Predicting randomness

nicholaf · Nov 4, 2005

Quote from Pekelo:

We all have to agree on the irrational part after the tech bubble. But being irrational is not the same as unpredictable. Quite so, when the tech bubble was raging (or the housing bubble now) we (well, the more rational of us) all knew/know that it had to/will end eventually.

But just because I am curious, what would you expect as evidence for predictability?? What is an acceptable proof for you?

Let's say somebody provides you with a bunch of predictions and they have a high success rate (what % would be high enough for you?), would you acknowledge that market prediction is possible???

With good money management even a 60% correctness rate is good enough...

Very interestingly enough, several studies that have "zero intelligence" traders have shown to exhibit the same bubble forming patterns as the internet bubble,real estate bubble, tulip bubble, etc

iceman1 · Nov 4, 2005

Quote from Cuspis:

It is all about probabilities, not predictability.

BINGO!

illiquid · Nov 4, 2005

Quote from iceman1:

BINGO!

For certain methods this is a must.

But honestly, as good as the idea sounds, I could never think of the market in probabilities like in poker or blackjack in the way I trade -- either I am flat out right or wrong, like fitting together the pieces of a jigsaw puzzle. Fortunately, if I've read the market right, there's only 2 ways the pieces could go together, and flipping them around the other way is a matter of a single keystroke.

nononsense · Nov 4, 2005

BINGO

Great thread! If you never understood how we ever got those 95% of the market participants to provide for the liquidity and the profits of the nimble. Here it is.

oddiduro · Nov 4, 2005

Quote from Grob109:

See attached.

Thank You for your contribution, Jack.

oddiduro · Nov 4, 2005

Quote from Pekelo:

We all have to agree on the irrational part after the tech bubble. But being irrational is not the same as unpredictable. Quite so, when the tech bubble was raging (or the housing bubble now) we (well, the more rational of us) all knew/know that it had to/will end eventually.

But just because I am curious, what would you expect as evidence for predictability?? What is an acceptable proof for you?

Let's say somebody provides you with a bunch of predictions and they have a high success rate (what % would be high enough for you?), would you acknowledge that market prediction is possible???

With good money management even a 60% correctness rate is good enough...

Ah, you asked THE QUESTION.

There is no such thing as 100% reliability in any field that I know, so I would say that for me, and acceptable outcome would be a tolerance of error of +/- 1 percent. This tolerance is achieved in the engineering and medical fields, so that would be acceptable to me as being indicative of predicability.

This is just an excercise of course, if you know of such an outcome you would be quite insane to give it to me

oddiduro · Nov 4, 2005

Quote from nononsense:

BINGO

Great thread! If you never understood how we ever got those 95% of the market participants to provide for the liquidity and the profits of the nimble. Here it is.

Nononsense, since you have been around these parts for a bit, would you like to chime in? This thread will surely be referenced in the future.

Lucrum · Nov 4, 2005

Quote from Charlie Dow:

... I'll do the best to explain myself and will not respond to questions or get into discussions about this.

Just my luck, cause I had a couple of questions.

Interesting post anyway.

murray t turtle · Nov 4, 2005

Quote from oddiduro:

I have concluded that there is no such thing as a trend. All patterns happen in hindsight. Taleb has something with his market views.

I am not marketsurfer

Seriously, my trading experience has shown me that trying to predict the direction is worse than flipping a coin and using good stops with risk management.

Let's talk yet again about whether we are not barking up the wrong tree with this prediction stuff.

Any pattern that can be shown to have worked in hindsight can also be shown to have NOT worked in hindsight, which means that the patterns we think we see have no predictive potential at all.

Regards
Oddi

===========
Thats fine you dont see any trends;
& as a precise use of the word, sure as shooting its
not about prediction, but probabilities.

And you may want to do exaxtly as N. Nickolas Talib;
options & t bills.

And to repeat a sentence;
thats fine you see no trends

cable · Nov 4, 2005

Quote from oddiduro:
The larger the crowd, the lower the IQ, the greater probability of irrational and/or random events.

You just explained not only the market, but Chit Chat as well.