Are you studying hard but still losing? That’s just because your market view is wrong.

Specifically, it has the following premises:

1. Price movements are independent - yesterday’s moves do not affect today’s moves.

2. Stochastic variation - prices move up or down with certain probabilities, making long-term direction unreadable.

3. Markets are efficient - all information is immediately reflected in prices, making arbitrage nearly impossible.

If the Random Walk Theory were completely true, it would be impossible to consistently profit from FX trading. However, in reality there are the following counterexamples:

• Trends occur - trend-following strategies tend to work frequently.

• Volatility clustering - high volatility tends to be followed by high volatility (explainable by ARCH/GARCH models).

• Market participants’ actions affect prices - central bank policies and large investors’ buying/selling create clear trends.

In short, the FX market is not a perfect random walk; there are observable patterns and some regularities.

Even if not completely random, in markets with strong randomness, using the wrong strategy leads to losses. The following strategies are effective:

• Recognize randomness in prices while identifying statistically favorable entry points.

• For example, trades based on pivot points or VWAP can function as a method to exploit short-term deviations.

• It may seem contradictory to random walk theory, but long-term trends often occur.

• Use moving average golden crosses/dead crosses and RSI divergences to discern trend onset.

• Even if prices move randomly, volatility clustering can be used to manage risk.

• Using ATR (Average True Range) to adjust stop losses enables proper risk management.

• In highly random markets, not only win-rate but risk/reward ratio is important.

• Maintaining at least a 1:2 reward-to-risk ratio ensures a positive expectancy even in highly random markets.

• Even with near-random moves, profits can come from exploiting small price distortions.

• Utilizing HFT (high-frequency trading) or arbitrage strategies (e.g., triangular arbitrage) allows you to accumulate small advantages.

• Short-term moves may seem random, but long-term trends and volatility patterns exist.

• Considering the nature of random walks and employing statistically advantageous trading methods is key.

• In trading, it is important to assume “near-randomness” while finding and exploiting patterns.

• By strictly managing risk and taking a probabilistic approach, it is possible to win over the long term.

In other words, an understanding that “the FX market is near-random but not completely chaotic” and effectively leveraging probability and statistics are the points to success for a trader.