What is more difficult? Predicting t or t+x ?

[earth_imperator]

I think I made an important discovery, but which most people simply seem to ignore

What is more difficult to predict:
the market index of the next trading day at EOD, or
the market index at EOD in 2 months?

And which of them is more rewarding?
And how much percent or times more rewarding over the other?

Is this maybe a flaw in the machinery of the universe?

 

[Sekiyo]

Tough to predict if the next toss is going to be head or tail. Easier to predict the ratio over the long run.

 

[panzerman]

Price is random pink noise with stochastic amounts of skew and kurtosis. However, even that model is too simplistic. So, to somewhat answer your question, price prediction is a probabilistic problem. For the most simplistic and most flawed way of predicting price, see attached.

 

[M.W.]

Every additional millisecond adds more stochasticity. The absolute foundations of Ito calculus establish that fact.

I think I made an important discovery, but which most people simply seem to ignore

What is more difficult to predict:
the market index of the next trading day at EOD, or
the market index at EOD in 2 months?

And which of them is more rewarding?
And how much percent or times more rewarding over the other?

Is this maybe a flaw in the machinery of the universe?

View attachment 316305

 

[M.W.]

Agree, it's never about point predictions. It's about probability cones. And the further out, the wider the cone, hence the lower the predictability.

Price is random pink noise with stochastic amounts of skew and kurtosis. However, even that model is too simplistic. So, to somewhat answer your question, price prediction is a probabilistic problem. For the most simplistic and most flawed way of predicting price, see attached.

 

[earth_imperator]

Agree, it's never about point predictions. It's about probability cones. And the further out, the wider the cone, hence the lower the predictability.

But then why is the reward much much lower for such a hard to predict event in the future?
Isn't it weird/unintuitive/illogical?

 

[M.W.]

What reward exactly, you need to be more specific.

But then why is the reward much much lower for such a hard to predict event in the future?
Isn't it weird/unintuitive/illogical?

 

[earth_imperator]

What reward exactly, you need to be more specific.

The reward in long call options trading for a shorter DTE is (much) higher than for a longer DTE, when all else equal. Related: 0DTE.

 

[M.W.]

Not true at all, what do you base your claim on?

The reward in long call options trading for a shorter DTE is (much) higher than for a longer DTE, when all else equal. Related: 0DTE.

 

[taowave]

Ild like to see EI's backtesting approach,but it appears (from my first round of backtesting) hes correct..I havent looked at 0 DTE,I started at 5 DTE,30 delta,25% stop,purchasing at different time intervals

Not true at all, what do you base your claim on?