many prop scalpers do this but don't realize that they do. i see guys testing long and short repeatedly on a stock or sector all day to what seems like random entry. it's basically cutting losers and riding winners. assuming 50/50 chance of correct move on stock entry during specified time period, a cut losses ride winner strategy works. traders may fail in non-random entry because their probability of calling correct move could be <50%.. which is inferior to random entry (coin flip 50/50)
Not that I'm in any way an expert on the subject, but what do market neutral strategies have to do with random entry? All market neutral strategies that I know of rely on prediction.
Thanks Lights. This seems to support the view that random entry can be used for small profits (and hence may be a reasonable strategy for scalpers). Anyone else?
Just 2 cents: Probably trading 5 pairs (=10) markets of strong negative correlations with always long (or always short) entries would be actually a market neutral system.
trader who calls >50% correct move on entry obviously superior and outperforms the herd however, it seems that the coin at 50% is a better trader than most speculators. this is what makes a market.
Just to be clear: VT would flip the coin everytime he took a new position. At any given time he would (most likely) have both long and short positions.