Topic: Here we go again, another major price drop for bitcoins - page 6. (Read 23152 times)
You can read "market wizards". There is no need to reinvent the wheel.
Given a fixed amount of money ($100) and a fixed time frame (month), can a specific trader in isolation beat the market by at least some percentage (3%) using only charts and indicators but no news media? Then do it again next month and next?
The answer is no. However, since there are lots and lots of such traders someone will - but it's not due to skill but simply chance.
Well, there *is* a way to test this hypothesis. Any contestants?
people not even trying to understand
There's no data that supports your position. There's plenty of data to support ours.
Given a fixed amount of money ($100) and a fixed time frame (month), can a specific trader in isolation beat the market by at least some percentage (3%) using only charts and indicators but no news media? Then do it again next month and next?
The answer is no. However, since there are lots and lots of such traders someone will - but it's not due to skill but simply chance.
This is my last post here in this thread about the topic of "can a trader beat the market regularly, without being lucky all the time", as I do not want to take more time to debate this with people not even trying to understand.
Trading, using technical analysis, and the proper money management is a skill that you can learn. But it is hard work. You can compare it with learning to play a music instrument or playing tennis.
If a musician or tennis player practiced for years, he will likely be better than others who are less talented and / or trained less hard.
It is no chance or luck that they beat others on a regular basis, the may lose some matches, but will win the majority of matches.
The same applies for trading and other activities.
Given a fixed amount of money ($100) and a fixed time frame (month), can a specific trader in isolation beat the market by at least some percentage (3%) using only charts and indicators but no news media? Then do it again next month and next?
The answer is no. However, since there are lots and lots of such traders someone will - but it's not due to skill but simply chance.
Netrin, turn the question around. If the analysis is so definitive and the options are so easy to understand, how come not ALL TRADERS always perform significantly above market averages?
Given a fixed amount of money ($100) and a fixed time frame (month), can a specific trader in isolation beat the market by at least some percentage (3%) using only charts and indicators but no news media? Then do it again next month and next?
The answer is no. However, since there are lots and lots of such traders someone will - but it's not due to skill but simply chance.
Yes! 
The point is that so far there's no trader ever that has outperformed chance, that is, has been trading at a statistically significant level that cannot just be explained with being one out of all traders in existence.
If someone claims to be such a trader, and in addition claims to have a method behind it, that will result in an instant Nobel Prize.
The point is that so far there's no trader ever that has outperformed chance, that is, has been trading at a statistically significant level that cannot just be explained with being one out of all traders in existence.If someone claims to be such a trader, and in addition claims to have a method behind it, that will result in an instant Nobel Prize.
The method as you have it sounds like computer program. If you'll accept a human and computer combo that can do it as sufficient evidence of a method, then I think you'll find such individuals. I ramble here because what you seem to require is that the best chess/go/poker player can create an AI or that the best programmers can play chess.
I think more interesting terms would be this: Given a fixed amount of money ($100) and a fixed time frame (month), can a specific trader in isolation beat the market by at least some percentage (3%) using only charts and indicators but no news media? Then do it again next month and next?
Do remember that for every market-beating robot gain there would be an equal amount of loss making robots. If you fund them all you will only do (on average) precisely as well as the market.
This is the same as with any trader. Weonly hear of the successful ones - and then believe them to have special abilities if their performance is statistically significant.
Correct.This is the same as with any trader. We
I have no idea what you were trying to say with your edits.
He is drawing the parallel between your post and the financial concepts of alpha and beta.
heh... is that head of yours hurting from bashing it against the wall enough times already? I feel for you, defxor 
Perhaps someone should start a thread on statistics. Or a thread called "No matter how well you're doing, if you're one of many it's still pretty much random".
Perhaps someone should start a thread on statistics. Or a thread called "No matter how well you're doing, if you're one of many it's still pretty much random".
Hehe. At one point in time I was really surprised that people who worked in the financial industry didn't know statistics and randomness inside out. Then I realized that if you do, you probably don't work in that sector at all (or you make sure you can cheat, like implementing HFT algo's in co-located servers).
