Question for those who believe everything is 50/50 always...

[CyJackX]

Some people assert that the direction is always a 50/50 chance, completely random.
Some assert that it's pretty close to 50/50, but the "edge" is what lets you get a positive expectancy.

Under that assumption, if a trader has a system that commits many trades (so as to rule variance out), shouldn't he not be able to lose money faster than the bleedout of commissions? If people can lose money faster than loss from commissions, and its not due to variance, it should hold that the person can at least go the other way as well.

 

[trdes]

Could be my lack of brain processing power for sure, but not sure I understand. Anyway you can dumb it down for me? lol

 

[tlatoani]

Some people assert that the direction is always a 50/50 chance, completely random.
Some assert that it's pretty close to 50/50, but the "edge" is what lets you get a positive expectancy.

Under that assumption, if a trader has a system that commits many trades (so as to rule variance out), shouldn't he not be able to lose money faster than the bleedout of commissions? If people can lose money faster than loss from commissions, and its not due to variance, it should hold that the person can at least go the other way as well.

No that is not true. A FX dealer hosted a contest called win by losing. Whoever lost the money the fastest won the $10,000 prize. Guess what, the same losers still lost but by winning this time. Yah messing with forces that are stacked multiple times against you. Dats da lesson

 

[trdes]

No that is not true. A FX dealer hosted a contest called win by losing. Whoever lost the money the fastest won the $10,000 prize. Guess what, the same losers still lost but by winning this time. Yah messing with forces that are stacked multiple times against you. Dats da lesson

lol. Has there ever been a verified study or record of someone finding the worst traders possible putting them on a paper account and than trading against them in a real account?

 

[CyJackX]

No that is not true. A FX dealer hosted a contest called win by losing. Whoever lost the money the fastest won the $10,000 prize. Guess what, the same losers still lost but by winning this time. Yah messing with forces that are stacked multiple times against you. Dats da lesson

So you believe any long term positive expectancy is the result of variance?

 

[java]

lol. Has there ever been a verified study or record of someone finding the worst traders possible putting them on a paper account and than trading against them in a real account?

It doesn't work on paper, only live, we are all great on paper

but for instance the strategy I trade is 50/50 and as far as it can move against me is how far it can move in my favor, so...extra big profits for me are just a warning of what is to come. Whatever edge I have is eaten by the spread and commish. I call it trading but it really isn't trading until I get flat (or ib starts auto liquidating me.) Other than that I buy any dip and sell any rally regardless of whether the underlying is showing me a paper profit or a paper loss. It all comes out 50/50 if I live long enough and usually in my short lifetime so far.

 

[trdes]

It doesn't work on paper, only live, we are all great on paper

but for instance the strategy I trade is 50/50 and as far as it can move against me is how far it can move in my favor, so...extra big profits for me are just a warning of what is to come. Whatever edge I have is eaten by the spread and commish. I call it trading but it really isn't trading until I get flat (or ib starts auto liquidating me.) Other than that I buy any dip and sell any rally regardless of whether the underlying is showing me a paper profit or a paper loss. It all comes out 50/50 if I live long enough and usually in my short lifetime so far.

Well you wouldn't tell the bad trader that it's paper you'd have him trade on what he thinks is a real account. But I understand your point.

EDIT: Also, I don't believe everyone is good on paper either. but I don't really have solid proof of that.

 

[Maverick74]

lol. Has there ever been a verified study or record of someone finding the worst traders possible putting them on a paper account and than trading against them in a real account?

The definition of a bad trader is not one who loses all the time, it's one who is inconsistent. It's actually just as hard to consistently lose money as it is to make money although I'm sure many of you will not believe that based on your own trading, but it's true. A bad trader is simply one who over time loses the vig.

So putting a portfolio of bad traders together and trading against them will produce the same result as the bad traders themselves. Hence markets really are fair.

 

[trdes]

The definition of a bad trader is not one who loses all the time, it's one who is inconsistent. It's actually just as hard to consistently lose money as it is to make money although I'm sure many of you will not believe that based on your own trading, but it's true. A bad trader is simply one who over time loses the vig.

So putting a portfolio of bad traders together and trading against them will produce the same result as the bad traders themselves. Hence markets really are fair.

No, I am not trying to dispute or argue, more just thinking out loud. I completely understand what you're saying.

But for example let's say you know a trader who has 2 year track record of consistently losing money. You give him (just for an example) $50,000.00 and tell him he gets to keep 30% of gains. Seriously, what's the odds of him being successful and making you money? lol.

I don't have 50k, nor am I saying I would try that if I did, but I mean you'd be absolutely terrified to have a guy like that trading your money. It's just interesting to think about.

 

[trdes]

The definition of a bad trader is not one who loses all the time, it's one who is inconsistent. It's actually just as hard to consistently lose money as it is to make money although I'm sure many of you will not believe that based on your own trading, but it's true. A bad trader is simply one who over time loses the vig.

So putting a portfolio of bad traders together and trading against them will produce the same result as the bad traders themselves. Hence markets really are fair.

Like I get it, I am just having a little trouble accepting it. Because clearly as in my example his chance of success would be so low no? So, if you put him on paper and traded against him on real, it just seems like such a great plan, lol but I digress.