Publications

This article, the third in a series, examines random and predictable events in financial data mining efforts and reviews the author�s experience with data mining in 30-year U.S. Treasury Bond futures.

by Thomas A. Rathburn, April 1, 2008, b-eye-network.com

Random Data

Until recently, many people argued that the movements of prices in the financial markets are random. Many researchers now confirm what practitioners have known for years. Price movements are not random. Few would argue against the existence of trends and trading ranges in the financial markets. The occurrence of these characteristics is sufficient to demonstrate that the markets are not a series of random price movements.

The question then reverts to whether the market is predictable. The logical answer is that predictability depends upon the talent of the predictor. The financial markets have the potential to be predictable. When market change is predicted successfully, the trader can reap great rewards. That is why so many people are pursuing data mining efforts.

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