Trading bloggers who are not scientific in their approach often start with a conclusion rather than an hypothesis and then look for data to satisfy rather than falsify the conclusion they have already made. All scientific theories are best guesses as to the truth but at least they are a lot better than blind faith. Yes, no scientific can be proven true, just falsified. Failure to falsify means that the theory is not incorrect but never true. Then, through experimentation and testing, you attempt to falsify that hypothesis.įalsification of an hypothesis means that the theory was incorrect and should be discarded. an educated guess) as to how something works. The first thing a scientist is taught is the scientific method, which is defined as "the systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses." What that mouthful means is that through observation you make an hypothesis ( i.e. The CEO in question makes himself look even more of a buffoon when he refers to his career as a "job" and that he has just "returned home to cut the grass" rather than ordering someone to cut the south lawn of his mansion. If the aforementioned person really is a CEO then I can only assume his trophy wife is on the phone to a divorce lawyer or worse, a hitman. The claimant is either mad because their income will drop by more than 99% or aįantasist because they never thought through their fictitious claim. More so when the CEO claims they are going to throw in their career for sports trading. His wasting time on sports trading makes no sense. TheĬEO of such a global organisation would have an eye watering salary such that To me that is not a contradictory remark, it is a fact.Ĭlassic "I am the CEO of a multi-billion dollar global organisation" seen on one infamous blog can onlyīe met with "Then why on Earth are you wasting your time with sportsĭefines a CEO as "the position of the most senior corporate officer,Įxecutive, or administrator in charge of managing an organisation". There are lots of ineffciencies that can be traded on but at the same time the market is efficiently gathering information through the wisdom of the crowd. a horse that will act up in the parade ring, later in the day), beginner traders (especially the scalper variety) add noise that arbitrageurs can trade on, and there are many more reasons besides. The majority of us are not privy to private information, public information does not take future news into account ( e.g. So, to make things clear, markets are long-term efficient but there are various informational and technical reasons as to why prices do not immediately reflect their true price until a market closes before the event begins. Before all information has been reflected in the price then that price is open to speculation, both as to its validity and its trading potential. Only when all public and private information is reflected in a price is that price efficient. Obviously, there are inefficiencies in markets but markets are efficient at gathering public and private information and reflecting it in a price, only not instantaneously. Usually they have access to private data and the odds are against you being such a person. There are some good fundamental traders who can determine the optimal time to bet. I don't know what a price should be, I only know that when a race is about to start, prices will be fair in the long run but until the race starts there is the opportunity to take advantage of the indecision of the crowd until wisdom takes over. I much prefer technical trading, working with mean reversion rather than against and preying upon other traders who get caught up in an exuberant market. This is the main reason why I do not waste my time studying form and betting on fundamentals. What then? Maybe the coin is biased 2:1 in favour of heads but you don't know that it is. But what if you don't know if the coin is fair or not. You can bet on value or you can trade the mean reversion. When the line reaches the 1:1 ratio the market has happened upon the long run efficient prices. Will mean revert if there is no edge and you will lose through commission losses.Īnother way of looking at the charts above is that they are time lines towards the start of horse races.
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Like a positive edge and vice versa but in the long run you As the simulation shows a negative edge can initially look To have a chance of beating a market in the long run. A losing system can have good luck or a winning system can suffer bad luck because they haven't been traded with long enough. Most traders and bettors create systems with a limited life span and so they won't get the chance to take advantage of the long run.