**** me... huge realisation about why trend followers survive longer...

arabianights

arabianights

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...in pretty much efficent markets.

Earlier today friendly member Jack O'Clubs inspired me to go looking for roulette lulz... yup, there are thousands of threadds all over about people who think they have a system for roulette.

Anyway, here's some "advice":

Erdnase52 said:
I see this system everyday along with the guys who play 2 sets of dozens. Its all great till you hit the wall, then the tears start and the "I cant believe it" moans begin, lol.
The best thing the casinos have done is to have reader boards on all the games, makes it easier for the dunces who walk by and can see red has come up 5 times in a row and cant possibly come up again. People ask me whats the most number of times i have spun a color and i tell them 16 in a row and when i did it NO ONE MADE A DIME ! To me i learned when gambling, either bet with the flow or do nothing. if you decide to go with the flow and you lose, you have only lost once, you go up against it, no telling how many you can lose. I dont even try to explain it to players anymore because its just a waste of time. They gots to learn the hard way, lol.
Click to expand...


So... what's my point? Simple. The unsuccessful trend followers will do so many less trades as they wait for confirmation of the trend, while the unsuccessful mean reverters, averagers, value players, whatever, will get to do a considerable lot more trades in the same time period.

Therefore whenever one looks at the population of "successful" outright traders one will see more trend followers. It will be fallacious to conclude this is the best way of trading... but it's what you will conclude... on the markets as much as the roulette wheel!
 
Did you use the word "unsuccessful" more times than you intended? Serious question.

If I get two up bars, three up bars, four up bars in a row, I may surmise with some confidence that more than 50/100 times there is a better than 50/100 chance of getting another up bar.

If I get two reds, three reds, four reds in a row in roulette, I don't have the same confidence in getting another red.
 
arabianights said:
...in pretty much efficent markets.

Earlier today friendly member Jack O'Clubs inspired me to go looking for roulette lulz... yup, there are thousands of threadds all over about people who think they have a system for roulette.

Anyway, here's some "advice":




So... what's my point? Simple. The unsuccessful trend followers will do so many less trades as they wait for confirmation of the trend, while the unsuccessful mean reverters, averagers, value players, whatever, will get to do a considerable lot more trades in the same time period.

Therefore whenever one looks at the population of "successful" outright traders one will see more trend followers. It will be fallacious to conclude this is the best way of trading... but it's what you will conclude... on the markets as much as the roulette wheel!
Click to expand...

they may have less trades but dont they still need a minimum amount before it can be decided how (un)successful they are?
 
arabianights said:
...in pretty much efficent markets.

Earlier today friendly member Jack O'Clubs inspired me to go looking for roulette lulz... yup, there are thousands of threadds all over about people who think they have a system for roulette.

Anyway, here's some "advice":




So... what's my point? Simple. The unsuccessful trend followers will do so many less trades as they wait for confirmation of the trend, while the unsuccessful mean reverters, averagers, value players, whatever, will get to do a considerable lot more trades in the same time period.

Therefore whenever one looks at the population of "successful" outright traders one will see more trend followers. It will be fallacious to conclude this is the best way of trading... but it's what you will conclude... on the markets as much as the roulette wheel!
Click to expand...

Are you saying that trend followers trade less frequently so survivorship bias leads people to conclude that trend following is good?
 
Has Arabian accidentally started a serious, interesting or useful thread?

Come on Howard, come and trash it!
 
Furthermore (and I assume this has occurred to the more thoughtful readers, amongst whom I count all the current respondents) this would even occur if the market were somewhat mean reverting in character. For simplicity's sake, let's assume very basic trend following strategies versus very basic mean reverting strategies... the former have larger stops than the latter!

So -EV strategies may in fact survive longer!
 
Isn't this just a function of trade frequency Arabian, stop size playing a part in this too?
 
Pazienza said:
Lulz and seriousness are not mutually exclusive. :)
Click to expand...
Awww...now you've gone and made me post some old guy's quote:-


"Humour is the only test of gravity and gravity of humour. For a subject which will not bear raillery is suspicious and a jest which will not bear a serious examination is certainly false wit."
 
TheBramble said:
Awww...now you've gone and made me post some old guy's quote:-


"Humour is the only test of gravity and gravity of humour. For a subject which will not bear raillery is suspicious and a jest which will not bear a serious examination is certainly false wit."
Click to expand...

Excellent! (y)
 
TheBramble said:
Well hey ho nonny ney...I'm not sure it's serious. Maybe I'm just taking it seriously.
Click to expand...

Your right Bramble - he's on HC's thread checking out a picture of Sarah Palin in a bikini. Normality has resumed. Nothing to see here now, move along folks.
 
arabianights said:
let's assume very basic trend following strategies versus very basic mean reverting strategies... the former have larger stops than the latter!
Click to expand...
Erm..guess I must be doing something wrong then.

Doesn't reversion to mean require the reversion to have already commenced? And for a trend play , for it to merely have halted its contra move? Moving 'away from' (reversion) covers more ground more quickly than 'slowing to a stop' (trend resumes).

The relative stop sizes in each scenario will reflect the momentum in each situation.
 
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