Because prices are extremely hard to predict in the long term. Long term defined as >12 hours unless fundamentals are a shoe-in. Basic technicals work on all time frames but are less relevant as the period grows. The reverse is also true. Beg all you like. Thousands of TA traders would respectfully disagree.
Hi I don't know if this has already been discussed, but rather than compare randomly generated price action with the real thing have you considered examining the mirror image of a real OHLC chart and contemplating why it looks wrong?
Yes, but a thousand of TA traders also go broke each given day and a new thousand joins the game till they go broke as well. The ones who survive, I think, dont make it because their TA system works but because of their sound money and risk management. On the contrary, I dont see many bank traders blow up and I think one reason, besides stringent risk management, is that they dont expose themselves excessively to unpredictable movements in the underlying. Then you have the other crowd, buy side hedge fund and mutual fund traders. I think you get the typical survivorship bias here. The ones that drop out of the game are gone and forgotten or join another firm and start over and the public just hears about the stars who made it big. But I think this does not mean anything, after all when you start with 100 monkeys and 50 go short and 50 long and then the winning 50 again split into 25 long and 25 short and so on you will have in the end a monkey guru that the crowd listens to.
Not trying to pick on you. But your example does not make much sense as it heavily depends on your political opinion. I am not American nor a native speaker but I dont think your example helps in making a point in regards to our specific topic.
Pick on me all you like. It doesn't bother me in the slightest. The example was sound and chosen for a reason. The parallels are the same.
With risk / trade management held constant, survivorship of bank versus TA traders would fall into a reasonable proximity. That said, I've never thought much of the lottery ticket paradigm. If a Monte Carlo was run on the track record of an immensely profitable trader - like a Livermore or Jim Rogers - I'd bet the odds of such success far exceed the weighted probability. I'd put money on it. A winning trade is timing on the entry and exit. Odds of that happening, successively over the months and years - in large amounts - are incredibly small. At least if left to chance
D'ya know who would be really interested in a mathematical proof of this theorem? A math professor (professional theorem prover himself) who runs a hedge fund. Luckily such people really do exist. You could print up your proof on fancy high-brightness paper and send it to Jim Simons (profile of Jim: http://www.bloomberg.com/apps/news?pid=20601109&sid=aq33M3X795vQ&refer=exclusive ) founder of Renaissance Technologies, and explain to him what it means in terms of "outperforming the market over the long term". Since Jim proves theorems himself, I'm sure he'd be fascinated. Who knows, he might even offer you a job. I understand the salaries at Renaissance are stratospheric and the bonuses are unbelievable.
I am getting increasingly confused with your posts. Where do you try to get to with this last one? Comments, see below...
yes but due to confidentiality one would never be able to share all the accumulated wisdom here at ET after having joined Renaissance. What a waste...;-)