Trading is constantly solving one problem: where will the market go?
If you don't know the cause of the problem, you cannot solve it. First try to find the cause, and second try to find a solution for the problem.
Keeper.
Trading is constantly solving one problem: where will the market go?
If you don't know the cause of the problem, you cannot solve it. First try to find the cause, and second try to find a solution for the problem.
I agree. It does.Practically, Yes!
Perhaps two perspectives:
A. 95% traders in long run. http://www.elitetrader.com/et/index.php?threads/95-are-losers.265548/
B. 75% trades in long run. (no matter what back-test results historically.) Probably due to a combination of many complex issues/ causes!
As trading is behavior, the question becomes whether or not one can determine the probability of a behavior or set of behaviors occurring again. If one could not, the advertising industry would collapse, and capitalism would struggle to survive.
The principles of successful stock speculation are based on the supposition that people will continue in the future to make the mistakes that they have made in the past.
-- T F Woodlock
I don't agree at all and will show you why:
I have a list of figures and ask you if you can predict the next figure. The answer will be probably that it is impossible to predict the next outcome.
124
1330,785053
-4008,196198
-2066,517015
-1574,077766
221,5751715
????
What is interesting now is the question: why did you come to the conclusion that it is impossible to predict the next outcome? The answer is that YOU see no relation whatsoever in this serie of figures. And you are correct. To YOU it is impossible to make any prediction and it looks like everything changes all the time randomly.
I can however make with 100% certainty a prediction for the next figure. Why? Because I have more information, information that you don't have. I see the formulas that leads to the next result.
View attachment 152279
So people come to conclusions based on knowledge. No knowlegde means no result, having the needed knowledge will lead to the correct result. In markets knowledge is important too. You maybe have no clue why the market does do something, but maybe someone else has knowledge to know ancwhat will happen. Markets cannot move each time in a way that never occured before, because that would lead to an endless number of different moves. If you can find basic patterns in all these moves you have knowledge that others don't have. That makes the difference between a profitable trader and a losing one.
Trading is constantly solving one problem: where will the market go?
If you don't know the cause of the problem, you cannot solve it. First try to find the cause, and second try to find a solution for the problem.
I don't agree at all and will show you why:
I have a list of figures and ask you if you can predict the next figure. The answer will be probably that it is impossible to predict the next outcome.
124
1330,785053
-4008,196198
-2066,517015
-1574,077766
221,5751715
????
What is interesting now is the question: why did you come to the conclusion that it is impossible to predict the next outcome? The answer is that YOU see no relation whatsoever in this serie of figures. And you are correct. To YOU it is impossible to make any prediction and it looks like everything changes all the time randomly.
I can however make with 100% certainty a prediction for the next figure. Why? Because I have more information, information that you don't have. I see the formulas that leads to the next result.
View attachment 152279
So people come to conclusions based on knowledge. No knowlegde means no result, having the needed knowledge will lead to the correct result. In markets knowledge is important too. You maybe have no clue why the market does do something, but maybe someone else has knowledge to know what will happen. Markets cannot move each time in a way that never occured before, because that would lead to an endless number of different moves. If you can find basic patterns in all these moves you have knowledge that others don't have. That makes the difference between a profitable trader and a losing one.
Trading is constantly solving one problem: where will the market go?
If you don't know the cause of the problem, you cannot solve it. First try to find the cause, and second try to find a solution for the problem.
You can derive a historical probability of an event x happening in the market from looking at history. However, since the distribution is not stationary i.e. it is not like roulette, your derived probability is subject to error in the future. This is how, for example, Long Term Capital Management destroyed themselves, by using historical data that since something had not happened before, there was no chance of it happening in the future.
You can derive a historical probability of an event x happening in the market from looking at history. However, since the distribution is not stationary i.e. it is not like roulette, your derived probability is subject to error in the future. This is how, for example, Long Term Capital Management destroyed themselves, by using historical data that since something had not happened before, there was no chance of it happening in the future.