Why predict?

[blumartian]

Quote from nitro:

I am stating that there is a way to make money playing this game against someone. Give me an example of how it can be done. It's trivial and yet no answer.

nitro

Offer "incorrect" odds?

 

[jasonjm]

Quote from nitro:

I am stating that there is a way to make money playing this game against someone. Give me an example of how it can be done. It's trivial and yet no answer.

nitro

I have no idea?

1) double or nothing?
2) cheat?
3) knock them out and steal their wallet?

 

[PointOne]

Quote from nitro:

I am stating that there is a way to make money playing this game against someone. Give me an example of how it can be done. It's trivial and yet no answer.

nitro

Bet the other guy that in 100 throws there will not be 50 heads in total.

 

[kidPWRtrader]

Quote from LondonUSTrader:

If you believe markets are random you are wrong. There is statistical proof that markets trend more often than not.

A while ago Richard Farley, one of the top traders at BT in Sydney who went on to run his own hedge fund based in Bermuda, ran computer tests on a broad range of markets to see how often markets continued in their current direction compared to reversing. He found that on average there were 55% continuations to 45% reversals.

Those results are hardly surprising. Most experienced traders realise trends exist and so markets are not completely random as some suggest.

I think what you meant to say was that from one instance to another instance, there is a greater chance of continuation rather than change.

There is actual proof that markets trend about 30% of the time from what I have read.

I think it's just a difference in phrasing though.

 

[maxpi]

Quote from jasonjm:

how could you possibly make money in a completely random market?

I dont understand how? please explain the concept of any trading system that you think could pull this off.......

once you factor in commission you are dead in the water on a completely random market

A random market could, and does, have trends. Generate some random data by randomly adding or subtracting a small increment, eventually, the laws of probability being what they are, there will be a trend just as sure as if you flip a coin, the laws of probability being what they are, you will get heads 10 times in a row.

 

[jasonjm]

Quote from maxpi:

A random market could, and does, have trends. Generate some random data by randomly adding or subtracting a small increment, eventually, the laws of probability being what they are, there will be a trend just as sure as if you flip a coin, the laws of probability being what they are, you will get heads 10 times in a row.

ok, so how can you possibly turn that into profits

makes no sense still, its random, it will trend as much as it will chop

and then u have commissions to factor in, as well as bid/ask spread

 

[TSGannGalt]

Watching and talking to 100s of traders, regardless of retail, prop. or institutional...

I think people predict or get all emotional because they fear the uncertainty of the market. More like they're own defense mechanism...

Some use emotions and get pissed to deal with it. Some try to predict / mentally simulate every outcome possible. Some have some peev. superstition. Some use statistics and tests. It's just a tool they use to comfort themselves from the uncertainty.

On a trade-by-trade basis, trading is like walking in a pitch black room.

 

[nzbryant]

Quote from nitro:

Every profitable trader I know assumes axiomatically that underlyings trace out some sort of Brownian motion. In the case of equities (or SIFs) it is Geometric Brownian motion. It is at the heart of the most important equation in all of Finance, the Black Scholes model of options, of which using it and modern versions of it have made people money as if it is as easy as printing it.

I ask you then, how is it that the biggest players in the market, derivatives traders, assume a random underlying, and make money hand over fist? If the underlying is random, how can anyone make money? If you bet on a fair coin, how can you make money playing the flip of that coin?

It is the answer to that question that is interesting and will take you down the correct path. Asking whether to predict or not is asking waaaay the wrong question, because it's answer will only confuse you.

nitro

Good post mate.

 

[nzbryant]

Quote from jack hershey:

Most people never come to understand this. You are one of them. that is going to continue for you for the future. We look at you and see you in a trap; caught in the trap as an amimal would be who screwed up. Animals caught in traps get to go through the consequences of getting caught in a trap. They do understand as they sit there awaiting the next step in the process as a situation that is not one of semantics. they can figure out that sematics is not part of the trap in which they are caught. there is not button on the trap that they can press and be freed to go about their business once again.

Jack for President! JH - how do you come up with this stuff? Brilliant

 

[Indrionas]

Quote from jack hershey:


Most people never come to understand this. You are one of them. that is going to continue for you for the future. We look at you and see you in a trap; caught in the trap as an amimal would be who screwed up. Animals caught in traps get to go through the consequences of getting caught in a trap. They do understand as they sit there awaiting the next step in the process as a situation that is not one of semantics. they can figure out that sematics is not part of the trap in which they are caught. there is not button on the trap that they can press and be freed to go about their business once again.

Get off of acid, man