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The Day I Lost a Shit-ton of Money, Part I

ptotrading.blogspot.com

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Re: The Day I Lost a Shit-ton of Money, Part I

#161

Post by nandemo »

encoderer wrote: post #159
nandemo wrote: post #78

Earlier quoted context omitted.

> Being net positive 80% of all days traded with all your winners and losers falling in a relatively tight distribution -- luck can't create highly specific, repeated outcomes like that. Yes, it can. E.g. you could sell deep out-of-the-money puts and collect a $1 premium day after day, say 99% of all days. Until one day a {terrorist attack in the US, humongous earthquake in Japan} happens and you lose more money than…

Which is why it's good to have net-short deltas (when beta weighted against the SPY), to protect against tail risk. It's also why it's important to trade small, and have a large number of uncorrelated positions. You can go on believing that nobody makes money doing this sort of thing over the long term. That's fine. But it's definitely not true. Derivatives have no more risk than the underlying. What makes them more…

My comment is an example of why the reasoning below incorrect. My comment does not say "it is impossible to make money by trading stocks/derivatives".

> Being net positive 80% of all days traded with all your winners and losers falling in a relatively tight distribution -- luck can't create highly specific, repeated outcomes like that.

Re: The Day I Lost a Shit-ton of Money, Part I

#162

Post by javert »

joshu wrote: post #149
javert wrote: post #74

Earlier quoted context omitted.

An economics professor is walking down the street with a student. The student sees a $100 bill on the ground and tells the professor. The professor says, "Nonsense! If there were a bill on the ground, someone would have picked it up already!" I actually think that in this case you are probably right, though. But I wouldn't bet my life on it.

Of course not every idea ever has been tried. But there's a lot of incentive. Statistically it would be ok to bet your life on it, though. Did you hear the one about the economist who drowned crossing a river that was three feet deep on average?

Haven't heard that one until now that you mention it, nice.

Re: The Day I Lost a Shit-ton of Money, Part I

#163

Post by blahblah7777 »

Fuzzwah wrote: post #140
ljf wrote: post #110

Earlier quoted context omitted.

To add to that, a friend 'got into being a trader' as a friend of his simply needed a large number of bodies to manage trades. Of a year the majority would fail, but would would do great - he would then tout all the 'good' traders out as being new super star traders, and use them to get new business. As long as he had a large enough pool he'd be sure to have a few that became multi-year profitable, and now command la…

This reminds me of Derren Brown's awesome "The System" special: http://www.youtube.com/watch?v=9R5OWh7luL4 More info for anyone who hasn't had the pleasure of knowing who Derren Brown is: http://en.wikipedia.org/wiki/Derren_Brown Derren Brown is a British illusionist, mentalist, trickster, hypnotist, painter, writer, and sceptic. He is known for his appearances in television specials, stage productions, and British t…

TL;DW for The System (courtesy of Wikipedia):

The System, a Channel 4 special in which Brown shared his "100 percent guaranteed" method for winning on the horses, was first shown on 1 February 2008.

The show was based around the idea that a system could be developed to "guarantee a winner" of horse races. Cameras followed a member of the public, Khadisha, as Brown anonymously sent her correct predictions of five races in a row, before encouraging her to place as much money as she could on the sixth race. To demonstrate the system to the viewer, Brown tossed a coin showing ten heads in a row to prove it was not impossible, just highly improbable.

After Brown had placed a bet of £4,000 of Khadisha's money on a horse in the final race, he explained that "The System" did not really exist. He had started by contacting 7,776 people and split them into six groups, giving each group a different horse. As each race had taken place 5⁄6 of the people had lost and were dropped from the system. Brown had a different person backing each horse in each race, and one individual, Khadisha, won five times in a row. This was similar to the coin flipping earlier: rather than having a predictive technique, Brown had tossed a coin repeatedly until ten heads had come up in a row, taking over nine hours to produce the required film. Brown expressed the opinion that the principle behind "The System" (essentially confirmation bias or survivorship bias) is what is behind belief in spiritualism or homoeopathic and alternative medicine.

After the selected horse in the final race lost, and Khadisha was convinced that she had lost all her borrowed money, Brown told Khadisha to look again at the betting slip in her hand. The ticket showed the winning horse's name, meaning Khadisha kept her stake and received winnings of £13,000. Brown claimed that he had decided to bet on a different horse when he got to the booth.

At the end of the show, a title card explained that "at each stage of the process, participants who did not make it to the next round were offered a complete refund of any bets they had placed."

Re: The Day I Lost a Shit-ton of Money, Part I

#164

Post by zimpenfish »

blahblah7777 wrote: post #163
Fuzzwah wrote: post #140

Earlier quoted context omitted.

This reminds me of Derren Brown's awesome "The System" special: http://www.youtube.com/watch?v=9R5OWh7luL4 More info for anyone who hasn't had the pleasure of knowing who Derren Brown is: http://en.wikipedia.org/wiki/Derren_Brown Derren Brown is a British illusionist, mentalist, trickster, hypnotist, painter, writer, and sceptic. He is known for his appearances in television specials, stage productions, and British t…

TL;DW for The System (courtesy of Wikipedia): The System, a Channel 4 special in which Brown shared his "100 percent guaranteed" method for winning on the horses, was first shown on 1 February 2008. The show was based around the idea that a system could be developed to "guarantee a winner" of horse races. Cameras followed a member of the public, Khadisha, as Brown anonymously sent her correct predictions of five race…

Didn't someone do something very similar in the early 1900s with newspaper adverts? I have a definite vague memory of a binary "keep the winners" scam.

Re: The Day I Lost a Shit-ton of Money, Part I

#165

Post by joshu »

quink wrote: post #151
joshu wrote: post #65

Earlier quoted context omitted.

You're kidding, right?

But Josh, don't you understand that 120 days in a past market is just the same as 120 days in the future market? As we all know the stock market is innately tied to certain magic specific numbers of days that are ever unchanging. Like 14, 30 and 70 will always be relevant when you're RSIing. Incidentally, your biorhythm cycle may be at a low point atm, so take care. Especially as you were born under the astrological…

Good point.

(Ps: joshua not josh)

Re: The Day I Lost a Shit-ton of Money, Part I

#169

Post by induscreep »

gws wrote: post #86

Guys, you are missing the mark on technical analysis. It's not about forecasting where the prices are going to be, it's about forcing yourself to follow a set of rules instead of following your emotions. There was an article on HN sometime ago about the practices of some old tribe to choose where to sow the crops for the next year. The practices were totally random, like watching the clouds, where a bird would fly, e…

> There was an article on HN sometime ago about the practices of some old tribe to choose where to sow the crops for the next year.

Really interested in this...do you have a link to/name of/keywords in said article?

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