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Okay, okay. To be strictly correct, I should have said something like "with that distribution and any reasonable assumption about correlation".
by thedevil 10y ago
Okay, okay. To be strictly correct, I should have said something like "with that distribution and any reasonable assumption about correlation".
- dietrichepp 10y agoAre you saying that it's unreasonable to suppose that some people can make money day trading in the long run? I was just illustrating a simple model you might use to test that theory.
- thedevil 10y agoI'm saying it's not reasonable to think that a private individual can make a long-term profit day-trading, skilled or not. It's quite reasonable to suppose lots of impossible things. How does your model account for magnitude?
- dietrichepp 10y agoThere are professional day traders who earn an income over the long run by day trading. This is a true fact. It seems like you are trying to contradict this fact… or do I misunderstand what you are saying? The model I gave was the simplest model I could think of that would let you test the theory that skill is a factor in day trading. It was an illustration of how someone with mathematical training might think about statistics like "80% of day traders lose money" without jumping to the false conclusion that all traders eventually lose money.
- thedevil 10y ago> There are professional day traders who earn an income over the long run by day trading. This is a true fact. Got anything to back up this "fact"? > The model I gave was the simplest model I could think of that would let you test the theory that skill is a factor in day trading. You can't assume the existence of skill proves the existence of long-term profits. Nor can you even assume that a good up/down ratio proves skill without considering the magnitude of the ups and downs or the impact of compounding.