Wall Street = Casino. Minus Sum Game.

This is a discussion on Wall Street = Casino. Minus Sum Game. within the General Trading Chat forums, part of the Reception category; http://www-rcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf...

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Old Jan 22, 2010, 1:36pm   #129
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Re: Wall Street = Casino. Minus Sum Game.

http://www-rcf.usc.edu/~lharris/ACROBAT/Zerosum.pdf
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Old Jan 22, 2010, 9:55pm   #130
 
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by Trader333 View Post
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.
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Old Jan 23, 2010, 5:45am   #131
 
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Re: Wall Street = Casino. Minus Sum Game.

DionysusToast started this thread
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Originally Posted by tar View Post
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.
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Old Jan 23, 2010, 9:50am   #132
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
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
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Old Jan 23, 2010, 12:03pm   #133
 
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Re: Wall Street = Casino. Minus Sum Game.

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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.
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Old Jan 23, 2010, 1:53pm   #134
 
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Re: Wall Street = Casino. Minus Sum Game.

DionysusToast started this thread 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.
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Old Jan 23, 2010, 2:33pm   #135
 
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Re: Wall Street = Casino. Minus Sum Game.

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Originally Posted by DionysusToast View Post
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.
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Old Jan 23, 2010, 3:21pm   #136
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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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