Rats trained to play the forex market

Post by PaulJoslin » Fri, Jul 23, 2010, 1:08 PM UTC

olefoo wrote: post #9

PaulJoslin wrote: post #6

If you take 80 people and tell them to randomly play the stock market, buying or selling - you will always have some that succeed and some that fail over the short term. The question is, if the same people who 'succeeded' are put back to the start again and play randomly with a new batch of 80 people - would they still rise to the top, or perhaps this time have worse luck. Comparing this to the rats, the long term te…

What the rats are doing (if this is not a well done prank) is exactly equivalent to what 'technical' traders and chartists do. As to why these techniques work; they are reacting to the intentions of other traders signaled in data. This may be a case where knowledge of the "underlying reality" that the market is reacting too (supposedly) is a disadvantage because it prevents noticing and reacting to the actual data. T…

Post by olefoo » Fri, Jul 23, 2010, 2:13 PM UTC

PaulJoslin wrote: post #11

olefoo wrote: post #9

Earlier quoted context omitted.

What the rats are doing (if this is not a well done prank) is exactly equivalent to what 'technical' traders and chartists do. As to why these techniques work; they are reacting to the intentions of other traders signaled in data. This may be a case where knowledge of the "underlying reality" that the market is reacting too (supposedly) is a disadvantage because it prevents noticing and reacting to the actual data. T…

You mean, like they're noticing a 'bearish gartley' pattern (in audio) and acting appropriately? My point was, that although these can be 'indicators', you still require a human mind to determine whether the trade should be made. If it was as simple as matching patterns and trading, anyone would be able to do it.

Post by nerfhammer » Fri, Jul 23, 2010, 2:54 PM UTC

cjg wrote: post #5

Survivorship bias explains his results.

Post by Retric » Fri, Jul 23, 2010, 2:57 PM UTC

yummyfajitas wrote: post #10

patio11 wrote: post #4

Much like the monkey throwing darts at the stock market chart who clocks professional money managers on average, this result proves nothing about rats or markets. It provides further experimental proof for the worst kept secret in history: professional money manager systematically destroy value.

While it is certainly true that professional money managers don't beat the market on average, this does not imply that they destroy value. Professional money managers and speculators in general, at least in principle, more efficiently allocate capital as a result of their speculative activities. This causes overall returns to increase. In a world without money managers/other speculators, market returns would be lower…

Post by asdf333 » Fri, Jul 23, 2010, 3:14 PM UTC

motters wrote: post #14

These rats clearly deserve $1000,000 bonuses. They are the indispensable financial innovators which drive our economy. These rats are too big to fail.