Fruitless Pursuits ?

[0007]

In a bookshop today I read this anecdotal tale: Maths Professor & his wife at home need to move a large table from one room to another, through a narrow doorway. After much effort and re-positioning they give up, admitting it can't be done. Because he's that sort of bloke, Professor writes a mathematical proof confirming the situation. Meanwhile, when he's finished he finds that wifey has successfully trans-roomed the table!

Do you ever feel like that with trading?

 

[JahDave]

In a bookshop today I read this anecdotal tale: Maths Professor & his wife at home need to move a large table from one room to another, through a narrow doorway. After much effort and re-positioning they give up, admitting it can't be done. Because he's that sort of bloke, Professor writes a mathematical proof confirming the situation. Meanwhile, when he's finished he finds that wifey has successfully trans-roomed the table!

Do you ever feel like that with trading?

I used to feel like that with trading, but not anymore. I'm not saying that I trade flawlessly, but I do find a lot more ways to win than I used to; and when I lose I do see more ways that I could have won than I used to. I have been trading for four years now and I try to always keep learning.

 

[intradaybill]

Math is a tool. All tools in the hands of an idiot are useless.

 

[Splitlink]

Math is a tool. All tools in the hands of an idiot are useless.

I have a vivid memory of, when I was about 4 years old, having measles, or something, and taking a watch that my dad had given me to pieces. Not being able to get it together again I hid it under my pillow. Fortunately, he laughed so I guess he got it from Woolworth's. Since then, I've always managed to take things to bits but my wife treats me with caution.

Still, a table? No moving parts--that does not seem too difficult. :smart:

 

[Dommo]

There was something like this (table stuck inside a staircase) in Douglas Adams' first Dirk Gently novel - I think it was resolved there with a time machine, which, of course, we'd all love to have.

 

[counter_violent]

World is full to the brim with useless people...we only have to look at celebrity culture and those that follow their every word.

Academics know more and more about less and less.... nuff said.

 

[counter_violent]

Yeah try to imagine a world without all those useless academic types and their pesky inventions like electricity, computers and the internet :smart:

I didn't say all of them...try applying the 95% rule

 

[shadowninja]

95% of scientists believe in AGW, according to the other thread.

 

[Shakone]

World is full to the brim with useless people...we only have to look at celebrity culture and those that follow their every word.

Academics know more and more about less and less.... nuff said.

This is true, academics become very specialised, and experts in a very small area, which often has little application.

Perhaps the other message in the opening post is that both got what they were looking for. The academic convinced himself it couldn't be done, and so couldn't do it, and evven wrote a paper to justify himself. The wife just wanted the table in the room, and somehow found a solution. If you keep thinking that trading profitably can't be done, you'll find ways to convince yourself it can't (the market being a random walk seems to be a common example around here).

 

[Shakone]

Assuming that the market is a random walk, and then building a methodology around that is an extremely useful concept

T2W really is the equivelent of a class full of dunces.

Except that you can't build a profitable (in the long term) system if it is a random walk

 

[counter_violent]

Assuming that the market is a random walk, and then building a methodology around that is an extremely useful concept

T2W really is the equivelent of a class full of dunces.

It's even been demonstrated in front of their eye's....but do they pay attention...no...they then proceed to quote textbooks.

 

[Shakone]

It's even been demonstrated in front of their eye's....but do they pay attention...no...they then proceed to quote textbooks.

It has been demonstrated that it is NOT a random walk.

 

[counter_violent]

It has been demonstrated that it is NOT a random walk.

If a strat is built that is sufficiently robust...then it matters not a jot wether the markets are random walk or not. Thats the whole point really.

 

[Shakone]

Sigh...then you don't understand what the term random walk usually means when it is stated that the market is a random walk (i.e. 50-50 chance of goin gup as going down).

Things can be random, and you can profit from them, with the right betting strategy, if the random game allows it. The toss of a coin if it is 50-50 heads or tails is random, and a sequence of tosses could give rise to a random walk. But you can never have positive expectation, no matter what your strategy is with that coin game, because it just isn't possible. And with spreads to pay in the market, if it was such a random walk, then you would always have a negative expectation. If it was 60-40, then obviously you could make money with the right strategy.

So what I was actually saying Counter_Violent, is that because it is possible to have positive expectation with the right strategy, then the conclusion is that the markets are certainly NOT the random walk they are said to be.

Random walk is a theoretical concept, and so you apply theory to it and can prove the impossibility of positive expectation. The real world is a separate thing entirely.

 

[cr6196]

the other point is that academics stop writing about the "random walk" thing about 20 years ago. even fama/french came out with paper around 1993 about factors that produced excess returns and some of their students proceeded to set up HFs and make cash with the stuff from their papers...but i suppose the story of stupid economists ignoring reality is far more appealing. i'm intentionally just referring to the orginal EMH type people and not including the papers written about ma/filter rules in the late 80s and ignoring the fact that most of the academics work in AM now.

and i'm not reli bothered if the market is or isn't random, just wanted to point something out that doesn't make sense.

 

[Shakone]

cr6196, it is the case that it is a 'convenient' assumption for calculations. In the same way that when you price options the Black Shcoles way, it is convenient to assume there are no transaction costs, and that a Brownian motions drives the underlying etc.

 

[Shakone]

Looking forward to you revealing your strategy that gives a positive expectation for a 50-50 coin toss game then Should stun the academic world.

 

[Shakone]

No, it is that you don't get it. Suppose the market is 50-50 up or down ALL THE TIME, then it doesn't matter where you enter, and it doesn't matter how you manage it, or where you exit. Those are all part of the strategy, which I said I was looking forward to you providing, which you clearly haven't.

Reason why it doesn't matter? Well if you toss a coin and it comes up tails 3 times, it doesn't make it more likely to be heads next or more likely to be tails again. Because there is no information obtainable, because it is a 50-50 random walk. So no matter how it turns out during trade, you can't manage it so that it becomes profitable, nor does the risk reward ratio matter.

 

[sighthound]

*sigh* you really dont get it do you ?

the positive expectancy isnt obtained from the entry

Wot no foreplay just poke at random?

 

[counter_violent]

This thread has the correct title.