To: marginmike who wrote (2347 ) 1/15/2000 1:29:00 PM From: Matthew L. Jones Respond to
Not necessarily... using technical analysis and statistical analysis, one can forecast market moves with a reasonable degree of certainly. Charts definitely tell a story regarding the probable movement of prices in the future, and statistics (like insurance mortality tables which have their basis in statistical analysis) can give the student of them a good idea of the "effective age" of a given market trend. Just as an insurer can't tell you how old you will be when you die, they can tell you that if you are 112, 60 lbs overweight, smoke 3 packs of unfiltered camels a day, and have TB, your likelihood of another decade is slim-- statistical analysis can tell you the statistical probability of a trend continuation base solely on the extent and duration of the current move and the historical record of the particular market you are measuring. We are not talking gambling here! Gambling is risking assets in the face of chance where odds are long against you (e.g., lottery). Speculation is the risking of assets when (and only when) the odds of success are strongly in your favor. Personally I don't take a position unless the extent and duration odds are at a minimum of 3:1 in my favor. Normally it is more like 7:1. Just thought I would weigh in in the discussion. My point is this: while individual trades cannot have predicted outcomes, trading a system where the risk and probabilities are clearly stacked in your favor will over time yield predictable results. Not maybe.
