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Author Topic: Here we go again, another major price drop for bitcoins  (Read 21523 times)
S3052
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August 29, 2011, 08:31:32 PM
 #81

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.


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defxor
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August 29, 2011, 08:36:29 PM
 #82

people not even trying to understand

There's no data that supports your position. There's plenty of data to support ours.

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August 29, 2011, 08:38:10 PM
 #83

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?

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S3052
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August 29, 2011, 08:48:35 PM
 #84

You can read "market wizards". There is no need to reinvent the wheel.

>15years analysis experience

Always do your own due diligence & consult your financial advisor. Never invest unless you can afford to lose your entire investment.

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defxor
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August 29, 2011, 09:37:24 PM
 #85

You can read "market wizards". There is no need to reinvent the wheel.

You still don't understand the concept of chance.

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August 29, 2011, 09:52:19 PM
 #86

start a thread with your trades posted as you make them, including the stop losses etc & everyone can clearly see you beat the market, not only that they will soon mirror your trades to your advantage

all the rest is just talk talk

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August 29, 2011, 09:59:31 PM
 #87

Trading seems to be very similar to playing poker. There is a significant variance involved in the form of luck but a skilled player will win in the long run for sure. I happen to be a long time poker pro, not a big level pro but I've made a living from that. As a trader I'm very amateur but I have already seen there are many similarities and a lot of the same skills are needed, most importantly money management.

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defxor
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August 29, 2011, 10:05:28 PM
 #88

a skilled player will win in the long run for sure

Feel free to quantify your "for sure" with actual data, showing that there are "skilled" traders that can outperform chance.

The point is that no one has been able to show that.
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August 29, 2011, 11:17:04 PM
 #89

a skilled player will win in the long run for sure

Feel free to quantify your "for sure" with actual data, showing that there are "skilled" traders that can outperform chance.

The point is that no one has been able to show that.


Chance is a BS word. 
"Derrr it was chance I tell ya!"
"Really?  Chance caused it?"

mizike29
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August 30, 2011, 02:53:53 AM
 #90

There definitely is no hard data that shows a skilled trader can beat chance.  I studied economics, stock market etc and we did multiple tests doing all the analyzing, buying stocks, trading, selling and then also did it by throwing darts at a dartboard of stocks randomly and 60 percent of the time, the dartboard did better.  They also have done this test in multiple schools and it is common practice.to prove the chance involved in stocks.  Same thing applies to bitcoins, and more chance with bitcoin is involved since its small short lifespan.

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August 30, 2011, 05:17:45 AM
 #91

There definitely is no hard data that shows a skilled trader can beat chance.  I studied economics, stock market etc and we did multiple tests doing all the analyzing, buying stocks, trading, selling and then also did it by throwing darts at a dartboard of stocks randomly and 60 percent of the time, the dartboard did better.  They also have done this test in multiple schools and it is common practice.to prove the chance involved in stocks.  Same thing applies to bitcoins, and more chance with bitcoin is involved since its small short lifespan.

Somewhat unrelated, but consider the "Probiwon" website then.  It's literally Bitcoin darts.  I'll confirm that it's still working as of yesterday.
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August 30, 2011, 05:37:15 AM
 #92

Trading seems to be very similar to playing poker. There is a significant variance involved in the form of luck but a skilled player will win in the long run for sure. I happen to be a long time poker pro, not a big level pro but I've made a living from that. As a trader I'm very amateur but I have already seen there are many similarities and a lot of the same skills are needed, most importantly money management.

I was just about to write the same thing--comparing trading to poker. Maybe we've sat at the same table(s) together: Vegas? Tunica? Biloxi? Poker Stars?

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August 30, 2011, 07:51:57 AM
 #93

Chance is a BS word. 
"Derrr it was chance I tell ya!"
"Really?  Chance caused it?"

Quote from: dictionary.reference.com
chance
noun
1. the absence of any cause of events that can be predicted, understood, or controlled: often personified or treated as a positive agency: Chance governs all.

I don't see your point.

There definitely is no hard data that shows a skilled trader can beat chance.  I studied economics, stock market etc and we did multiple tests doing all the analyzing, buying stocks, trading, selling and then also did it by throwing darts at a dartboard of stocks randomly and 60 percent of the time, the dartboard did better.  They also have done this test in multiple schools and it is common practice.to prove the chance involved in stocks.  Same thing applies to bitcoins, and more chance with bitcoin is involved since its small short lifespan.

Exactly.
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August 30, 2011, 09:40:40 AM
 #94

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.

Let us remember protagonists who also make side bets such as "I bet some folks would pay for ________" where the ________ can be something along the lines of "the special magic seed used in the (ahem) predictive numbers generator routine by the robot that beat the market by the largest amount".

(Or even something along the lines of "a subscription to my analysis ezine / mailing-list".)

We could sell the robots that provably historically beat the market.

This is kind of similar in its roots to sending half your subscribers one prediction and the other half the opposite prediction and only keeping the subscribers who get the correct side of the coin/ezine/choice, but  conserving subscribers by selling collections of back-issues of only those branches of the decision-tree that worked out.

(Maybe don't sell it as something meant to work in the future but as something to study to try to learn how exactly it managed such a run in the past. "Learn to progam trading robots! Fully commented code of bot that beat the market X% for Y years in a row! Only $1499.99!")

