Part of my point was that arbitrarily setting it to be the same is a statistically certain way to lose money over time
Math, I thought this over and came up with a different way to explain it. The way you present it above is, as you point out, a zero-sum game. However, the market is not a closed, Thermostatic system, but an open, Thermodynamic one.
by taking into account the upward bias of the market,
You point out here that if we give a small bias, we will still lose. This is true, long term. But, when dealing with a short term situation, as to what may happen in the next month or so, it is much more volatile.
I am working with the assumption that the market is still going down for the next month. If I am right, I will have much better odds of winning selling short than long. And in a up market, the opposite would be true, of course.
All of this depends on having the correct premises. If I turn out to be working on false premises, I will lose money, no matter, how good my modeling. |
