Predicting is ***Unavoidable***
- Thread starter aeliodon
- Start date
You know why prediction is a dirty word in trading? Because you can't compute the odds with any sort of accuracy. Casinos predict and they know exactly by how much the odds are in their favor at all times.
But in trading the odds change all the time. Think about, if predication is unavoidable and you're going to play that game then its nice to know the odds but then if you don't even know the odds then that's a real uncomfortable situation **enter cognitive dissonance** and then traders like to comfort themselves by saying they don't predict.
But in trading the odds change all the time. Think about, if predication is unavoidable and you're going to play that game then its nice to know the odds but then if you don't even know the odds then that's a real uncomfortable situation **enter cognitive dissonance** and then traders like to comfort themselves by saying they don't predict.
Like/Unlike games of chance, you can utilize a greater sample set for the sub-domain. The greater the sample relflects the population, the more it removes chaotic probability variances (indeterminant causation) and produces relative frequency distributions that are (near) normal (aka: the central limit theorem).
Successful traders DO NOT PREDICT.
Successful traders enter trades because they have identified a high probability trade set-up within the context of their trading methodology. Therein lies the duelality of the markets.......
When someone back tests, or researches a method or pattern, they do indeed predict. One says, "I see x and predict that y will occur". Or, "I think every time I see y, x came before it". In other words, there is a hypothesis which is usually predictive and then the subsequent "proof".
There comes a time that the back tester, researcher, and holy grail seeker, must become a trader.
As a trader, the predictions are over. Now a trade must be taken based on the belief in the set-up, NOT THE OUTCOME.
The successful trader does not go long because he "predicts" price will rise. He goes long because he has identified a long trade set up within the context of his methodology/trading plan. He is trading for expectancy not accuracy. He uses probabilies rather than Tarot cards..............
Successful traders enter trades because they have identified a high probability trade set-up within the context of their trading methodology. Therein lies the duelality of the markets.......
When someone back tests, or researches a method or pattern, they do indeed predict. One says, "I see x and predict that y will occur". Or, "I think every time I see y, x came before it". In other words, there is a hypothesis which is usually predictive and then the subsequent "proof".
There comes a time that the back tester, researcher, and holy grail seeker, must become a trader.
As a trader, the predictions are over. Now a trade must be taken based on the belief in the set-up, NOT THE OUTCOME.
The successful trader does not go long because he "predicts" price will rise. He goes long because he has identified a long trade set up within the context of his methodology/trading plan. He is trading for expectancy not accuracy. He uses probabilies rather than Tarot cards..............