Gambling and trading

[Visaria]

"I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them."

- George Soros

 

[J_Smith]

www.oxforddictionaries.com/definition/english/gamble

 

[marketsurfer]

Discoveries by cognitive scientists on randomness and human psychology and the increasing use of technology by casinos as well as stock/futures markets to manipulate individuals are just yet another reason why all trading teachers should have to go through a mandatory third-party vetting of their P&Ls over a multi-year timeframe, to show that consistency in day trading is nearly impossible with such a large distribution of data.

"Psychologists who study how the human mind responds to randomness call this the gambler’s fallacy — the belief that on some cosmic plane a run of bad luck creates an imbalance that must ultimately be corrected, a pressure that must be relieved. After several bad rolls, surely the dice are primed to land in a more advantageous way.

The opposite of that is the hot-hand fallacy — the belief that winning streaks, whether in basketball or coin tossing, have a tendency to continue, as if propelled by their own momentum. Both misconceptions are reflections of the brain’s wired-in rejection of the power that randomness holds over our lives. Look deep enough, we instinctively believe, and we may uncover a hidden order.

Recent studies show how anyone, including scientists, can be fooled by these cognitive biases. A working paper published this summer has caused a stir by proposing that a classic body of research disproving the existence of the hot hand in basketball is flawed by a subtle misperception about randomness. If the analysis is correct, the possibility remains that the hot hand is real.

Gamblers, with their systems and superstitions, sat nearly immobile at video slots, trying to outguess the algorithmic heart beating inside. They were immersed in what the anthropologist Natasha Dow Schüll calls “the machine zone.”

In her book “Addiction by Design,” she describes how modern slot machines are engineered to maximize “gaming productivity” — the velocity with which dollars fly from the players’ pockets. Mechanical levers have been replaced by faster, more efficient electronic buttons, while the simulated reels of cherries, bars and other symbols are programmed to give the illusion that you missed a jackpot by just a hair — fuel for the gambler’s fallacy.

But often the patterns we see are illusions. Some research has suggested that more excitable people are likelier to embrace the magic of the hot hand (go, go, go!) while those with “higher cognitive skills,” as the studies put it, are prone to the gambler’s fallacy — the belief that a run of heads will probably be followed by tails. Their swaggering brains think they have psyched out the system, discovering an underlying regularity."




http://www.nytimes.com/2015/10/18/s...-region&WT.nav=opinion-c-col-left-region&_r=0

It's the exact same thing with price charts. why these folks find that difficult to believe is that they themselves have been duped.

surf

 

[marketsurfer]

"I am not well qualified to criticize the theory of rational expectations and the efficient market hypothesis because as a market participant I considered them so unrealistic that I never bothered to study them."

- George Soros

Soros is under pressure to "support the very markets he trades in" due to his size--- only a moron would tell the truth to the press in soro's position and soros is far from a moron. surf

 

[Visaria]

No one has a monopoly on the truth.

However, if one trades and has been successfully trading for some time, one comes to the same conclusion as Soros.

 

[Q3D]

This explains price behavior in futures and stocks far better than any trading teacher has done yet:

In probability theory, a stochastic (/stoʊˈkæstɪk/) process, or often random process, is a collection of random variables, representing the evolution of some system of random values over time. This is the probabilistic counterpart to a deterministic process (or deterministic system). Instead of describing a process which can only evolve in one way (as in the case, for example, of solutions of an ordinary differential equation), in a stochastic or random process there is some indeterminacy: even if the initial condition (or starting point) is known, there are several (often infinitely many) directions in which the process may evolve.

 

[i am nobody]

Soros is under pressure to "support the very markets he trades in" due to his size--- only a moron would tell the truth to the press in soro's position and soros is far from a moron. surf

And other traders are not? Or are they different because they play tennis with you, or you swim in their pool?

 

[marketsurfer]

And other traders are not? Or are they different because they play tennis with you, or you swim in their pool?

No, most of us, myself included are micro parasites riding on the back of the greats like the dark lord pallidrome--- no comparision.