In the stock market, probability theory is (mis)used to model the typical random behavior of the market, as Nassim Taleb as seen many times. http://en.wikipedia

In the stock market, probability theory is (mis)used to model the typical random behavior of the market, as Nassim Taleb as seen many times. http://en.wikipedia.org/wiki/Black%E2%80%93Scholes http://en.wikipedia.org/wiki/Black%E2%80%93Scholes http://www.bbc.co.uk/news/magazine-17866646 http://www.bbc.co.uk/news/magazine-17866646 frequentist probability seems like an okay tool for the stock market, but these who knows if the motion of stocks are correctly separated into "drift" and "noise" by Ito processes or whatever model they choose Rare events - "risk" - can and will occur if we leave a process running sufficiently long, and sooner than we predict. This is Taleb's "Black Swan". Game-theoretic strategies seem better here, playing stocks off each other accounting for the "black swan" as much as we can.