Edge types, efficiency, etc

[spindr0]

Quote from illiquid:

It's funny, I always thought with pair-trading (especially short-term) you would buy the stronger stock and short the weaker one. Made sense to me. Then I realized people were taught to do the opposite . . .

It depends on your metric and time frame. My first exposure to pairs trading was 20+ yrs ago when I came across the strategy of buying Value Line ranked #1 stocks and shorting the #5's. That would make sense for "investing" per se. For short term trading, one would want overvalued versus undervalued, regardless of the quality. There a e many ways to skin the sking. Some even work

 

[New2thegame]

You included I get it though... Just a squirrel vying for a nut. Wisdom peeks through here and there and it's helpful.

Quote from mikasa:

I've never seen a thread where so many people
show up to say so little

that's understandable, this is a tough gig

 

[New2thegame]

I would agree with this. Even things such as quantum theory which are generally conceived as chaotic, in my estimation it virtually need to be explicable via some means. Even if those means are beyond the scope of human intellectual capacity. That said, I've kind of always considered that some things are literally deterministic, but effectively chaotic, solely because we lack the means to analyze sufficiently the necessary data to well, determine. Therein lies the issue...

Quote from intradaybill:

No, no, you are flat wrong and a victim of misinformation mechanisms activated by those losers to confuse people about the nature of their acts. The reason they failed was BAD MONEY MANAGEMENT and excessive risk. They blamed it on randomness for obvious reasons. Randomness cannot destroy anyone overnight or in such a short period of time like some of those losers you mentioned unless one is leveraged to the roof. Their accounts were not depleted slowly because of consecutive losers. It just happened that they lost it all instantenuously more or less. That is an act of foolishness, not because of getting fooled by randomness. There is nothing random about this world will live in. Everything has an antecedant, proximate cause. Unless you believe in magic. I don't. My mon never read to me magic books to fall to sleep.

 

[mikasa]

Quote from New2thegame:

You included I get it though... Just a squirrel vying for a nut. Wisdom peeks through here and there and it's helpful.

I think people are afraid of you, you seem smart

get a new name and do this again but this time act stupid

someone will say darn it, I'll give him a nugget to chew on

 

[New2thegame]

Great way to get the point across Yeah, up to the conclusion it is perfectly reasonable to assume that chance could have caused all the happenings. An educated man would take that into consideration. The uneducated man would throw that possibility out the window, if he ever conceived of it at all. I suppose the rounded person would know while it's possible to simply be chance, it's best to take advantage of information in whatever form it's delivered.... Noted. As wise as this seems to be, I still am of the mindset one needs to be quite careful that what they see or what they think they see means anything. Of course this can be done ad nauseum. I hope to learn to strike a balance between skepticism and faithful. It would seem that is where trading opportunities become ripe for the picking.

Quote from intradaybill:

Thanks Knight. The point being the following: You are on vacation with your beautiful girlfriend far away and you suddenly bump into a friend of yours. He looks very surprised for this "random" event.

Then, after a week, while you are back home, you go to a restaurant with your beautiful girlfriend and there he is, the same friend looking very surprised for the "random" encounter.

After a month, you go to China with your girlfriend and while visiting the famous square you bump again into the same friend. Now you start wondering what is happening.

You go back home and while at the movies, your "friend" suddenly comes in and sits next to your beautiful girlfriend. Well, you say, this can be explained with law of probabilities. The probability is tiny small but nevertheless never zero.

The following day, you beautiful girlfriend tells you it is time to break up. Next thing you know you see her and your good "friend" having drinks and kissing in a bar.

Now you know the difference between theory and real life. Tiny theoretical probabilities correspond to almost certainty in real, limited life. You should have taken action to protect yourself and keep your profits (girlfriend) but you relied on the stupidity engraved in your brain by those professors of statistics and probability. You deserved it.

Something that happens enough times is not any longer random but it is important how you and others involved handle the situation.

 

[New2thegame]

Ha ha. Thanks. Jack made me feel stupid, you made me feel smart. Ups and downs just like the markets.

Quote from mikasa:

I think people are afraid of you, you seem smart

get a new name and do this again but this time act stupid

someone will say darn it, I'll give him a nugget to chew on

 

[Gabfly1]

Quote from New2thegame:

It's interesting that you bring that up because I've heard traders discuss something similar before. However, the reference was to a teapot instead of mountains. Same gist though... A little mystical for my taste, but interesting nonetheless. I guess the message is you start simple, get lost somewhere along the way, but then end simple again. I can definitely see this in trading. You start off just gazing at charts seeing fortunes, you get into indicators, all the bells and whistles, making it more complicated than it needs to be, ultimately settling for something much less than that.

I think progress is somewhat circuitous, beginning at simple-naive, moving to unnecessarily complex, and then hopefully settling at simple-elegant. It seems like coming full circle, but not quite.