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

[trdes]

OK, let me add one further variable that I think will help. Let's create a series of trades here with two variables. We're going to bet on coin flips, heads or tails but...we're adding a sizing condition. Here is where I think your "emotional trader" will affect the results. See a good disciplined trader or black jack player for that matter will size properly and his/her results should conform to some steady distribution of results over time.

The emotional whackjob player though while making random bets, he/she is also randomly varying their bet size, let's say based on whether they took their morning meds. On days where they skipped their medication, their bet size is unusually large. See, this is where the luck comes in. So there are two conditions required to get lucky here, or very lucky we'll say. One, they have to bet heads and be correct which we all agree can happen randomly. But....they also have to get lucky on their bet size. The good trader will likely have very little variance in their bet size. Sure some trades will be a little bigger when they perceive they have more edge. Some will be a little smaller. But the variance around the mean will be small.

The emotional nutjob however, will have HUGE variances in their bet size. For example if they get into an argument on ET, they might take out their anger on the market and bet 10X on the next coin flip. What if they bet heads and it is heads? They will have a huge positive outlier. This explains how people can get very lucky in life. Not only do they predict the right outcome randomly, but they also randomly chose a huge bet size that turned out to be correct. The bet sizing variable properly explains how one can get very very lucky and also how they can "blow out their account" while still having only a 50/50 odds of being right or wrong.

Again this demonstrates why you can't bet against them. Because they might get lucky not only on the coin flip, but they also might get lucky going all in on size which you would have to take the other side of and pay out.

What we can do now is get out an excel spreadsheet. Have it do two things, randomly choose heads or tails and have it randomly choose size. Sum the results and chart the outcomes. You will see a handful of outcomes that produce spectacular results and some devastating ones as well. Over time the end results will be just that, random with some really big tails.

That was pretty funny well done. Yeah, I am no longer debating on betting against the bad traders, you've made your points well, in good humor and they are at the very least solid.
Well done, I totally understand how at the very least in reality it's not really plausible to do what I was theorizing over. I am no longer trying to debate that.

EDIT: I am more speaking to people saying there's no edge in the markets or that it's always 50/50 almost no matter what, which isn't the case.

 

[Mtrader]

I am more speaking to people saying there's no edge in the markets or that it's always 50/50 almost no matter what, which isn't the case.

You are right. 50/50 is too low for a good trader and too high for a bad trader as he will lose much more. Can even go to 0/100.

What was always irrelevant ( or sometimes even pure nonsense) to me:

• Prices are random.
• Market is 50/50.
• It is a negative sum game.
• Retailers cannot win.
• All daytraders lose.

But to know if I was really right I had to wait for hard proof: a trackrecord.

I have now 20-25 years of experience, trading almost everyday from opening till close.

My conclusion after all these years:

• Prices are not random as I can manage to take big moves with a high success rate. This would be impossible with random prices. I can only take big moves if I know when to get in and when to get out. I do this on a mathematical basis, so consistently the same rules without interpretation, emotions or stress.
• Market is maybe 50/50 in his total, but my trades are far away from 50/50. Far enough to conclude that markets are maybe 50/50, but individual traders can have totally different results.
• Telling markets are 50/50 is comparable with: the average fortune of Buffett and myself is around $ 40 billion. This statement is correct as I have no money and Buffett has 80 billion. But for both of us individual this statement is complete nonsense.
• The game in his total can be negative, but for individual traders it can be totally different. Same logic as "markets are 50/50". Confirmed by my trading account over the years.
• I am a retailer and I can win. Confirmed by my trading account over the years.
• There are daytraders that win too. Confirmed by my trading account over the years.
• Most statements are based on averages or totals of groups of traders. You cannot use these conclusions on an individual basis. Averages are based on the total of all winning and losing traders.

I saw both sides: I wiped out, which is almost inevitable when you start from zero knowledge. After many years I could make decent money on a consistent basis. Without a losing month for at least 10 years. In 50/50 markets I should at least have a number of losing months. And as retailers never can win I should only have losing months.

I just checked my account: it does not start with"-", so it is profits, not losses.
My broker would never let me go so far in the red, so it must be profits.

 

[lawrence-lugar]

Anybody who thinks or believes trading the Market is 50/50...should just empty their account now -- and instead spend it on Vegas, at least you'll go out with a fun bang there ,.

With trading...you have way more controls at your disposal...in your attempt to topple the house.
Vegas is Hell...you're in the Devil's layer playground; the Marketplace is more of neutral ground, a free zone.

