Posted: Today at 7:00 am Post subject: (No subject)
I think I better take a step back here and explain how I see statistics and their use....
1st (LEVEL 1).............How is a "dry (decisionless)" casino game run? (I'll make a simple new game)
-you try to guess the outcome of a dice roll, the dice has 5 wrong picks and one good pick (5:1)
-the casino is paying you 4:1 on your money for guessing the correct
-because there are more possible outcomes than you are being paid for, the casino will always win, beating the game is an illusion, IT WILL NOT HAPPEN
-this game is a simplified version of roulette
2nd (LEVEL 2).............How is a "moist" (minor decisions) game run?
-This would be like blackjack, the player has some decisions to make which will increase their odds, but never to the point of positive expected value
-Playing blackjack within the confines of the dice game above, you may be able to lower the house odds from 5:1 to something like 4.5:1 through proper blackjack playing
-There are some decisions to be made by the player, although the astute player will realize that there is always one proper decision to be made, and one can only lose more money by making wrong decisions, you cannot win more money by making right decisions.
3rd (LEVEL 3).............A "wet" (major decisions to be made) game
-This game would be like playing poker, the house odds are not set, the outcomes are "random" like price action
-It is your responsibility as the player to take these seemingly "random" events and make order out of them, and then dynamically plotting this order against you opponent to win
-Both sides are free to make decisions in their best interest
-This type of game is most similar to trading, I hope you can see the similarities
As a trader I would be most interested in what you call Level 3 and not really anything else.
The problem with things like dice is that the probabilities are known whereas with trading they are not.
I think it is a mistake to try to fit trading into probability like games.