be a winner over extended periods. The idea that you couldn’t be a winner is based on a scenario in which a person buys a portfolio of stocks and does not sell anything until some indefinite future when the portfolio is liquidated. In other words, the positions are not being managed and a gain in one stock is balanced by a loss in another. The idea is that you not only buy at a random price, but you also sell at a random price. There is no strategy here. However, we have seen that by proper portfolio management and the application of a sound strategy, it is possible to effectively “rig the game” in your favor, even if stock movements were purely random.

By Dr. Winton Felt

Copyright 2015, by StockDisciplines.com a.k.a. Stock Disciplines, LLC.

Dr. Winton M. Felt

  • Author
  • Recent Posts
cryptheory
cryptheory
Core team behind Cryptheory Labs and website Cryptheory.org.
cryptheory
Latest posts by cryptheory (see all)
  • Why Online Advertisers Should Request Website Traffic Data from Google Analytics Instead of Using SEO Tools Like MOZ or Ahrefs? - March 24, 2025
  • North Carolina’s Bold Move: State Bill Proposes Investing 10% of Public Funds in Bitcoin - March 22, 2025
  • Justin Sun Stakes $100 Million in Ethereum on Lido – What Does It Mean for the Market? - March 19, 2025
Previous Post

Getting Started With Cryptocurrencies

Next Post

5 Benefits of Investing in BTC

Related Posts

Personal Traits in Trading
Guest Post

Personal Traits in Trading

September 5, 2023
Top 10 Leading Countries in AI Research and Technology [current_date format=Y]
Guest Post

The strategic approach to AI in the enterprise

September 4, 2023
The development of Bitcoin mining technology
Cryptheory News

The development of Bitcoin mining technology

March 28, 2025
Why the smart cities of tomorrow are relying on blockchain tools
AC mania

Why the smart cities of tomorrow are relying on blockchain tools

September 2, 2023
What are the advantages of causal analysis
Guest Post

What are the advantages of causal analysis

September 2, 2023
Crypto Fraud: How To Protect Yourself From Crypto Scams
Guest Post

Crypto Fraud: How To Protect Yourself From Crypto Scams

June 30, 2023
Title: Bit by Bit: Navigating the Labyrinth of Crypto currency Scams
Guest Post

Bit by Bit: Navigating the Labyrinth of Crypto currency Scams

June 29, 2023
Games Is Important Part in Our Life
Guest Post

Games Is Important Part in Our Life

March 28, 2025
Philippine Oil Deregulation – A Policy Research Analysis
Guest Post

Philippine Oil Deregulation – A Policy Research Analysis

March 28, 2025
Please login to join discussion
Track all markets on TradingView
Score: 0
Game Over

Popular

Crypto Trading Tips for June 5, 2025: Navigating the Binance Spot Market

Crypto Trading Tips for June 5, 2025: Navigating the Binance Spot Market

June 5, 2025
Let’s Be Honest: Most Crypto Projects Are Just Bullshit Wrapped in a Sexy Website

Let’s Be Honest: Most Crypto Projects Are Just Bullshit Wrapped in a Sexy Website

May 15, 2025
June 15th: The Altcoin Apocalypse or Your Ticket to a Lambo? Let's F***ing See.

June 15th: The Altcoin Apocalypse or Your Ticket to a Lambo? Let’s F***ing See.

June 11, 2025
Dogecoin's Wild Ride: A Charts-and-Giggles Exposé on Who Really Got Rekt (It Was Probably You)

Dogecoin’s Wild Ride: A Charts-and-Giggles Exposé on Who Really Got Rekt (It Was Probably You)

June 6, 2025
Ethereum Is Just a Pricier Solana – Let the Maxis Rage All They Want

Ethereum Is Just a Pricier Solana – Let the Maxis Rage All They Want

May 14, 2025
The Hottest Female Characters in PC Games: A Deep Dive into Digital Desirability

The Hottest Female Characters in PC Games: A Deep Dive into Digital Desirability

June 5, 2025
Trading tips for May 14, 2025

Trading tips for May 14, 2025

May 14, 2025
SOL's Big F***ing Breakout: Why Solana's About to Send You to the Moon

SOL’s Big F***ing Breakout: Why Solana’s About to Send You to the Moon

June 10, 2025
Staking: Is it Just a Fancy Ponzi Scheme? Let's Get Real.

Staking: Is it Just a Fancy Ponzi Scheme? Let’s Get Real.

June 11, 2025
Analysis & Trading Tips June 10, 2025: Dogecoin Is Barking Again

Analysis & Trading Tips June 10, 2025: Dogecoin Is Barking Again

June 10, 2025

⭐ What Type of Crypto Investor Are You? (v2)

1. How do you DYOR (Do Your Own Research)?

2. Your first reaction to a 10x pump?

3. What’s your opinion on memecoins?

4. Where do you stake your crypto?

5. What’s your exit strategy?

6. How do you pick your next investment?

7. Favorite kind of airdrop?

8. What’s your approach to NFTs?

9. How do you store your crypto?

10. What's your long-term crypto goal?

Crypto News

Bitcoin

Ethereum

Altcoins

Cryptocurrency

Platforms for Copy Trading

Platforms for Grid Trading

Glossary of trading and crypto terms

Crypto Portfolio Tracker

 

Cryptheory Labs Projects

Guest Post for Free

On our website, you can share your opinions and insights. This feature is reserved for non-promotional articles. We are already working on a system for donations and rewarding every author.

This website is here for those of you who want to be at the forefront of innovation and new technologies like Bitcoin. But first, we need to tackle the challenges and survive in the unforgiving world of crypto assets. THIS IS CRYPTHEORY!

Follow Us

  • Terms Of Use
  • Privacy Policy
  • About us
  • Contact us

© 2024 Cryptheory - F**k the forex, we want gains!

Shiba Inu loading
No Result
View All Result
  • Cryptocurrency List
  • Cryptocurrency
    • Cryptocurrency Exchanges
      • Top exchanges for trading Bitcoin derivatives
      • How to buy bitcoin without KYC
      • How to Trade Bitcoin – best platforms
      • Best platforms to buy Bitcoin by debit or credit card
      • Platforms for Grid Trading
      • BYDFi: Review and Guide
      • BingX: Review and Guide
      • Kraken: Review and Guide
      • Bybit: Review and Guide
      • Bitpanda: Review and Guide
      • Phemex: Review and Guide
      • Huobi: Quick Guide
      • Binance: Review and Guide
    • Bitcoin
    • Tether
    • XRP
    • Dogecoin
    • Avalanche
    • Stellar
    • The Open Network
  • crypto news
  • Crypto Exchanges Info
  • Analysis
  • Attractions

© 2024 Cryptheory - F**k the forex, we want gains!

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.