Probability is a measure of our OWN ignorance and is subjective

[nitro]

De Finetti’s treatise on the theory of probability begins with the provocative statement PROBABILITY DOES NOT EXIST, meaning that probability does not exist in an objective sense. Rather, probability exists only subjectively within the minds of individuals.

De Finetti defined subjective probabilities in terms of the rates at which individuals are willing to bet money on events, even though, in principle, such betting rates could depend on state-dependent marginal utility for money as well as on beliefs. Most later authors, from Savage onward, have attempted to disentangle beliefs from values by introducing hypothetical bets whose payoffs are abstract consequences that are assumed to have state-independent utility. In this paper, I argue that de Finetti was right all along: PROBABILITY, considered as a numerical measure of pure belief uncontaminated by attitudes toward money, does not exist. Rather, what exist are de Finetti’s ‘previsions’, or betting rates for money, otherwise known in the literature as ‘risk neutral probabilities’. But the fact that previsions are not measures of pure belief turns out not to be problematic for statistical inference, decision analysis, or economic modeling.

https://faculty.fuqua.duke.edu/~rnau/definettiwasright.pdf

 

[nitro]

What matters is not probability, but risk neutral distributions

 

[nitro]

The precogs have no need for probability:

 

[nitro]

If time is an illusion, then precogs are possible:

 

[i am nobody]

Nitro,

a hypothetical series of trades. Trading the ES you see the number of trades (y axis) and the profits divided in 3 points intervals.
The red line shows where the losing trades are.

What do you conclude if you see this? Does it say something about probabilities or rather about risk neutral distributions?

I repeat: this is a simulation, I don't pretend or suggest anything. Just to keep the bashers away (although this will probably not help).

 

[panzerman]

The geometric Brownian motion of price and the lognormal distribution are still the best model of market behavior anyone has yet devised. It is not a perfect model, since all financial distributions have some degree of skew and kurtosis to them, which means the underlying processes are more complex than a simple lognormal distribution implies.

Fractal theory seemed promising 20 years ago, but that field of research has yet to provide something workable to the financial community.

 

[xandman]

If time is an illusion, then precogs are possible:

So, the US Govt may be forecasting the next day's events from the moon.

 

[galvinlee888]

Nitro,

a hypothetical series of trades. Trading the ES you see the number of trades (y axis) and the profits divided in 3 points intervals.
The red line shows where the losing trades are.

What do you conclude if you see this? Does it say something about probabilities or rather about risk neutral distributions?

I repeat: this is a simulation, I don't pretend or suggest anything. Just to keep the bashers away (although this will probably not help).

View attachment 154906

I am not mean to target you, but ..

If this is what your real performance (I understand you claim it is hypothetical but assume you have a similar real performance as you claimed in another thread), congratulation, you find the holy grail that No One in this planet can achieve in human history, you have only 3 trades that lost less than 3 points and the rest (~75 trades) were ALL in profit and the majority are 6 to 12 points profits (risk/reward < 0.3 with win rate more than 95%)

You must be smarter than anyone that I ever see in any institutions (Goldman, Citi) or any famous prob firms. No one (or even any machine / algo) can have this kind of accuracy to predict market direction even with all the best data and market info, it seems you get the direction "right" almost every time (the small losing trades are seemed more due to market chop)?

I recalled previously we have one young guy claimed his has similar trading result (technically his P/L is almost a linear line to north as written in his CV). The management decided to give this guy an exception for the interview for a trader position (This guy is only a science graduate from one of the community college. The company policy guideline is we will never interview any traders without any "proven" trade record or a solid education background- e.g. he has to been recommended by others in industry or good education background, e.g. PhD or equivalent). The only request from the firm is he has to prove this type of trade records in real time, the result is - he lost more than 70% in the paper account in less than a week, obviously he never get hired.

As usual, Nobody never make any real time call (with sufficient number of trades to prove it is statistical significant) to prove what he claim in his trade records. Highly suspicious

 

[i am nobody]

I am not mean to target you, but ..

If this is what your real performance (I understand you claim it is hypothetical but assume you have a similar real performance as you claimed in another thread), congratulation, you find the holy grail that No One in this planet can achieve in human history, you have only 3 trades that lost less than 3 points and the rest (~75 trades) were ALL in profit and the majority are 6 to 12 points profits (risk/reward < 0.3 with win rate more than 95%)

You must be smarter than anyone that I ever see in any institutions (Goldman, Citi) or any famous prob firms. No one (or even any machine / algo) can have this kind of accuracy to predict market direction even with all the best data and market info, it seems you get the direction "right" almost every time (the small losing trades are seemed more due to market chop)?

I recalled previously we have one young guy claimed his has similar trading result (technically his P/L is almost a linear line to north as written in his CV). The management decided to give this guy an exception for the interview for a trader position (This guy is only a science graduate from one of the community college. The company policy guideline is we will never interview any traders without any "proven" trade record or a solid education background- e.g. he has to been recommended by others in industry or good education background, e.g. PhD or equivalent). The only request from the firm is he has to prove this type of trade records in real time, the result is - he lost more than 70% in the paper account in less than a week, obviously he never get hired.

As usual, Nobody never make any real time call (with sufficient number of trades to prove it is statistical significant) to prove what he claim in his trade records. Highly suspicious

I wrote clearly HYPOTHETICAL so these trades have nothing but absolutely nothing to do with my real trades. But even then you put words in my mouth that I never said.

You are mean to target me. Everybody who reads correctly what I wrote in my first posting in this thread will understand now clearly that you manipulate and twist things and suggests things that are not there and never were there.
It's a pity that this behavour is accepted by Baron, but this remarks was already made many times.

I posted another chart here: Does Probability exist?
Distribution was different. There were 44 trades, in this one there are 78. So one of them can be real but both cannot.

 

[galvinlee888]

Distribution was different. There were 44 trades, in this one there are 78. So one of them can be real but both cannot.

LOL. Regardless which one is real (if they ever been "real"), the same statement still stand:

You must be smarter than anyone that I ever see in any institutions (Goldman, Citi) or any famous prob firms. No one (or even any machine / algo) can have this kind of accuracy to predict market direction even with all the best data and market info, it seems you get the direction "right" almost every time (the small losing trades are seemed more due to market chop)?

I recalled previously we have one young guy claimed his has similar trading result (technically his P/L is almost a linear line to north as written in his CV). The management decided to give this guy an exception for the interview for a trader position (This guy is only a science graduate from one of the community college. The company policy guideline is we will never interview any traders without any "proven" trade record or a solid education background- e.g. he has to been recommended by others in industry or good education background, e.g. PhD or equivalent). The only request from the firm is he has to prove this type of trade records in real time, the result is - he lost more than 70% in the paper account in less than a week, obviously he never get hired.

As usual, Nobody never make any real time call (with sufficient number of trades to prove it is statistical significant) to prove what he claim in his trade records. Highly suspicious