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Troy Kelley wrote:
> Subject: Randomness
> Date: Thu, 26 Mar 1998 02:15:25 -0500
> From: Troy Kelley <tkelley@xxxxxxxxxxxx>
> Organization: arl
> To: realtraders@xxxxxxxxxxxxxx
> References: <199803260014.QAA06248@xxxxxxxxxxxxx>
>
> I just had a long argument with a friend of mine who says that
> predicting the market is impossible. It is randomness. I counter with
> the fact that new theories of chaos say randomness is predictable. And
> randomness is predictable, my friend concedes, but that doesn't mean I
> can make money from it. I say some people make money in this profession,
> but my friend just said they are all snake-oil salesman. And the real
> traders that make money can't do it for very long. They just discover
> some random variation in the market and exploit it for a short time,
> then write books about it and sell systems.
>
> I started thinking too, that he might be right and that is one reason
> this is so stressful. Because your mind is telling you that it is not
> predicable, but everyone in the business is telling you it is. Everyone,
> that is, with something to sell you. If they can convince you that it
> is not random, they can sell you something. I pay 300 bucks a month for
> real-time futures data. THAT IS OUTRAGEOUS. I could be driving a very
> nice car for that amount of money. Just because someone has some
> information that I think I can figure out and predict, they make a
> fortune from me. It must be true, or I wouldn't have to pay so much
> money for the data -right? So, it is like a casino, and the only people
> getting rich are the people who own Wall Street.
>
> I am even starting to think that people like Jim Rodgers and Warren
> Buffet were lucky too. They were just lucky with a different strategy,
> buy and hold. I would argue that even that strategy has so many
> variables in it, that it is difficult to predict on a consistent basis.
> Then the only people who are really right are the people who take the
> long term approach and the academics. I always wondered way so many
> people criticize the random walk theory. All of those people want your
> money. They are the practitioners not the academics. They don't care
> about theory, they want to make money, and they do a good job.
>
> OK realtraders, convince me otherwise.
> Troy
1. If you could tell every trader exactly what the market is going to do
tomorrow, 95% would still manage to lose money. So, yes the market can be
forecasted with some degree of accuracy, but it has little effect on most
trader's financial outcome.
2. As for you paying for live data, you only need to do this if you are
day trading. I bet Warren Buffet or Jim Rodgers don't make a practice of
daytrading. They make their big money on catching big moves by holding
positions for extended periods of time. As for academics and what they have
to do with real trading, I haven't a clue other than they just tend to add
to the confusion.
3. As for whether any one trader can make money over an extended period of
time, the answer is yes
if: A.. they have a thorough knowledge of themselves and good self
discipline B. Have a good knowledge of the market they are trading. C.
Have a talent for trading or investiing via the patience to achieve the
intended profit goal. D. The discipline to plan a trade and trade the plan.
E. Must have a talent for playing strategy games.
4. As for convincing you or your friend, I currently see no reason to do
this unless you are willing to pay me. <G>
Regards,
Norman
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