Dumb traders make as much money as smart ones

[Ferru123]

Not sure what you're getting at - Can you elaborate please?

Jeff

at this point i throw into the equation, the law of averages...

[mister man]

randomness and the law of averages go hand in hand.

coin toss, in theory its 50/50 i know i know dont start that one about its not...lets say roughly its 50/50 on each toss.

the lottery numbers, the roulette table...

the law of averages, are the counter weight to randomness...

penalties and dodgy decisions that even out over the season (managers say or dont) etc,etc,

33% of favs win, somedays it might be 60%, but you know soon enough it comes back in line...

tbh i think the whole title of the threads wrong anyway, as nobody has defined dumb or smart,nor can they, but only be their own definition...

happy gambling

[Ferru123]

Mister Man

I agree about randomness and the law of averages, ie if you toss a coin 10,000 times, you'll get about 5,000 heads and 5,000 tails.

I don't see what your point is though. Are you saying that the markets are random, and therefore trading is like betting at odds of 2.0 on the toss of a coin?

Jeff

[Euler]

The law of averages isn't actually a law at all, in academic circles it's know as the gamblers fallacy.

The Gambler's fallacy, also known as the Monte Carlo fallacy (because its most famous example happened in a Monte Carlo Casino in 1913),[1][2] and also referred to as the fallacy of the maturity of chances, is the belief that if deviations from expected behaviour are observed in repeated independent trials of some random process, future deviations in the opposite direction are then more likely.

[Zenyatta]

I guess Peter offers something like tossing the coin twice and asks, which sequence is more likely:

HT [heads, tails] or
TT [tails, tails]

Without thinking, some might say the first sequence is more likely, but of course both are equally likely.

[Euler]

10/10 Zenyatta, when you ask people to pick a seqeunce of random events they inevitable get it wrong. You can subtly influence their choice as well depending on how you ask them. You see exactly the same thing in the market. People assign weight to a trade that they really shouldn't, they see a pattern that just doesn't exist.