Youâve never seen gamblers in action, I think.
All trading is gambling. All of it.
Efficient markets cannot be predictable.
This is one of the most preposterous things I have ever read. The only problem with predictable markets is that finance guys wouldnât be able to skim vast fortunes out of the system.
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Preposterous? Itâs mathematically provable lol.
Take the MIT course on Risk and Return II and Portfolio theory I.
They go through the math that proves all efficient markets are random.
Think of it this way.
If you know youâre going to lose. Are you going to sell to me?
If I know Iâm going to lose am I going to sell to you?
Therefore when information is known on both sides there will be no transaction.
What about when somebody grows onions and wants to sell onions to the supermarket? Who benefits from randomness in that transaction?
Should the price of bread in the supermarket be randomized to make it âefficient?â
Is it more efficient to have everybody in the world wondering if any of their life savings will still be there when they go to retire? Maybe the market will go down by 80% tomorrow. Or up. Doesnât seem very efficient to me.
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Do you think that guy doesnât have an idea what the true price is? And doesnât pay attention to the commodities markets to know what the best price he can get is?
Random means it canât be predicted. It doesnât have anything to do with what its price is.
You can say it wonât go to -80% with reasonable certainty. But you also canât make that bet either.
You canât get anyone willingly to take your bet that the market wonât go down 80%.
Therefore the trade doesnât even exist and your assertion somehow that it hasnât gone minus 80 is proof it isnât random is equally asinine
Asinine? Use a dictionary, fool.
Yes itâs asinine to assert a market is not random because of a condition that never exists in that market.
I donât know what point you are trying to make or how your point might relate to what I said. I do not need randomness to make a transaction. Not all transactions involve frivolous parasitic trades that are meant to one-up the other party. Not all transactions are even zero-sum.
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If a person does not realize that in almost all markets they are gambling with random outcomes, then they do not realize that what successful traders are doing is managing risk.
By managing risk, a person can trade into randomness and come out ahead.
The same way a poker player can win at poker by managing their bets better than their opponents.
All transactions in every market are minus-sum games.
Worse than zero-sums.
Youâre paying someone for the privilege of entering the market.
Itâs like walking into a casino but you have to pay a cover charge.
You are arguing for the current system. True, the current âmarketsâ are filled with people using randomness to fleece all the amateurs. I have never considered that a feature, since I am one of the amateurs getting fleeced.
Then learn the game. Cuz it wonât change. Itâll just break you and find someone else
I have real job. I will never be as good as people that play the game all day every day. It doesnât matter how much studying I do - half the profits are made on insider trading and front-running trades.
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The first thing you have to learn so as to not get taken by winners is to manage risk.
Your downside risk has to be less than 2% of your bank (capital).
Your downside risk is greater than 1 ATR than the lowest low of the current trend.
Average True Rate
If your target (1.5 - 2x downside risk) Canât be supported by the trend then that trade is bad outright.
If your downside risk costs yoi more than 2% of your trade then thatâs a bad trade.
Which is why you need to look for indicators of large trends and trade on momentum rather than technicals.
Are you from planet Earth? I canât think of a single investment that has less than 2% downside risk.
A lot of them do. Thousands of times a day.
You put your stop at that 1xATR and place your bet so that the loss of that ATR is not more than 2% of your trading capital.
So for instance if I have $1000 and if I get stopped. What should my stop cost me?
$20.
So if that ATR is greater than that. Then the volatility is too high. And the likelihood of me getting stopped is too high.
And that is a bad trading environment.
GME is a good example right now where ATR is 1 to 0.5 of target.
So 1ATR:0.5 of highest highs.
If you bought at 234 on Wed youâd need to have put your stop at 226.99 to avoid getting stopped.
Then would have had to target 244.50 to be within a good ratio stop to target.
If you put 1,000 @234 then got stopped at 226.99 (lowest low that day was 227 just saying) then thatâs $30.
Or 3%
Thatâs a high risk. And not a good trade.
You can find plenty of trades that are within 2%. Thatâs what most professional traders are looking for.
Until the market gaps up or down and your stop loss order canât be filled.
Or, your trading company might gamble on Greek bonds and accidentally lose your moneyâŚ
Iâm not sure Iâve ever heard of something like that? Trade with a better firm?