I have a special pet peeve with TA though. I can understand people who do FA to really really believe that they're basing their trades on valid data, but ... TA? Really?
"No matter if Bernanke decides to hike the interest rate hundreds of points tomorrow my charts with pretty trendlines says we're in a head & shoulders touching feet kinda pattern and that means that we will break out of this downward channel .. "
But I guess I'm just not good at it
However, if after taking note of this ONE individual, he continues to flip heads, heads, heads, heads then you should start suspecting a duplicate sided coin, because this is statistically significant.
Yes!
The point is that so far there's no trader ever that has outperformed chance, that is, has been trading at a statistically significant level that cannot just be explained with being one out of all traders in existence.If someone claims to be such a trader, and in addition claims to have a method behind it, that will result in an instant Nobel Prize.
heh... is that head of yours hurting from bashing it against the wall enough times already? I feel for you, defxor
Perhaps someone should start a thread on statistics. Or a thread called "No matter how well you're doing, if you're one of many it's still pretty much random".
Oh, well, like the endless discussions on deflationary spirals and "what backs Bitcoin", I'm afraid we're destined to have this conversation with the uninitiated many, many times.
However, if after taking note of this ONE individual, he continues to flip heads, heads, heads, heads then you should start suspecting a duplicate sided coin, because this is statistically significant.
Yes!
The point is that so far there's no trader ever that has outperformed chance, that is, has been trading at a statistically significant level that cannot just be explained with being one out of all traders in existence.If someone claims to be such a trader, and in addition claims to have a method behind it, that will result in an instant Nobel Prize.
i guess you never heard of the trading computer on wall street that buys low sells high ... a trade algorithm that make millions!
However, if after taking note of this ONE individual, he continues to flip heads, heads, heads, heads then you should start suspecting a duplicate sided coin, because this is statistically significant.
Yes!
The point is that so far there's no trader ever that has outperformed chance, that is, has been trading at a statistically significant level that cannot just be explained with being one out of all traders in existence.If someone claims to be such a trader, and in addition claims to have a method behind it, that will result in an instant Nobel Prize.
I have no critique of Taleb's book as presented by Wikipedia. If I recall someone earlier made the (99:1 bet in which you almost always win, but when you lose, you lose all your savings) point that successful trading is more about money management, setting stops, investing a small percentage of your treasure to invest in a single trade according to risk, etc.
I also agree with a statement you made earlier: "If a thousand traders decide whether to buy or sell depending on coin flips, some of them will outperform the market and some won't. The ones who outperformed the market when looking back will claim it's due to their skills at flipping coins. Yet it's still not predictive."
It is true that within a large body of seemingly random noise, it is highly probably to find instances of pattern/consistency. For example, if ten people flip three coins, it is quite likely that at least one of them will flip heads, heads, heads. And you are correct that this says very little about his next coin flip. However, if after taking note of this ONE individual, he continues to flip heads, heads, heads, heads then you should start suspecting a duplicate sided coin, because this is statistically significant.
I also agree with a statement you made earlier: "If a thousand traders decide whether to buy or sell depending on coin flips, some of them will outperform the market and some won't. The ones who outperformed the market when looking back will claim it's due to their skills at flipping coins. Yet it's still not predictive."
It is true that within a large body of seemingly random noise, it is highly probably to find instances of pattern/consistency. For example, if ten people flip three coins, it is quite likely that at least one of them will flip heads, heads, heads. And you are correct that this says very little about his next coin flip. However, if after taking note of this ONE individual, he continues to flip heads, heads, heads, heads then you should start suspecting a duplicate sided coin, because this is statistically significant.
While I think I understand what you mean when you say for every Up there is a Down, what you actually said was both incorrect and irrelevant. Your argument seems to be that because a system is closed it is therefor homogeneous (no entropy) or unpredictable (maximal entropy).
No, that's not at all what I said. I was specifically talking about what happens when you have many actors essentially performing at random on any market.