 

[vanzandt]

Anybody who thinks or believes trading the Market is 50/50...should just empty their account now -- and instead spend it on Vegas, at least you'll go out with a fun bang there ,.

Cheetah's.

https://twitter.com/cheetahs_vegas?lang=en

 

[Maverick74]

I see very few people truly understand the terms randomness and variance as evidenced by their posts. I blame our public school system not them though. Sigh...

 

[trdes]

I see very few people truly understand the terms randomness and variance as evidenced by their posts. I blame our public school system not them though. Sigh...

Well are you trying to show or prove that you're more intelligent than others here, they're just stupid or generally just trying to educate?

I ask this because if we're taking people at face value there seems to be successful traders that aren't in full agreement with you. Most people only care about making money and being successful, so the debate at hand doesn't seem to have a strong relevance in regards to being successful at trading or not. Obviously small sample size here and people could be lying granted. But just making that point.

I am just not fully understanding where you're coming from. You're saying people are getting consistently lucky in the markets but it's still 50/50? Or you're just amazed by the fact that people don't understand the theory behind what you're saying or the definition and true meaning of the words they're using.
Is it the actual concepts you're disagreeing with or that we're using the incorrect word to describe things?

 

[Mtrader]

I see very few people truly understand the terms randomness and variance as evidenced by their posts. I blame our public school system not them though. Sigh...

I am mentoring two men. One has a university degree in mathematics. The second one has a university degree in computer science. I try to help them without giving away my "secrets".
After 3-4 years of intensive studying they are still not able to make any money at all. In fact they have to add money all the time to keep away from margin calls and from blowing up.

They understand perfectly randomness and variance, but I beat them by hundred fold in trading.
I am probably only half as smart as they are, but I understand now that for trading these things are completely irrelevant. From what I read on ET as realistic performances I beat them also by X-fold.
This lead me to the conclusion that too many very smart people don't see what I see. You don't have to be a Phd or a super smart person. You should just know what you need to know. But for most people that seems to be impossible.

For me the only evidence I need, to know if something works or not is: track record.
That's the only and ultimate proof that what I think and do is what should be done.

My personal experience is that the debate at hand doesn't seem to have any relevance in regards to being successful at trading. But I understand and agree that your remark is correct.

Sometimes a high education can be helpful, sometimes a high education can be useless or even detremental. When I was working as treasury manager I was head of a department where at least a dozen of people had a higher education then me. But when I left to become fulltime trader none of them could take my place. Higher education but not able to do the job (that was much better paid then their job). I saw several cases like this in this company. The company had + 10,000 employees, so not really a small box.

 

[Maverick74]

I am mentoring two men. One has a university degree in mathematics. The second one has a university degree in computer science. I try to help them without giving away my "secrets".
After 3-4 years of intensive studying they are still not able to make any money at all. In fact they have to add money all the time to keep away from margin calls and from blowing up.

They understand perfectly randomness and variance, but I beat them by hundred fold in trading.
I am probably only half as smart as they are, but I understand now that for trading these things are completely irrelevant. From what I read on ET as realistic performances I beat them also by X-fold.
This lead me to the conclusion that too many very smart people don't see what I see. You don't have to be a Phd or a super smart person. You should just know what you need to know. But for most people that seems to be impossible.

For me the only evidence I need, to know if something works or not is: track record.
That's the only and ultimate proof that what I think and do is what should be done.

What does understanding randomness have to do with profitability?

 

[Maverick74]

Well are you trying to show or prove that you're more intelligent than others here, they're just stupid or generally just trying to educate?

I ask this because if we're taking people at face value there seems to be successful traders that aren't in full agreement with you. Most people only care about making money and being successful, so the debate at hand doesn't seem to have a strong relevance in regards to being successful at trading or not. Obviously small sample size here and people could be lying granted. But just making that point.

No, you are over thinking things again. I am simply stating that people are saying things on this thread are not true but stating them as facts. Has nothing to do with successful trading. If I said the earth was flat I could still be a profitable trader and say that correct? They are independent of each other.

 

[trdes]

No, you are over thinking things again. I am simply stating that people are saying things on this thread are not true but stating them as facts. Has nothing to do with successful trading. If I said the earth was flat I could still be a profitable trader and say that correct? They are independent of each other.

Ok, yes makes sense that was my question. I realize you did not directly or even indirectly correlate the two, I just assumed you may be doing that, but that clears it up.