A message to some day traders.
- Thread starter Amahrix
- Start date
I too feel the same about you via trying to make an analogy of what happens to a Turkey to the financial markets as if its your way only and others viewing the same Turkey via reality is not allowed.
Take care.
wrbtrader
Good luck.
Yikes........We be diners until we're dinners
The example highlights how the turkey, looking at all of its past, still won’t know when it’ll become “Thanksgiving Day” for him. He is using inductive reasoning, and this cannot save him from ruin. Because if you’re only using inductive reasoning, you’re believing that the past is indicative of the future. You’re relying on it too much. And it’ll hurt like hell when you get shocked.
The butcher knew, because he was in control. He had more superior knowledge to the turkey.
The turkey is a metaphor for financial markets(whether the whole market, or individual stocks, or short term charts, doesn’t matter). As much as we look at the past, we cannot predict where prediction would’ve been of greatest value the most, in the future.
You can trick yourself into seeing patterns shmatterns, but you will end up losing because 1) your collecting pennies risking dollars 2) you’re patterns cannot predict the event that’ll have the most impact on your P&L.
Now if your collecting pennies, it won’t take much of a move to knock you out of your earnings for last 3 months. A unexpected jolt of a few percent move inside a trade will set you back. (You get the point).
This is why day trading using traditional TA tools, does not work over the long term. To those that argue it has for a select few; 1) survivorship bias 2) it can statistically happen due to sheer luck
Also, this is why, as I made a point in a few posts ago, sharpe ratios should not be indicative of a safe strategy. That turkey had an amazing sharpe ratio.. didn’t it.
Also, this is why, people can have a win rate of 99% and still lose over the long term.
Will anyone learn?
Good luck & happy trading.
Yes I am a believer in God and that He made me. However, He didn’t make me a turkey to be led to the slaughter. There may be a few turkeys in the market waiting for the slaughter but not me. I ain’t one of them.
1) The markets are not random. (Hint start with a wrong premise and your conclusions will be wrong)
2) The markets have complete information not incomplete as you think. It is all there and the effect of that information on price is visible in the chart. The information is exactly WHAT moved the market. I may not see..hear..or speak of this information but the effect of this COMPLETE INFORMATION is all I need to know. That effect shows up in the chart as ..excuse me...patterns if you will. When the black buzzard flies in I will know it and I’ll know what to do. I may not discern the buzzard itself or hear it’s name or even what it looks like. But I’ll certainly know when that buzzard takes a crap and I’ll know exactly what to do. When the turkey heads roll I’ll be grabbing up the turkeys and selling them to others. Kinda like Soros did to Britain...eh
3) Luck, good or bad, does not move the markets. Because nary such a thing exists. Do you understand? Think hard.
4) Patterns form because of the pressures. Pressures are there because of the complete information that is entirely embedded in the market.
5) I do not need to meet the pressures in person nor examine the information that causes the pressures. I just need to “see” the effect of pressures and know what to do.
If the turkey is a metaphor for the market then we are all turkeys because the market is made of US. But turkeys can’t reason..plan...like humans. They just exist..eat..and crap..and make more turkeys. To say the market is the turkey is frankly quite a stupid idea. Taleb should know better than that.....
Is climate change bad luck?
Is Mr T being President bad luck or good luck?
Is this thread bad luck?
Are you able to type because of good luck?
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It is imperative that you understand this point..
If a strategy carries the risk of ruin... for example, investing in the Inverse VIX ETF; chart below, whilst not carry a put option with it(as insurance)...he is carrying the risk of ruin.
If this individual trades whilst exposed to this risk of ruin, then he is lucky that he has not been ruined. Therefore, all the profits he has gained, can be solely attributed to luck.
Look at the chart, people who bought a position and held, without insurance, ended up being wiped out due to the 85-95% drop. The gains they experienced were a result of luck. They set themselves up to fail over the long term, and quickly collect as much profit they can in the short term. They were collecting nickels in front of a steamroller, and were lucky they weren't hit. Unlike the individual who was suspicious of his knowledge, and bought a put option. He was lucky enough to be fine. Skilled enough with reality to know that he doesn't know.
Get it?
If a strategy carries the risk of ruin... for example, investing in the Inverse VIX ETF; chart below, whilst not carry a put option with it(as insurance)...he is carrying the risk of ruin.
If this individual trades whilst exposed to this risk of ruin, then he is lucky that he has not been ruined. Therefore, all the profits he has gained, can be solely attributed to luck.
Look at the chart, people who bought a position and held, without insurance, ended up being wiped out due to the 85-95% drop. The gains they experienced were a result of luck. They set themselves up to fail over the long term, and quickly collect as much profit they can in the short term. They were collecting nickels in front of a steamroller, and were lucky they weren't hit. Unlike the individual who was suspicious of his knowledge, and bought a put option. He was lucky enough to be fine. Skilled enough with reality to know that he doesn't know.
Get it?
It is imperative that you understand this point..
If a strategy carries the risk of ruin... for example, investing in the Inverse VIX ETF; chart below, whilst not carry a put option with it(as insurance)...he is carrying the risk of ruin.
If this individual trades whilst exposed to this risk of ruin, then he is lucky that he has not been ruined. Therefore, all the profits he has gained, can be solely attributed to luck.
Look at the chart, people who bought a position and held, without insurance, ended up being wiped out due to the 85-95% drop. The gains they experienced were a result of luck. They set themselves up to fail over the long term, and quickly collect as much profit they can in the short term. They were collecting nickels in front of a steamroller, and were lucky they weren't hit. Unlike the individual who was suspicious of his knowledge, and bought a put option. He was lucky enough to be fine. Skilled enough with reality to know that he doesn't know.
Get it?
Idiot, I've said repeatedly throughout this thread that it is random & not random, depending on perspective. Starting with the response to the Moderator who commented few pages ago.
Idiot, I never said "luck moves markets".
Idiot, did the pattern leading up to the subsequent demise of this chart embed the information of such subsequent demise?
Did you see the pressures in the chart above? That's why you made money on it prior?
Where do I start with point #2.... f*ck man.
Let's say I have the opportunity to place a bet daily on whether or not the turkey was going to be butchered. I would bet a small amount of my capital every day that the turkey wouldn't be butchered because that's the most probable outcome. My account would steadily grow until the day the random event happened and the turkey was butchered. But I steadily grew my account and minimized my risk by only betting a small amount of my capital every day. Active trading is similar. We don't deal with certainties, we deal with probabilities.
Random events can affect every aspect of your life. Your health, career, finances etc. could be thrown into chaos at any time by random events. Trading/investing is no different. But that doesn't mean that everything that happens on a shorter time frame should be chalked up to randomness.
This was a good thread. It was interesting to read everyone's views on this subject.
Please read my most recent post. It responds to this proposition.