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The Electric Day Trader and Ruin. How probability oppposes short-term investors.
- Thread starter ByLoSellHi
- Start date
you really do not understand!!! When I have an edge in a game then I want to play as often as possible. There are some constraints such as the cost of playing the game (commission, spreads) but THIS WAS NOT THE ORIGINAL POINT. Sure such cost of doing business needs to be paid attention to but lets stick to the main point. A game with edge I want to play as often as I can. Disagree?
Quote from Ms Varima-Garch:
true, you don't have to use mathematical definitions to see what's going on with price. (like some people have tried to do, for example kaufman in his skew-kurtosis strategies - look at shape of price distribution to see what's going on, but i don't know if it really work)
there are other ways of doing it like moving averages, various standard deviation ideas, atr/kettler channels etc
i guess we're not arguing about whether technical analysis works or not. it probably does help a picture is worth a thousand words
the issue in this thread is how frequently you trade, and at want point the frequency of your trades begins to work against you
Quote from asiaprop:
sorry but AGAIN whats your point? How is the original topic of probability of trading outcomes suddenly related to my broker? (unless I am overtrading which is not the case under discussion here) I fail to see your critical reasoning....
well i guess my point is that if you're not overtrading, you're ok
trading outcomes: can't predict 'em . . .you can only get an approximation, and basically take it from there . . .
Quote from Ms Varima-Garch:
true, you don't have to use mathematical definitions to see what's going on with price. (like some people have tried to do, for example kaufman in his skew-kurtosis strategies - look at shape of price distribution to see what's going on, but i don't know if it really work)
there are other ways of doing it like moving averages, various standard deviation ideas, atr/kettler channels etc
i guess we're not arguing about whether technical analysis works or not. it probably does help a picture is worth a thousand words
the issue in this thread is how frequently you trade, and at want point the frequency of your trades begins to work against you
I have friends that scalp trade and are profitable each day, I have friends that intraday trade and are profitable each day, I have friends that swing trade and are profitable each week and I have friends that position trade and are profitable each month and year.
The question isn't when does the frequency turn you profitable or turn against you but when does your charting give you consistency to give you the confidence to trade it with arrogance.
come on, go back to the tower you are coming from. How does your splitting hairs enrich this discussion in the slightest. Again I dont need luck to play a game that lets me win 55% of the times an equal amount which I lose 45% of the times. If I play with an optimal bet size I DO NOT NEED LUCK. And guess what probability theory dictates that even in the event I was "unlucky" and blow out I should fund my account and play this particular game again. So where do I need luck here?
Quote from Ms Varima-Garch:
reasonably cautious: try to find optimal position size, % of equity you risk on a trade.
"reasonably" means if your bet per trade is too small, you're not moving anywhere
"cautious" means if your bet per trade is too large, you're increasing your risk of ruin
"reasonably cautious" means finding the right tradeoff
lucky: we don't have an infinite series of trades. lucky means being lucky, as it were, to have your theoretical edge realized, over the course of the limited series of trades.
that's why this risk of ruing thing is so important. yes, it's unpleasant for some of us to even think in those terms. trading does not always have to be about pleasure, no pain no gain
lucky means having the courage to say: i know i can be wiped out by a series of losing trades
all this should be balanced, but i don't know how, quite frankly.
that's why i don't trade regularly, it's true
ok guys you win
probability does not oppose short-term investors
probability favors short-term investors
the authors of the article got it wrong. they may be good people, but their analytical skills leave more to be desired
excellent proof of that is the great shape of our hedge fund industry. we can see probability has been on their side
Varima Garch
probability does not oppose short-term investors
probability favors short-term investors
the authors of the article got it wrong. they may be good people, but their analytical skills leave more to be desired
excellent proof of that is the great shape of our hedge fund industry. we can see probability has been on their side
Varima Garch
Quote from Ms Varima-Garch:
ok guys you win
probability does not oppose short-term investors
probability favors short-term investors
the authors of the article got it wrong. they may be good people, but their analytical skills leave more to be desired
excellent proof of that is the great shape of our hedge fund industry. we can see probability has been on their side
Varima Garch
Varima, don't give in just to give in.
Try to understand the information we are trying to provide you.
"Probability" has no business in being the primary focus of any part of trading. "Probability" should simply be a result field percentage when looking at overall profitability.
The authors DO have it wrong because they are looking at the markets through the same opaque lens most academics do. It's easier to rehash old data then to go out and research anything new. Most academics are lazy and their article makes that perfectly clear.
As far as hedge funds, well, most operators aren't any smarter than the academics they hold in high esteem and they are even lazier than those academics when it comes to research. Now, there are a few that have excelled through all overall extreme market oscillations but you rarely ever hear of them. Just like in any business field, there are the ones that strive toward greatness and others that down right stink.
Most traders assess their odds of a winning trade at even, which is an epic fallacy, as that assumption includes a proviso that the markets are transparent and no other player has information or data they don't also have access to.
This is why 'front running' is such a huge scandal (and this is JUST ONE example of the things that distort markets), and an even bigger scandal when one ponders why no significant action has ever been taking by any regulatory agency to sanction this massive fraud on the markets.
This is why 'front running' is such a huge scandal (and this is JUST ONE example of the things that distort markets), and an even bigger scandal when one ponders why no significant action has ever been taking by any regulatory agency to sanction this massive fraud on the markets.