what would you say about traders who trade reversions to the mean? i could not think of a more challenging forecast than that entails.
Delirium
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what would you say about traders who trade reversions to the mean? i could not think of a more challenging forecast than that entails.
When you choose to follow the price action (or whatever ever your edge is), you’re not making predictions, but rather you’re choosing to correct your forecast because you care about being in sync with the market from moment to moment in order to avoid any emotional attachment.
It’s best to leave the predictions to the talking heads on television who don’t have their assets on the line.
Searching for 95% accuracy is often a reflection of the need to be right, and ‘the need to be right’ is a recipe for disaster for traders.
I think it is far more productive to focus on R/R, expectancy, rock solid risk management, and emotional control.
It is nice to philosophize about the market and the world, but ultimately the market is driven by herd behavior (fear and greed).
“The map is not the territory, the word is not the thing it describes. Whenever the map is confused with the territory, a 'semantic disturbance' is set up in the organism. The disturbance continues until the limitation of the map is recognized.” ~ Alfred Korzybski~
They're PREDICTING the price will revert to the mean.
Not really. You don’t need to predict what’s going to happen. If you have limited downside and unlimited upside.
That’s NNTaleb’s point.
What you give when you’re wrong and what you take when you’re right.
The best money makers aren’t the best forecasters. Actually … You don’t need to be a great forecaster to make great money with speculation.
By definition … The best money is within the unforeseen. Otherwise the odds would be fair. Market would have priced in the event.
The risk would balance the rewards.
That’s why blackSwans payoff because they aren’t forecastable. It’s a surprise. An unknown.
But you can position yourself such a to profit from the unexpected. Without forecasting. Just by acknowledging the probability.
Acknowledging outcomes isn’t forecasting.
Forecasting is eliminating outcomes.
Staying with one course of action.
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taleb’s thesis is that there will be more tail events than the market is pricing. That’s a prediction.
99percent of the black swan funds lose money because they are just constantly buying lottery tickets.
No, I don't make a prediction to follow, I make a decision to follow.
Big difference.
Not a prediction, a conclusion.
And based on my own data, I found that to be generally true.
it’s a prediction because he’s betting the future will be X.
.
Prediction,decision,it all ends up to be the same thing.