Coin flips psychologically better??

This is a discussion on Coin flips psychologically better?? within the Psychology, Risk & Money Management forums, part of the Methods category; Originally Posted by DionysusToast Whilst markets are not rational Give me an example of why markets aren't rational....

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Old Aug 1, 2012, 5:12pm   #17
 
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Re: Coin flips psychologically better??

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Originally Posted by DionysusToast View Post
Whilst markets are not rational
Give me an example of why markets aren't rational.
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Old Aug 1, 2012, 5:33pm   #18
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Re: Coin flips psychologically better??

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Originally Posted by DionysusToast View Post
Oh - one more thing - why would anyone try to find a technique that would work on random charts?

Are you freaking nuts?
Far from it

But I wont be drawn on this stuff at the zoo, other than to say its a very worthwhile exercise
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Old Aug 1, 2012, 5:41pm   #19
 
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Re: Coin flips psychologically better??

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Far from it

But I wont be drawn on this stuff at the zoo, other than to say its a very worthwhile exercise
Well again, what is meant by random charts. If I plot a Brownian motion, it will within reason look like a normal price chart for a while. But there's no way you can have an edge on that, ever, under any method. So to find a way of trading that profitably is an exercise in futility.

Last edited by Shakone; Aug 1, 2012 at 5:48pm.
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Old Aug 1, 2012, 6:27pm   #20
 
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Re: Coin flips psychologically better??

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Originally Posted by scose-no-doubt View Post
Give me an example of why markets aren't rational.
http://www.trade2win.com/boards/gene...zophrenia.html
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Old Aug 1, 2012, 6:33pm   #21
 
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Re: Coin flips psychologically better??

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Far from it

But I wont be drawn on this stuff at the zoo, other than to say its a very worthwhile exercise
The problem I have with it is simple - the charts aren't the market. Just the result of trading.

So - to attempt to profit from a random chart is a bizarre experiment.

There is no herd behind a random chart. There are no news announcements on random charts. There are no opens and closes on random charts. No holidays, no recessions, no euphoria, no puking, no speculators etc. etc. etc.

No CNBC, no Bloomberg, no bucket shops, no MF Global, no PFG, no Goldman, no Bernanke, no Obama.... Hell - I'm beginning to like it...

I'm still getting a whiff of almonds here.
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Old Aug 1, 2012, 6:53pm   #22
 
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Re: Coin flips psychologically better??

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Originally Posted by DionysusToast View Post
The problem I have with it is simple - the charts aren't the market. Just the result of trading.

So - to attempt to profit from a random chart is a bizarre experiment.

There is no herd behind a random chart. There are no news announcements on random charts. There are no opens and closes on random charts. No holidays, no recessions, no euphoria, no puking, no speculators etc. etc. etc.

No CNBC, no Bloomberg, no bucket shops, no MF Global, no PFG, no Goldman, no Bernanke, no Obama.... Hell - I'm beginning to like it...

I'm still getting a whiff of almonds here.
Yep. Just plotting random points that have nothing to do with the market, and deriving a system to attempt to profit from that, is of as much value as deciding to plot the temperature each day and deriving a trading system to profit from that. Actually it's worse, because there are trends in temprature and patters of behaviour.

Unless your model exhibits the properties of a real market, it is as you say bizarre.
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Old Aug 2, 2012, 2:04am   #23
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Re: Coin flips psychologically better??

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What do you mean by a randomly generated chart?
As in the creation of a string of 50/50 moves as in this link...

Random walk hypothesis - Wikipedia, the free encyclopedia

Edit: Looks like there are a few break out trades and a trend trade or two there to be taken.
.

Last edited by Jason101; Aug 2, 2012 at 2:11am.
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Old Aug 2, 2012, 7:18pm   #24
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Re: Coin flips psychologically better??

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Originally Posted by DionysusToast View Post
Markets are not random. Whilst markets are not rational, they certainly are not random.
To a certain extent I agree.
Markets certainly have times when they are far from random.
I also think there are times when they are random.

None of that matters a bit.
Whether markets are random or not is actually irrelevant.
That argument is as old as the hills, both approaches can work both can fail.
So in effect, it does not matter one iota whether it is factually correct to say
markets are random.
As I said earlier, for me its shades of grey anyway...

Where randomness truly comes into play is with trade results, now they are random.
Markets are not PnL, trade results are...

Anyone that disputes that needs to have a serious think about why the disagree
with that statement.
There is not one trader on the face of the earth who has not had a losing trade,
so why did you take a losing trade?

Simple, factors beyond your control or knowledge transpired to take your stop out.
Even with a high strike rate, that randomness is still present.

As for charts being the past, the tape is the past as well, just more recent past.
The DOM may be the future, then again it may also be the false future someone wants you to believe...
Nobody except those with pockets deep enough to move markets can truly
know what will happen next, and even they get burnt.
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