Monthly trend of EUR/USD

[ryaron]

Are they stochastic ?
If markets are not deterministic at all, then they are stochastic.
Hence any prediction has a 50% chance to work.

People have proven before that markets show seasonality.
In my opinion the situation is more complex.
We are dealing with a system that obeys a stochastic differential equation (Langevin type).
I.e. the system (market) is deterministic with additional stochastic term.

[Enivid]

I am pretty sure markets are dual - there's some dependence between the current and the next state, but there is also an influence of the external factors and the strength of this influence varies greatly in time. That's why some indicator strategies work well during some periods and then suddenly stop working.

[Enivid]

Do you use some generic software to build this model or is it something custom-made?

[ryaron]

TISEAN to reconstruct the system's phase space.
And yes, you have nailed the spot.
The system is dual.

[ryaron]

You are quite right that the short term influences are stochastic, while long term observation shows determinism.
This is quite the approach that I am using.