Mathematical expectation

Discussion in 'Risk Management' started by Visaria, Jul 30, 2014.

  1. So let's not backtest anything and trade on hunches, tips, feeling, emotions and rely on our infallible inborn sixth sense instead.
     
    #41     Aug 1, 2014
  2. timbo

    timbo

    Hindsight is always 20/20.

     
    #42     Aug 1, 2014
  3. Maverick74

    Maverick74

    Never mind Ron. You twisted my words into something I did not say nor imply. Enjoy your weekend. Unsubscribe...
     
    #43     Aug 1, 2014
  4. panzerman

    panzerman

    So then we should all forget about technical analysis because it is BS, and any attempt to validate TA through backtesting is BS because it is all based on hindsight? Maybe we should listen to John Bogle and just buy and hold equities and forget any kind of market timing or trading.

    Well that happens to be a good idea. I would actually bet that most people on ET do just that with the majority of their investment portfolio.
     
    #44     Aug 1, 2014
  5. timbo

    timbo

    Pulling data forward and making inferences about it is a difficult thing to do. So much so, that it is pointless to do it when low hanging fruit exists.

     
    #45     Aug 1, 2014
  6. ?? :confused:

    Oh so you have a better way of trading? Care to elaborate, we are all ears...

    [​IMG]
     
    #46     Aug 1, 2014
  7. kut2k2

    kut2k2

    True but what else is there to go on? We've always counted on the past (aka experience) to help us deal with the future. Why should trading be an exception to how we deal with the future in the rest of our lives? Don't let a legalistic disclaimer dissuade you from benefiting from experience.

    "Why would we look to the past in order to prepare for the future? Because there is nowhere else to look." -- James Burke
     
    #47     Aug 1, 2014
  8. ronblack

    ronblack

    You too! Just having a conversation Maverick74. No intentions to hurt feelings. If you come back would like to hear from you how you define an edge.
     
    #48     Aug 2, 2014
  9. ronblack

    ronblack

    The statement that backtesting on past data is all we have to deal with the future is based on the informal fallacy of the excluded alternative. It is true that for most people this is the only alternative but there are other, more sophisticated choices.
     
    #49     Aug 2, 2014
  10. Such as?

    I mean seriously, how do you know that your system will make money in the long run if you do not test it first, with enough historical and/or live data?
     
    #50     Aug 2, 2014