The random vs non random war as broken out again. It breaks out every year. And every year I post this. http://www.youtube.com/watch?v=dsrOXJwGwtk&feature=related
Better link <iframe title="YouTube video player" width="480" height="390" src="http://www.youtube.com/embed/o_UxB6EEqWo" frameborder="0" allowfullscreen></iframe>
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Interesting movie. Theres a reason why directional traders make consistent money. Its possible and you can't break down human emotion (what drives the market) into a formula/strategy that is always correct. Theres a reason why cutting your losers short works, the unexpected that no one can predict can and will happen.
That's absolutely true. Human emotions are always blocking the path of trading to certain degree. some times they do good many times they do bad. It limits us .
I don't understand why they keep talking about the formula "taking the risk" out of the markets... as if it's guaranteed profits. That's really not the case. That's not to say its not significant... but it just more efficiently allowed us to trade *risk* itself. It by no means didn't get rid of risk. If you don't want risk, you'll still end up getting compensated the risk-free rate. *That* has not changed.
Yea the black-scholes formula didn't eliminate risk, it merely enabled traders to better price risk, and it doesn't always work. LTCM went down because they didn't factor in implied volatility - a variable that can change anytime. There isn't anyway to trade without taking risks, even traders who don't trade direction have to deal with risk.