IS this Karen Supertrader story legit?

My comments regarding Karen is that she doesn't matter to anyone else. Again, unless you are Karen, working for her or are invested in her fund, she doesn't matter. She is not giving you her exact system and even if she did, she has more available than almost all of us because of her larger account size. It's like saying "Warren Buffet made a lot of money. Do you think it's legit?" Who cares? All of this is a publicity stunt. Who became a "super trader" by listening to this? Most likely no one.

My comments regarding probabilities: It's both frustrating and funny when people throw out probabilities as if it means anything. The probability of a stock moving up or down is always 50/50. Everything else is a statistic.
 
louistrader said:
My comments regarding Karen is that she doesn't matter to anyone else. Again, unless you are Karen, working for her or are invested in her fund, she doesn't matter. She is not giving you her exact system and even if she did, she has more available than almost all of us because of her larger account size. It's like saying "Warren Buffet made a lot of money. Do you think it's legit?" Who cares? All of this is a publicity stunt. Who became a "super trader" by listening to this? Most likely no one.

My comments regarding probabilities: It's both frustrating and funny when people throw out probabilities as if it means anything. The probability of a stock moving up or down is always 50/50. Everything else is a statistic.
Click to expand...

So many people get very confused with probabilities. Those with no formal education in the subject can get definitely confused. But even those with a formal education in the subject easily can get off track.

One area of confusion I see often is people thinking that processes, such as stock movement, follow probabilites, instead of probabilities describing processes. Probabilities are just mathematical descriptions based on past history and other considerations. The processes themselves know nothing about the probabilities. They don't know when you had started counting your sequence, for instance. They have no memory.

How about the so-called gambler's paradox. A gambler is watching a roulette wheel and notices that it has landed on black ten times in a row. He knows that the odds are 50/50 (ignoring "0" and "00" for the moment) between landing on a black or a red for each individual spin. He also know that the probability of getting ten blacks in a row is 1/1024 (2 to the tenth power is 1024); that is, virtually zero. So he thinks that FOR SURE the next spin has to be a red since the chances of NOT getting a red in 11 spins is virtually zero.

What the gambler has forgotten (or, more likely simply ignorant of) is that the roulette wheel has no memory. For each individual spin the chances are 50/50 between red and black regardless of the recent past.
So even though it is true that BEFORE THE 11 SPINS there is an exact probability of 1/2048 that in 11 spins of a roulette wheel you would get 11 blacks in a row, once the first ten have occurred and you notice all blacks, you cannot say anything about the next spin other than that there's a 50/50 chance for either black or red--just like all the other spins. Again, the roulette wheel has no memory of what has occurred prior.

The same is true with stock market probabilities. Even if they were exact like the roulette wheel (and stock market probabilites are surely not exact), you can use them only as guides into the future for a particular time range. But once the stock movement has started to occur, you need to at the very least recalculate the probabilities for whatever range of time is still of interest to you. If the stock hasn't moved as much as it was "supposed to" have during the initial part of the time range, you cannot assume it will "make it up" in the latter part. If you think this, you are falling victim to a version of the gambler's paradox.

One more thing: Along the lines of what I just said, I've seen traders completely misuse probabilities and standard deviations when attempting to make correct market decisions. I once read a pseudo-scientific article written by someone whom I believe was sincere. But ... oh so how misguided! His system went something like this. Throughout the trading day he constructs a bell-shaped (normal) curve of a stock based on its intraday movements. If a majority of the bell curve seems to be being built on either the left or the right side of the bell, he says there is a great chance that the rest of the bell "has to be" built on the opposite side. Thus, he would use this "knowledge" to day trade the latter half of the trading day.

The errors in his thinking are numerous. One of the errors, of course, is that the stock movement doesn't "know" its on someone's left- or right-side of a bell. Indeed, if he had instead constructed a bell in real time with a total time range of only the first half of the day (instead of the full day), he would have ended up with a completely different bell that is is "filled in" on both sides. Everything about his method is arbitrary including the time range. There are an infinite number of time ranges and an infinite number of possible histogram bin possibilities when constructing your histogram. Yet he swore by this "scientific" system. Lots of ignorance abounds.
 
CostaKapo said:
So many people get very confused with probabilities. Those with no formal education in the subject can get definitely confused. But even those with a formal education in the subject easily can get off track.

One area of confusion I see often is people thinking that processes, such as stock movement, follow probabilites, instead of probabilities describing processes. Probabilities are just mathematical descriptions based on past history and other considerations. The processes themselves know nothing about the probabilities. They don't know when you had started counting your sequence, for instance. They have no memory.

How about the so-called gambler's paradox. A gambler is watching a roulette wheel and notices that it has landed on black ten times in a row. He knows that the odds are 50/50 (ignoring "0" and "00" for the moment) between landing on a black or a red for each individual spin. He also know that the probability of getting ten blacks in a row is 1/1024 (2 to the tenth power is 1024); that is, virtually zero. So he thinks that FOR SURE the next spin has to be a red since the chances of NOT getting a red in 11 spins is virtually zero.

What the gambler has forgotten (or, more likely simply ignorant of) is that the roulette wheel has no memory. For each individual spin the chances are 50/50 between red and black regardless of the recent past.
So even though it is true that BEFORE THE 11 SPINS there is an exact probability of 1/2048 that in 11 spins of a roulette wheel you would get 11 blacks in a row, once the first ten have occurred and you notice all blacks, you cannot say anything about the next spin other than that there's a 50/50 chance for either black or red--just like all the other spins. Again, the roulette wheel has no memory of what has occurred prior.

