2. Accuracy

Let’s imagine John and Paul are playing a coin tossing game, the rules of which are as follows:

• If it’s heads, John gives Paul $1, if it’s tails, Paul gives John $1.

  The boys toss 1,000 times in each game (Chart 1).

• Simply refresh your browser (press F5) to start a new game.

• Notice: any trend is purely random chance.

• Of course, the boys, being smart, would never play this game: they know it would be a complete waste of time. In this game, there can be no winner.

• Also notice: a price series on liquid, highly effective financial markets are largely - although not totally - random. Therefore any “pattern”, e.g. “support”, “resistance”, “pullback”, “breakout” and whatnot that you think you surely see on the chart could be there just by random chance meaning nothing.