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August 30, 2011, 10:08:16 AM
 #95

I was just about to write the same thing--comparing trading to poker. Maybe we've sat at the same table(s) together: Vegas? Tunica? Biloxi? Poker Stars?
I've mostly played online cash and mostly at ongame/bwin network or the ipoker network, although I've won a couple of tournaments at stars. I've seen my share of casinos as well. I was in Vegas once for 3 weeks and played in almost every casino on the strip.

And back to topic, question to mizike29: what was the timeframe of your test of analysis vs dartboard? As I said, there is a very significant luck factor involved in both trading and poker in the short run. The luck factor will matter more than skill which means that it's possible, not too unlikely even, that a "random" approach will work better.

But when the timeframe gets longer, months, years, eventually the luck factor will dwindle down to 0, or close enough to 0 to not matter anymore. A professional trader can calculate exactly what his hourly wage is, what his monthly wage is etc. but he needs a long timeframe to do it, just like a poker player, because one month you might lose a lot and the next you might win a lot.

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August 30, 2011, 10:15:47 AM
 #96

I would like to add that I'm very certain that just like in the poker world, there are traders that think they are making money but actually aren't, in the long run. There are serious poker players around who manage to break even in the long term or even lose. It's not only amateurs that lose, small time pro's can think they are better than they actually are.

I certainly don't have any data on beating the Bitcoin-market, I'm just trying out occasional trading with small volumes and even my own results are so short-term yet that it's pointless to even speculate if I'm doing well or not. But there are serious players out there and most of them aren't there for long if they don't think they can beat it.

I think it's ridiculous and ignorant as hell to think there aren't traders who beat markets in the long run, in fact it's fairly certain that there are successful traders in pretty much every market possible. I only understand a little something about trading but this is already very clear. Thinking otherwise is just as stupid as thinking that poker is a game of luck and you can't beat it.

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August 30, 2011, 10:23:35 AM
 #97

I am not sure that luck/chance is really fundamental in games, especially zero sum games (though economies are hopefully not zero sum within human history timespans maybe not even in geological timespans going forward) where humans are pitted against one-another.

You can try to retrofit statistics, claiming after Bill Gates resorts to paying terrorists to nuke Warren Buffet or vice versa that of course a certain percentage of humans might resort to nukes upon occasion, but does chance really govern which human does, and when, and against who, and for what motive?

Sure if you throw umpteen coin-tossers into a game of heads or tails runs or umpteen monkeys into a type-Macbeth-or-Hamlet contest chance might play quite a role. But replace the monkeys with professional authors or toss shot-puts or "tennis balls and only using a raquet and only within a court like so with a net like so and scoring like so" and is it really chance if those who dedicate their lives to it outperform those who prefer to toss coins?

On the other hand, I think there are authors and tennis players who have beaten chance. If no traders have surely one has to wonder why?

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August 30, 2011, 10:33:30 AM
 #98

I think it's ridiculous and ignorant as hell to think there aren't traders who beat markets in the long run, in fact it's fairly certain that there are successful traders in pretty much every market possible.

Belief is not relevant, actual data is. Yes there are successful traders. In fact, just as many as chance predicts there will be. It doesn't mean that they're better than anyone else, it just means that out of a population of X performing essentially at random in a non-deterministic market some will "win", some will "lose".

The wake up call is when you realize that the above means that it's irrelevant whether a certain fund manager/TA-specialist/Buffet-clone has beaten the market for 10 years straight - historical performance is no predictor for the future.

This has been tested and tried over and over again. If you want to claim differently, we eagerly await your data Smiley And no, "I believe" is not data.
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August 30, 2011, 11:13:00 AM
 #99

I would like to add that I'm very certain that just like in the poker world, there are traders that think they are making money but actually aren't, in the long run. There are serious poker players around who manage to break even in the long term or even lose. It's not only amateurs that lose, small time pro's can think they are better than they actually are.

I certainly don't have any data on beating the Bitcoin-market, I'm just trying out occasional trading with small volumes and even my own results are so short-term yet that it's pointless to even speculate if I'm doing well or not. But there are serious players out there and most of them aren't there for long if they don't think they can beat it.

I think it's ridiculous and ignorant as hell to think there aren't traders who beat markets in the long run, in fact it's fairly certain that there are successful traders in pretty much every market possible. I only understand a little something about trading but this is already very clear. Thinking otherwise is just as stupid as thinking that poker is a game of luck and you can't beat it.

You only way to make real money here is if you are the person handling the monies or clairvoyant.
Meaning if you have enough volume you can completely overtake any exchange.
The last indication of proof I noticed was 21K in BTC the other day.
I wish I was better at clairvoyance.  Tongue
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August 31, 2011, 07:25:09 PM
 #100

We did the dart test over a year in college economics class.  It has been done before in 1988 till 2001 I think it was.  Here is a link, it was monkeys throwing darts to pick the stocks vs the pros

http://www.automaticfinances.com/monkey-stock-picking/

THe numbers were effected by pros choosing riskier stocks, and some inflated winning in the very begining from the announcements. But in the end it came down to this.



Pros picked riskier stocks: Case Western Reserve University professor Bing Liang says that, adjusted for risk, the pros' would have lost 3.8% on the market over the six-month period.
The Dartboard stocks continued to do well:

 After the contest ended, the dart stocks continued to perform, while the pros' picks fell from their initial highs after publication.

So it basically showed, and there were more tests done very similar to this, that there is a small very small minority of investors that do really well based on facts, knowledge etc.  When in reality, it has most to do with luck, or insider trading, like knowing the bitcoins were going to jump to 30 bux a coin before they did, now that would have been nice lol

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