Nicholas Taleb wrote a book about it called "Fooled by randomness".
http://en.wikipedia.org/wiki/Fooled_by_Randomness
While I think I understand what you mean when you say for every Up there is a Down, what you actually said was both incorrect and irrelevant. Your argument seems to be that because a system is closed it is therefor homogeneous (no entropy) or unpredictable (maximal entropy).
In my own experience, I matched the market on the rise up, and tend to under perform the market on the way down. I do not conclude that day trading is impossible. No, I conclude that I am bad at it. I suspect you are as well, but you blame 'random' for your consistent performance.
As it happens, patterns emerge in chaotic systems. Indeed there is a branch of mathematics dedicated to the study. Even if you argue that humans are non-deterministic, they are after all human.
In my own experience, I matched the market on the rise up, and tend to under perform the market on the way down. I do not conclude that day trading is impossible. No, I conclude that I am bad at it. I suspect you are as well, but you blame 'random' for your consistent performance.
As it happens, patterns emerge in chaotic systems. Indeed there is a branch of mathematics dedicated to the study. Even if you argue that humans are non-deterministic, they are after all human.
Do remember that for every market-beating robot gain there would be an equal amount of loss making robots. If you fund them all you will only do (on average) precisely as well as the market.
This is the same as with any trader. Weonly hear of the successful ones - and then believe them to have special abilities if their performance is statistically significant.
This is the same as with any trader. We
Correct.
I have no idea what you were trying to say with your edits.
Do remember that for every market-beating robot gain there would be an equal amount of loss making robots. If you fund them all you will only do (on average) precisely as well as the market.
This is the same as with any trader. Weonly hear of the successful ones - and then believe them to have special abilities if their performance is statistically significant.
This is the same as with any trader. We
Correct.
we should have a robot no past technical analyst was better than?
If you have X such trading robots, and X is a high enough number, one or several of them will outperform the market. To get a feeling how high "X" needs to be you'll need to do the calculations.
Do remember that for every market-beating robot there would be an equal amount of loss making robots. If you fund them all you will only do (on average) as well as the market.
This is the same as with any trader. We only hear of the successful ones - and then believe them to have special abilities.
Maybe we can use a GPU farm to work out our trades.
We'll need two decisions: buy/sell and amount (zero or one Satoshi).
So each loop cycle we decide whether to do a buy or a sell then whether the amount of the buy or sell should be zero or one.
SInce transaction fees would slaughter us if we actually posted single-satoshi buys or sells to the blockchain, we can accumulate the amount, and unless someone sees some point in posting both a buy-minimum-transaction-amount and a sell-minimum-transaction-amount if both the buy amount and the sell amount accumulate together, both hitting the minimum-to-transact at once, I suspect we might well be able to accumulate the buy satoshis with the sell satoshis in one value that is eiter positive or negative depending on whether the buy total or the sell total (not necessarily respectively) is higher.
Thus coin-flips might with enough GPU cycles hit a run of enough more buys than sells, or sells than buys, to accumulate an absolute value equal to te minimum amount we want to actually transact on the blockchain, and if the Nobel people have been correctly withholding that nobel prize we should have a robot no past technical analyst was better than?
-MarkM-
We'll need two decisions: buy/sell and amount (zero or one Satoshi).
So each loop cycle we decide whether to do a buy or a sell then whether the amount of the buy or sell should be zero or one.
SInce transaction fees would slaughter us if we actually posted single-satoshi buys or sells to the blockchain, we can accumulate the amount, and unless someone sees some point in posting both a buy-minimum-transaction-amount and a sell-minimum-transaction-amount if both the buy amount and the sell amount accumulate together, both hitting the minimum-to-transact at once, I suspect we might well be able to accumulate the buy satoshis with the sell satoshis in one value that is eiter positive or negative depending on whether the buy total or the sell total (not necessarily respectively) is higher.
Thus coin-flips might with enough GPU cycles hit a run of enough more buys than sells, or sells than buys, to accumulate an absolute value equal to te minimum amount we want to actually transact on the blockchain, and if the Nobel people have been correctly withholding that nobel prize we should have a robot no past technical analyst was better than?
-MarkM-
Oh please. Surely you are not suggesting a relaa... oh my!
Jump to: