Here we go again, another major price drop for bitcoins

[bonker]

Whats the easiest way to buy bitcoins?

All this doom jibber jabbber is making me want to buy.

[d'aniel]

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 And no, "I believe" is not data.

It seems weird to me that the data would show that human beings do not have the capacity to foresee future unmet demand.  If we're no better at this than chance, then this is the logical conclusion, correct?

I think the data actually shows that humans are no better on average than the average.  But that's not really surprising, is it?

[defxor]

If we're no better at this than chance, then this is the logical conclusion, correct?

The conclusion is simply that the market is not moving in a predictable way.

I think the data actually shows

No. If so you would still have traders outperforming chance.

[d'aniel]

If we're no better at this than chance, then this is the logical conclusion, correct?

The conclusion is simply that the market is not moving in a predictable way.

Usually, sure.  But not if you can find informational edges.  Then it's predictable.  Outsiders trading well-regulated, deeply traded stocks probably aren't the traders we're looking for here.  The ones we're looking for probably just aren't part of your data set, perhaps for good reason.

[defxor]

Usually, sure.  But not if you can find informational edges.  Then it's predictable.  Outsiders trading well-regulated, deeply traded stocks probably aren't the traders we're looking for here.  The ones we're looking for probably just aren't part of your data set, perhaps for good reason.

Insider trading or outright theft is not considered trading in this aspect, no We're talking your regular naïve fund manager or TA scammer.

[d'aniel]

Usually, sure.  But not if you can find informational edges.  Then it's predictable.  Outsiders trading well-regulated, deeply traded stocks probably aren't the traders we're looking for here.  The ones we're looking for probably just aren't part of your data set, perhaps for good reason.

Insider trading or outright theft is not considered trading in this aspect, no We're talking your regular naïve fund manager or TA scammer.

Oh, if we're only talking about traders that don't know anything that everybody doesn't already know then sure, I agree.  But shouldn't the fact that they don't outperform chance be obvious?

[defxor]

Oh, if we're only talking about traders that don't know anything that everybody doesn't already know then sure, I agree.  But shouldn't the fact that they don't outperform chance be obvious?

I fail to understand what it is you want to discuss.

[d'aniel]

Oh, if we're only talking about traders that don't know anything that everybody doesn't already know then sure, I agree.  But shouldn't the fact that they don't outperform chance be obvious?

I fail to understand what it is you want to discuss.

I didn't realize at first that what we were discussing wasn't interesting. 

[defxor]

I didn't realize at first that what we were discussing wasn't interesting. 

Oh it could probably be interesting, I just don't understand what point you're trying to make. If you're claiming that by using FA or TA (that is, no insider trading nor theft) it's possible for a trader to outperform chance then feel free to support that viewpoint with data.

If you don't claim that, if your point is that the only way to beat the market is to cheat, then I fully agree with you.

[kjj]

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

No discussion of stock picking is complete without The Tao of Alpha.

[d'aniel]

I didn't realize at first that what we were discussing wasn't interesting. 

Oh it could probably be interesting, I just don't understand what point you're trying to make. If you're claiming that by using FA or TA (that is, no insider trading nor theft) it's possible for a trader to outperform chance then feel free to support that viewpoint with data.

If you don't claim that, if your point is that the only way to beat the market is to cheat, then I fully agree with you.

No, there are information propagation and price reaction delays in any market.  I just gave an extreme example that I fear is much more common than we'd like to believe.

I guess my point then is that your data set is probably biased heavily in favour of traders that don't have informational edges.

[skubeedooo]

I hope everyone can agree that if there is a real statisitically significant pattern in the data and if someone can recognize it when others do not, then they can beat the market in a statistically significant way, not just in the sense of "well there're lots of participants so some must win."

So, are there real patterns in financial markets?  To me the answer is clearly yes for these reasons:

• Historically there have been many patterns. They existed due to real-world factors like financiers liking to sell off some of their assets before going on holiday, like certain international events making people think more optimistically about life in general, like corporation taxes being levied at particular times of the year, like breweries being anti-correlated with GDP and so on and so on.  Shortly after they are identified publicly they disappear, because the market starts to predict them ahead of time, hence smoothing them out.  So how come you can look back and see all those patterns historically and yet you look now and there doesn't seem to be any patterns?  Well it could be because there are in fact no more patterns because they've all been discovered, but much more likely it's because there are patterns that exist now but they have either not yet been discovered or have not yet been made public.  In ten years time, today's patterns will have been revealed and made public...I wonder if in ten years time people will still be saying "but now is different, now I can quite surely say that there are no more patterns because they have all been discovered".
• With the (possible) exception of modern algo trading, trades are done by humans.  Humans have emotions, they trade partly on sentiment, they make flawed analyses. They buy because they want to impress the hot sales girl.  They sell because the risk-manager is breathing down their neck.  They double up when they get drunk.  Humans cannot even generate random numbers if they try...how can one plausibly claim that a price series generated by humans is perfectly random when humans don't seem capable of generating a random series of numbers at all?
• Just because a trader cannot stay ahead of the pack indefinitely, that does not mean that he never spotted a real (statistically significant) pattern.  It would be like saying there's no evidence Pele was a good footballer because he currently cannot get into the Brazilian team. Maybe one day I'll spot something that nobody noticed about company X.  I'll trade it, make some money and that would be it.  I wouldn't become famous, I wouldn't get a nobel prize, maybe I would never spot any pattern again, maybe I would never trade again. But that doesn't mean that my trade was random, it just means that it would never be picked up and given as evidence for the existence of patterns.  Remember, there's a world of difference between on the one hand patterns actually existing and on the other being able to statistically prove that patterns exist given public data.

So I hope I've given pretty strong arguments that patterns exist, and that some people can use them to make money, even if you can't necessarily prove it using statistical means and even if it gives you no indication of what those patterns actually are.

[the joint]

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

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.

If you are saying it was due to chance, you are saying it was caused by chanced, or caused by the acausal.

I don't need the dictionary to think.  Just because you cant predict it, understand it, or control it does not mean there is no cause.  It means you don't know what it is and you don't understand it, so you input the word chance instead.  "I don't know" governs all.  Chance (subject) governs all (object).  The thing acts upon a thing.  You really don't get this?

[Phinnaeus Gage]

To me, it looks like somebody bought over 5,000 BTC, then three days later sold them all for a different amount, just to make a profit.

[wolftaur]

To me, it looks like somebody bought over 5,000 BTC, then three days later sold them all for a different amount, just to make a profit.

How DARE he?!

[bitrebel]

Buy Low, Sell High   

[mizike29]

There are patterns to everything, thats what the world is, live, die, stocks, bitcoins, they all have patterns.  But I think the same amount of people could study those patterns to make decisions to buy stocks and make money, buy low, sell high, as a monkey throwing darts at stocks.  The patterns do not mean you can win or take advantage of them to make money any better then taking lucky shots at a stock or bitcoin market.

[d'aniel]

No discussion of stock picking is complete without The Tao of Alpha.

I guess I haven't engaged in enough stock picking discussions, cause I've never read that.  Really fun and informative read, highly recommended.  Thanks.

"Between them all, they will share the zero dollars of alpha available in the world." 

[defxor]

I guess my point then is that your data set is probably biased heavily in favour of traders that don't have informational edges.

I still don't understand what the point you're trying to make is. Are you talking about trading in the marketplace or cheating? You seem to seriously confuse the two.

So I hope I've given pretty strong arguments that patterns exist, and that some people can use them to make money, even if you can't necessarily prove it using statistical means

"I guess" and "I believe" is considered to be quite poor data.

Fact: No trader ever has outperformed chance.

[d'aniel]

I guess my point then is that your data set is probably biased heavily in favour of traders that don't have informational edges.

I still don't understand what the point you're trying to make is. Are you talking about trading in the marketplace or cheating? You seem to seriously confuse the two.

So I hope I've given pretty strong arguments that patterns exist, and that some people can use them to make money, even if you can't necessarily prove it using statistical means

"I guess" and "I believe" is considered to be quite poor data.

Fact: No trader ever has outperformed chance.

The hell?  Of course they do!  All the time!

Some glaring examples:

• arbitrageurs
• short sellers who uncover dirt on companies
• traders who uncover market manipulation
• those who trade on insider information

You can reliably find 'alpha' by having an informational edge.

I strongly suggest you read the Tao of Alpha link posted above.