My first post; some observations on trading.

Quote from andread:

nobody can guarantee anything. The point is not the guarantee, but a reasonable expectation
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Exactly, this is the point I am trying to make.

At most one can assume/make/ even hope (!) for a certain outcome with reasonable expectation but cannot guarantee it.

Therefore with results outside of one's control how can any one trader claim skill.

Traders saying they have skill is like me suggesting that a successful bet placed on Chicago Bulls winning a basketball game in the 1990s makes me Michael Jordan.

abc1
 
"It's no different really to betting on a basketball game, horse race etc. You can read the form guide, make judgements about the conditions but nobody can tell you what will happen next and therefore skill is not involved."


That is only the case if you believe that all of the above have no bearing on increasing the chances of a profitable outcome.

You are assuming that all movements in the stock market are entirely random and any attempt to improve your chances of selecting a sucessful trade are just the result of luck and not due to any edge that results from the methods employed. This is a big assumption to make and an incorrect one.

The high trasnactional frequency of day trading actually makes it less liekly that a successful traders results are the result of chance as he cannot hit one big trade and skew the outcome. profitability is supported by a much larger set of data and therefore the less than zero sum nature of the markets will weed out those with a high transactional frequency that achieve their success through luck fairly quiclkly.

If your presented argument were correct then most people would loose money at a steady rate that equates to the trasnactional cost of each trade, a laughable premise at best when you look at the equity curves of most traders accounts.
 
Quote from jwecme:

That is only the case if you believe that all of the above have no bearing on increasing the chances of a profitable outcome.

You are assuming that all movements in the stock market are entirely random and any attempt to improve your chances of selecting a sucessful trade are just the result of luck and not due to any edge that results from the methods employed. This is a big assumption to make and an incorrect one.

...

If your presented argument were correct then most people would loose money at a steady rate that equates to the trasnactional cost of each trade, a laughable premise at best when you look at the equity curves of most traders accounts. [/B]
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Of course there are set of factors which usually determine price movement but the weighting these have day to day, minute by minute is out of our control. I am not saying they are random; human beings by nature are for the most part quite predictable. See any of stock trad3r's posts for example.

My point is that is impossible to predict with certainty what will happen next and therefore skill is somewhat redundant. For example, one might use evidence from stock trad3r's previous posts that it is 99% certain that the next post will be as banal as the last. However, the next post might include something worth reading. Does that make the person who bet "banal" a bad trader or a skillful one ?

I prefer to say chance as what stock trad3r posts is determined by him. We, as readers or speculators, can only ride the wave, or more appropriately 'trickle', in this case.

One can use knowledge to get in and get out but that bit in the middle where the price is moving - or stock trad3r is thinking - is out of our control.

abc1
 
Even if there is no certainty of a profitable outcome, it does not automatically follow that the primary driver of that outcome is chance.

The greater the number of successful transactions viewed the lower chance is that it is “just down to luck”. If you take people like Jim Rogers or Warren buffet from the investing world you can be much more confident that their results are due to skill rather than luck as they have so many different decisions to make over a huge amount of time. It becomes harder and harder to sustain the argument that the primary driver of their success is luck.

Try picking up the book by Taleb "fooled by randomness it is an excellent read and he makes some great points on the role of chance in trading and investing. Successful high frequency over a long time span is actually the least likely to be based on luck as its primary driver.
 
Once you learn *HOW TO TRADE*, you increase your *chance* for success. The fact that it's a game of *chance* evens the playing field. However, the key is to learning HOW TO TRADE.

Learning how to trade is much more than knowing how to place an order.
 
Quote from jwecme:

Even if there is no certainty of a profitable outcome, it does not automatically follow that the primary driver of that outcome is chance.

The greater the number of successful transactions viewed the lower chance is that it is “just down to luck”. If you take people like Jim Rogers or Warren buffet from the investing world you can be much more confident that their results are due to skill rather than luck as they have so many different decisions to make over a huge amount of time. It becomes harder and harder to sustain the argument that the primary driver of their success is luck.

Try picking up the book by Taleb "fooled by randomness it is an excellent read and he makes some great points on the role of chance in trading and investing. Successful high frequency over a long time span is actually the least likely to be based on luck as its primary driver.
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I don't really like the word luck. Too much like rolling dice.

I am not saying that chance is moving price. Of course there are always tangible factors determining price it is just that with say, for arguments sake, 1 million people trading one instrument and all with different agendas, why should the people who make money be determined more skillful than those who don't. Nobody knows what the others are doing or why they are doing it; one can only make assumptions or judgements based on what has happened previously.

Regarding your references to Mr Rogers and Buffet, these are just two examples out of huge number of people who trade. Toss one million coins 10 times and a few might show 10 successes :-)

As for Taleb's book; one of the best things I have ever read. I could not believe it when I read the book summary and that the author was himself a trader having held various senior positions. It was as though many of my opinions had been published; albeit using different analogies than I would use. A real breath of fresh air and independent thinking in a world full of herd animals.

BTW: I appreciate the discussion and your measured thinking (if that doesn't sound too pompous.)

ABC1
 
you are naive....95% of people fail at everything! That's why sucess is "sucess"...if everone was doing it wouldn't be success!

Success comes from hard work and persistence to learn...it's not chance! You're focusing on the wrong thing...the 95% who are losers. You get what you are looking for and looks like you've found it! Stop being so negative and focus on what sucessfull people are doing and you won't say stupid things like it's all chance. Whatever you descide to do...you are right and will reap the appropriate rewards.

So keep thinkiing it's all chance so we can take some more of your money away....GET IT!
 
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