The same is true with stock market probabilities. Even if they were exact like the roulette wheel (and stock market probabilites are surely not exact), you can use them only as guides into the future for a particular time range. But once the stock movement has started to occur, you need to at the very least recalculate the probabilities for whatever range of time is still of interest to you. If the stock hasn't moved as much as it was "supposed to" have during the initial part of the time range, you cannot assume it will "make it up" in the latter part. If you think this, you are falling victim to a version of the gambler's paradox.

One more thing: Along the lines of what I just said, I've seen traders completely misuse probabilities and standard deviations when attempting to make correct market decisions. I once read a pseudo-scientific article written by someone whom I believe was sincere. But ... oh so how misguided! His system went something like this. Throughout the trading day he constructs a bell-shaped (normal) curve of a stock based on its intraday movements. If a majority of the bell curve seems to be being built on either the left or the right side of the bell, he says there is a great chance that the rest of the bell "has to be" built on the opposite side. Thus, he would use this "knowledge" to day trade the latter half of the trading day.

The errors in his thinking are numerous. One of the errors, of course, is that the stock movement doesn't "know" its on someone's left- or right-side of a bell. Indeed, if he had instead constructed a bell in real time with a total time range of only the first half of the day (instead of the full day), he would have ended up with a completely different bell that is is "filled in" on both sides. Everything about his method is arbitrary including the time range. There are an infinite number of time ranges and an infinite number of possible histogram bin possibilities when constructing your histogram. Yet he swore by this "scientific" system. Lots of ignorance abounds.
Click to expand...

Excellent post. It's funny because people have advanced math and science degrees and do not get this basic concept. If the probabilities are always changing your initial probability of success has no pragmatic meaning. The more I study the more I am realizing that there is no way to algorithmically predict price movement.
 
louistrader said:
Excellent post. It's funny because people have advanced math and science degrees and do not get this basic concept. If the probabilities are always changing your initial probability of success has no pragmatic meaning. The more I study the more I am realizing that there is no way to algorithmically predict price movement.
Click to expand...

The probabilities are the probabilities and that doesn't change that, much like flipping a coin 10 times can yield you getting heads 8 times, that isn't indicative of the probability.

Same goes for the spot price of an option and standard deviation. You could do a 95% prob trade 10 times and get hit 8 out of the 10, it doesn't change the math. If you did the same trade 1,000,000,000 times you will see the success move closer to 95/5
 
CostaKapo said:
. . . What the gambler has forgotten (or, more likely simply ignorant of) is that the roulette wheel has no memory
. . . .
The same is true with stock market probabilities . . .
Click to expand...

Rubbish. If true then market returns would be normally distributed. They are not. Your analogy is made of fail.

(n)
 
A Dashing Blade said:
Rubbish. If true then market returns would be normally distributed. They are not. Your analogy is made of fail.

(n)
Click to expand...

You can't cherry pick sentences.

Even if they were exact like the roulette wheel (and stock market probabilites are surely not exact), you can use them only as guides into the future for a particular time range. But once the stock movement has started to occur, you need to at the very least recalculate the probabilities for whatever range of time is still of interest to you. If the stock hasn't moved as much as it was "supposed to" have during the initial part of the time range, you cannot assume it will "make it up" in the latter part. If you think this, you are falling victim to a version of the gambler's paradox.
Click to expand...
 
The gamblers fallacy and roulette wheel are good analogies. The only thing they leave out is positive drift from interest rates and inflation. When you calculate those the distribution looks a lot more even.
 
ACstudio said:
The gamblers fallacy and roulette wheel are good analogies. The only thing they leave out is positive drift from interest rates and inflation. When you calculate those the distribution looks a lot more even.
Click to expand...

Good input.
 
Now that I have a minute let me add. Whether or not market movement is random is irrelevant. for these reasons.
While you may think you can make a prediction about a price based on some information, you have no way of knowing how much of that information is already priced into it, you have no way of knowing the magnitude of the effect of that information and you don't even know what you don't know and how much effect those can have. So it might as well be random.

And, the pricing models used to calculate options pricing is based on random theoretical models that make forward predictions using, among other things, volatility.

The fact that the option prices are based on theoretical random models and that volatility tends to be overstated is actionable and more reliable in my opinion than imagining I can see something in the market that teams of people with billions of dollars haven't already made a move on.
 
ACstudio said:
Now that I have a minute let me add. Whether or not market movement is random is irrelevant. for these reasons.
While you may think you can make a prediction about a price based on some information, you have no way of knowing how much of that information is already priced into it, you have no way of knowing the magnitude of the effect of that information and you don't even know what you don't know and how much effect those can have. So it might as well be random.

And, the pricing models used to calculate options pricing is based on random theoretical models that make forward predictions using, among other things, volatility.

The fact that the option prices are based on theoretical random models and that volatility tends to be overstated is actionable and more reliable in my opinion than imagining I can see something in the market that teams of people with billions of dollars haven't already made a move on.
Click to expand...

Excellent post. I couldn't have said it better myself.
 
Fx??

Another lost .. very lost FX trader.. can't make any money trading, and you won't make any $ trying to scam the more intelligent Options traders.

Instant Karma (y)

happy pip hunting
 
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