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Related to this but little theoretical question - If you add an intelligent predictor of market which wins over other consistently by X% - then the market will
by attentionmech 2y ago
Related to this but little theoretical question - If you add an intelligent predictor of market which wins over other consistently by X% - then the market will start using that information and wouldn't that make our intelligent predictor lose it's edge?
More simply what i mean to ask is -> the moment market knows about your advantage, shouldn't you lose it because everyone else will use that information to balance the market?
- EliBullockPapa 2y agoThis phenomenon is called Alpha Decay. As more market participants exploit the predictor's advantage, the edge diminishes until it disappears.
- attentionmech 2y agothanks!
- gmueckl 2y agoThere is some very limited value in copying a successful strategy. Once enough market participants follow along, the strategy starts to fail. Markets are erratic because of that dynamic.