Wall Street = Casino. Minus Sum Game.

tar · Jan 22, 2010, 7:36am

http://www-rcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

montmorencyt2w · Jan 22, 2010, 3:55pm

Quote:

Originally Posted by Trader333

It appears that the cases for whether TA works or not seem to be based on absolute views, ie it always works or it doesn't. I would agree that when news events occur then TA (on an intra-day basis) cannot really give an indication of the likely movement in price. However, that does not mean that TA cannot work at other times. Myself and many others on this site have seen TA used on a basket of stocks for weeks on end where almost every day there were consistent profits of between $2K and $10K a day being made. Quite a few of us also saw this live and many others witnessed it in a web conference room.

The key to the success was the basket of stocks that were either all Shorted or all Long at once and some did lose money but overall the basket was profitable.

Paul

Just to mention, for what it's worth, that Gary Norden's book (which I've referred to once or twice) claims that (at least classical) TA was invented/designed for use in the stock market, and that its use outside of that arena is extending it to a sphere that it was not intended for, is not (to his thinking) particularly suitable for, and in which (to his thinking) it doesn't work very well.

After a brief initial foray when first starting, I personally have avoided stocks, and even indices, for the most part, so I don't have an opinion on how effective it is there.

DionysusToast · Jan 22, 2010, 11:45pm

Quote:

Originally Posted by tar

http://www-rcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf

Sorry - but I only got to the first paragraph that said trading was a zero sum game.

Trading is not a zero sum game.

For example - take 2 traders, one going long at the exact same time the other went short with the same position size. They both exit at the same time. In this case, you would say that one trader lost and another gained.

The losses and gains are not equal. The losing trader lost more than the winning trader won.

Hence minus sum game.

tar · Jan 23, 2010, 3:50am

Quote:

Originally Posted by DionysusToast

Sorry - but I only got to the first paragraph that said trading was a zero sum game.

Trading is not a zero sum game.

For example - take 2 traders, one going long at the exact same time the other went short with the same position size. They both exit at the same time. In this case, you would say that one trader lost and another gained.

The losses and gains are not equal. The losing trader lost more than the winning trader won.

Hence minus sum game.

whatever goodluck

robster970 · Jan 23, 2010, 6:03am

Quote:

Originally Posted by tar

whatever goodluck

Harris covers this extensively in the book that this paper is derived from. It's zero-sum if there is no cost of doing business. It's negative sum if you include costs of doing business (dealer, brokerage costs, etc). All depends on how you model the market. Personally I always think of it as negative sum because I always think about my costs of doing business. Others don't. Horses for courses.

DionysusToast · Jan 23, 2010, 7:53am

It doesn't depend how you model the market. The market is what it is. Commissions and spreads are there.

That's the issue though - people 'modelling' things.

robster970 · Jan 23, 2010, 8:33am

Quote:

Originally Posted by DionysusToast

It doesn't depend how you model the market. The market is what it is. Commissions and spreads are there.

That's the issue though - people 'modelling' things.

I know it's -ve sum. You know it's-ve sum. I'm surprised the thread has run for this long.

Prawnsandwich · Jan 23, 2010, 9:21am

Yeah I'm a bit surpised as well.....when its fairly obvious that TA works, and works very well....when used in a effective method.

By TA I mean anything from candlesticks, MAs, chart patterns, trends, indicators , price action etc

Problem with fundamental analysis is that the market prices in a lot of known and projected fundamental information, as there are always insiders and entities who have access to information ahead of the masses....very difficult for small / retail investor to compete with big / insider money

TA is suppposed to pick up this inside information acting in the market via chart patterns , trends etc...

Jan 22, 2010, 7:36am	#129
tar Legendary Member Member Since Nov 2006 3,917 Posts	Re: Wall Street = Casino. Minus Sum Game. http://www-rcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf __________________ I detect a snake oil salesman from a mile away !

Jan 23, 2010, 7:53am	#134
DionysusToast Legendary Member Member Since Dec 2009 5,548 Posts	Re: Wall Street = Casino. Minus Sum Game. It doesn't depend how you model the market. The market is what it is. Commissions and spreads are there. That's the issue though - people 'modelling' things. __________________ I cannot see., however why we should expect to find a "system" which will work in the stock market; surely the possibilities of profits for the student justify the time and effort required to learn market interpretation. Humphrey B Neill - 1931

Jan 23, 2010, 9:21am	#136
Prawnsandwich Senior Member Member Since Nov 2008 339 Posts	Re: Wall Street = Casino. Minus Sum Game. Yeah I'm a bit surpised as well.....when its fairly obvious that TA works, and works very well....when used in a effective method. By TA I mean anything from candlesticks, MAs, chart patterns, trends, indicators , price action etc Problem with fundamental analysis is that the market prices in a lot of known and projected fundamental information, as there are always insiders and entities who have access to information ahead of the masses....very difficult for small / retail investor to compete with big / insider money TA is suppposed to pick up this inside information acting in the market via chart patterns , trends etc...

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