Going public with a system ruins it?

Quote from nitro:

Now, if I am the only one with this knowledge, as price approaches the Bollinger Bands in a given context, I would sell or buy accordingly and I would ring the cash register.

Now suppose I tell a friend, who then tells his friend, and after a year it is now being taught to every trader that trades. What do you think would happen?

What would happen is that more and more aggressive traders would preempt the price from ever getting to either of the Bollinger Bands in a given context because it was riskless to enter at them.
More...
Thank you for being logical. To put it another way:

If every trader's market data is the same, for a given system

Input (market data) .... System (processing of data) .... Output ("buy", "sell", etc.),

use by more traders will lead to more traders attempting to execute the same trade at the same time. That's more competition.
 
No,

What I am saying is,

if Input(data) isequalto price

will evaluate to true less and less as more traders know about it until it _never_ evaluates to true because "price" will be anticipated by more and more traders as it approaches the value of Input(data).

This is clearly an idealized case, as even situations that are "risk free" occur all the time even though lots of people know about it, e.g., Index Arbitrage. But the more players that have entered into that game, the less the guy that thought of it makes, until all you are left with are scraps.

nitro
Quote from NickelScalper:

Thank you for being logical. To put it another way:

If every trader's market data is the same, for a given system

Input (market data) .... System (processing of data) .... Output ("buy", "sell", etc.),

use by more traders will lead to more traders attempting to execute the same trade at the same time. That's competition.
More...
 
Quote from nitro:

No,

What I am saying is,

if Input(data) isequalto price

will evaluate to true less and less until it _never_ evaluates to true because "price" will be anticipated by more and more traders as it approaches the value of Input(data).

This is clearly an idealized case, as even situations that are "risk free" occur all the time even though lots of people know about it, e.g., Index Arbitrage. But the more players that have entered into that game, the less the guy that thought of it makes, until all you are left with are scraps.

nitro
More...
There's no inconsistency there.

Mine describes the conditions (more competition). Yours describes the result (uselessness of the system).
 
Quote from nitro:

No,

What I am saying is,

if Input(data) isequalto price

will evaluate to true less and less as more traders know about it until it _never_ evaluates to true because "price" will be anticipated by more and more traders as it approaches the value of Input(data).

This is clearly an idealized case, as even situations that are "risk free" occur all the time even though lots of people know about it, e.g., Index Arbitrage. But the more players that have entered into that game, the less the guy that thought of it makes, until all you are left with are scraps.

nitro
More...


The more people exposed to an arb, the more likely someone will be willing to do it larger and for less edge. Then someone comes along and pushes that clown out of the way. In the end , lots of money is made by the block box boys and nothing by civilians.
 
You must log in or register to reply here.
Back
Top