Do you play the lottery ? Is this any reflection on your trading ?

[DionysusToast]

"Market segmentation".
All of these things are products to be sold. It's the same reason there's the regular IPod, the IPod Nano, and the IPod Shuffle.

I agree - but it is the WHO they are including with these products that is of interest.

The same with the forex leverage available.

Lowest common denominator ?

 

[montmorencyt2w]

Is there no negative psychological impact from going through this anticipation/excitement/dissapointment cycle twice a week ?

We get plenty of Life Training experience in this as teenage boys.

 

[Masquerade]

Let's say the jackpot is £50 million and should you get the right numbers and let's assume you'll be the only winner. Should you play?

 

[DionysusToast]

Let's say the jackpot is £50 million and should you get the right numbers and let's assume you'll be the only winner. Should you play?

Good question.

To be honest, this wouldn't sway me. It's the 14 million to 1 odds that make your chances of winning virtually zero that puts me off bothering.

The way I see it - play or don't play, you still won't win - so why bother ? The prize is rather irrelevant in my opinion.

 

[Masquerade]

But you have a 14 million - 1 chance of winning and a potential reward of 50 million for the risk of 1. This is surely a great gamble? If you saw trades like these you should be biting their hands off, no? You're destined to win in the long run.

 

[Benton D Struckcheon]

I agree - but it is the WHO they are including with these products that is of interest.

The same with the forex leverage available.

Lowest common denominator ?

Well, as low as they can get and still cover transaction costs, I'm sure. Always have to look at it from the side of the guy putting it out, who is, after all, after a profit.

 

[DionysusToast]

Masq Seeing as you put it in those terms :

If I had a 14 million to one chance of turning $1000 into $14,000,000,000 - I wouldn't take that trade either.

It's just throwing away $1000. At the point you get to 14 million to 1 - the odds are moot. You are not going to win.

 

[Masquerade]

What if you had a 1000-1 chance of turning $1 into $4000. Would you take it?

 

[Shakone]

That's strange though DionysusToast. Because now you're not taking the trade when the expectancy is in your favour, and you're not taking the trade either for the huge risk reward (i.e. small amount can change your life drastically), so on what basis are you making this decision? It isn't logical.

 

[montmorencyt2w]

But you have a 14 million - 1 chance of winning and a potential reward of 50 million for the risk of 1. This is surely a great gamble? If you saw trades like these you should be biting their hands off, no? You're destined to win in the long run.

As an aside, this reductio ad absurdum helps to illustrate what an unreliable concept risk:reward (at least as normally expressed) actually is.

The so-called "risk" in risk:reward ratio is only half the story ... the quantity of money initially on the table compared to the size of the eventual target. It says little about the real-world probability of the target being achieved. If anything, it says the opposite of what is likely to be the real case, since the further away the target, the harder it is to reach it, and the longer your money is on the table, the more at risk it can be considered to be.



Similar arguments could be applied to the practice of moving stops to break-even.

 

[Masquerade]

So if I offer you a game with odds of 1000-1 paying out 4000:1 are you going to turn me down mont?

Besides....buy 14 million tickets and scoop up £50 million when you win. It's really a no-brainer.

 

[Shakone]

As presented, there is no sensible reason for turning down Masquerade's game. Obviously in practice, for a 50million jackpot, you haven't got a 14mil to 1 risk reward, since 2,3,4... people could win. Risk reward is unknown on this

 

[DionysusToast]

That's strange though DionysusToast. Because now you're not taking the trade when the expectancy is in your favour, and you're not taking the trade either for the huge risk reward (i.e. small amount can change your life drastically), so on what basis are you making this decision? It isn't logical.

It's logical to me.

14 million to 1 is not in my favour. It is zero chance or as close that the difference is moot.

What if you had a 1000-1 chance of turning $1 into $4000. Would you take it?

I may well have a shot at that.

So if I offer you a game with odds of 1000-1 paying out 4000:1 are you going to turn me down mont?

Besides....buy 14 million tickets and scoop up £50 million when you win. It's really a no-brainer.

Unless 100 other people have the same idea