Search results

The risk/reward ratio is the relationship between the probability of the loss multiplied by the absolute value of the loss and the probability of the profit multiplied by the absolute value of the profit.

OOps, I did it again! Boggling would be a good word to use, but bugling works too, don't you think? :D

Yes, works of Professor Burke Brown form UFT in behavioral finance have conclusively proved the fact that diversification and other methods of Modern Portfolio theory have been wildly overstated and, therefore, misleading. He is 80 years old and he is my best friend and the mentor. His simple...

:D :D Don't be modest! I would love to have all of my screens as bright as yours! I was and I will be your fan! Its other not very bright lights in ET chandelier I would like to replace with more efficient florescent bulbs!

No, it suggests less of the correlation (not negative). 98% and minus 98% correlation is the same thing. It simply means that the two events are inversely correlated. However, 98% and 2% correlations are totally different in terms of their codependency.

May be I should. You never know. However, my argument was not about diversification being useless, but about diversification being useless for risk/reward ratio only. Since that was the original question I still remain certain that I am correct.

Ok, I could have missed the point. But isn't it true that the longer the time frame the less chances one has to be right?

I do not recall me putting anybody down here on ET while arguing. So, please argue, chime in! I would love to here your opinion. It does not matter how many screens I have (its about 250 by now :cool: ) I could still be wrong! I will be the first to admit it. So fire away!

I was simply unsure of what do you think causality is in relation to trading. That's all. But, of course, I might have missed the obvious. I apologize.

Sure I can. Urge to express in the anticipation of a thrill being heard and being relevant. Exultation is one of the forms of insecurity. However, it is no different than collecting stamps or playing a guitar. The way people express themselves is irrelevant to their desire not to be isolated...

What difference does it make?

I missed your morning call. I had sooooooo many people in the office! When did you call the down turn? I could not find it.

That is another valid point. The longer time frame the greater the probability for any prediction to be neither right nor wrong i.e. to be = 0. So, the longer time frame you choose the less chances you have to make money, unless your bets are non-directional (i.e. time decay).

I think he is a good sport! What do you think?

No, what he is saying is if your risk is lower so is your return. Diversification does not change the risk/return ratio.

"Smoother" yes, but risk return ratio will remain the same.

Causality? Could you expand on that? I am not sure I folow.

Yes, I agree. You are making a very valid point. In the world of Math it translates: A conditional probability of two independent events is always lower than the individual probability of each of those separate events.

No, the point I am making is IT DOES NOT MATTER . You cannot change risk reward ratio by mixing up any strategies unless one of them has inherently higher ratio.

You are getting it, brother!