The player that is using better strategy could (and often does) still lose though. Edges can be quite small and only expose themselves over thousands of hands. — BitconnectCarlos

This is exactly the emotional issue which I tried to bring up. The lesser skilled can and does win, because poker is to a large degree a game of chance. This little bit of winning produces a euphoria in the player making the person more oblivious to the facts, which are that the probabilities ensure the more skilled will win in the long run, just like the probabilities are slanted for the house in the casinos. That's the emotional weakness, similar to dreaming about winning the lottery. The skill in poker is to a large degree in the betting strategy. The skilled win the big pots and lose small ones. As a trader you might see something similar with the intelligent use of stop orders.

If you look at a game like pool though, there's a much higher degree of skill than poker. The pool sharks might use a slightly different strategy, actually letting the lesser skilled win for two bits, and not revealing one's true skill level until the bet is significant. And as a trader you would know that the small money is made when the market rises, and the big money is made when the market drops.

Fair point. Also, Metaphysician Undercover, where do you draw the line between trading and investing? Seems you could apply the same logic you've used to condemn anyone who puts money into a market with the intention of later taking it out at a profit (and note that markets aren't zero sum games when they are expanding). — Baden

I would say that investing is to put money into an enterprise with the goal of making a return. The terms of return ought to be clearly stipulated in advance, similar to what we do with the interest on a loan. I believe there is a degree of greed which brings about the idea that we can invest without stipulating the terms of return, allowing one to think that returns could be unlimited. But it is also a deceptive idea, which facilitates the negative return.

OK, so anyone who has a pension is participating in an immoral exercise due to the lack of constraints on the return. Interesting idea. Do you have a pension?

I think what pension mangers do is often very immoral.

They invest on your behalf, presuming you have a pension? If so, why participate in what you have described previously as a generally immoral activity? Or are there now exceptions? If so, what are they and why?

(Point being, I don't see how someone who benefits from a pension is the moral superior to a trader under your argument. Getting someone else to do something for you that you consider immoral doesn't absolve you of responsibility, no?)

I've seen it in the movies, and you hear it on the news once in a while, pension fund managers seem to be prone to doing immoral things. Ever see "The Irishman", about Jimmy Hoffa?

By the way, I am forced to contribute to a pension fund, it's just like taxation. I never freely chose this so I am not willfully contributing to whatever immoral acts the managers might be involved in. One might even argue that forcing me to contribute is itself immoral. I don't think traders are forced to trade.

Well, I'm sorry about all those compounded ill-gotten gains they'll force on you. I hope you'll get through the experience somehow. :strong:

I liked your response here. Here I'm addressing the parts that I disagree with, but I read through your entire post and agreed with like 90% of it so I just didn't respond to those parts that I agreed with. Some of my "disagreements" here are really just extra analysis.

This little bit of winning produces a euphoria in the player making the person more oblivious to the facts, which are that the probabilities ensure the more skilled will win in the long run, just like the probabilities are slanted for the house in the casinos. That's the emotional weakness, similar to dreaming about winning the lottery. — Metaphysician Undercover

I get what you're saying here. We should take note here that a live environment is different from an in-person environment, and while one player may have an overall better sense of the game at a fundamental level and excel at online play, live dynamics can muddle the waters a little bit and bring in an extra element that allows worse players to step up their game in other ways to even the playing field. A highly skilled player could also overestimate their edge and that could serve to their detriment.

Also a lot of players are just playing to have fun or pass time, not necessarily to win money. I personally was not playing with the goal of winning money when I played semi-professionally, my goal was always to play my best game. If the money comes then it comes but it was never a guarantee.

And as a trader you would know that the small money is made when the market rises, and the big money is made when the market drops. — Metaphysician Undercover

This I would question. Traders can make money either way. Insane amounts of money are made when markets are doing well.

Traders can make money either way. Insane amounts of money are made when markets are volatile. — BitconnectCarlos

Fixed it. :wink:

Also a lot of players are just playing to have fun or pass time, not necessarily to win money. — BitconnectCarlos

I agree with this, and I think it's somewhat related to that emotionally euphoria I referred to. That is an emotional volatility, like a mania in an extreme case. The emotions must be stabilized in one way or another, to make a good player. So if the person is not playing for money, this would be beneficial toward stabilizing the emotions. Therefore if you're not playing for money, you'd be a more stable player. They say that the well fed cat makes a better hunter than the hungry one.

I would think that the best poker players are not playing for money, they're playing to be the best they can. This would really be not much different from any athlete playing any sport. The athletes are not playing for the money, they're working on being the best they can. The millions of dollars just comes naturally if they do well at it. But if they went into the gym with the goal of making lots of money, they most likely wouldn't have what it takes to become a good athlete, and so they wouldn't make it.

This I would question. Traders can make money either way. Insane amounts of money are made when markets are doing well. — BitconnectCarlos

I agree that traders make money either way, but this is why I think more money is made for them on the down swing. The first premise is that the money is actually received from the sale. The second is that the trader will most likely continue in the occupation of trading, so there will always be the need for a purchase after a sale. So if the market is in a generalized upswing, the purchase after the sale will likely be higher relative to the sale price, then if the market is in a generalized downswing, thus more money is actually pocketed in the downswing. On top of that there is the issue of numerous people buying on margins which I mentioned earlier in the thread. I believe that margin calls make the downturns a little more predictable than the upswings, another reason that more money can be made from the downswing.

I agree that traders make money either way, but this is why I think more money is made for them on the down swing. The first premise is that the money is actually received from the sale. The second is that the trader will most likely continue in the occupation of trading, so there will always be the need for a purchase after a sale. So if the market is in a generalized upswing, the purchase after the sale will likely be higher relative to the sale price, then if the market is in a generalized downswing, thus more money is actually pocketed in the downswing. — Metaphysician Undercover

I get what you're saying here. However, we need to keep in mind that markets over time trend upwards, so if you're going to be a bear you need to time it well and know when to close your shorts before the reversal (this is nearly impossible in practice.) Being a bear and repeatedly shorting is one of the few ways to lose money in a bull market. Even if you do happen to time it correctly, you can certainly do well as a trader but your long-term holdings whether in stocks or commodities will suffer which could easily offset your trading wins with capital losses elsewhere. I guess the way to avoid this is to just sell everything prior to the crash and go full on short which is either genius or insanity at the peak of a bull market.

I guess the way to avoid this is to just sell everything prior to the crash and go full on short which is either genius or insanity at the peak of a bull — BitconnectCarlos

More like insanity, because you are shorting on how crazy people can be. And they can be far more crazy and for far longer than you can anticipate.

Far more sane is simply to try to get 80% right: to decrease your stock portfolio when (in hindsight) the stock market is in the 20% nearest to the top and then buy when it's 20% nearest to the bottom. Hence if you sell and the stock indexes still go up still 20% to the peak, you still might congratulate yourself. Same true the other way.

Some indicators like what I and discussed like Margin debt growth are good in this case. When that Margin debt growth starts to decrease at the height of the market, that is really an alarming signal, because it means that people aren't willing to speculate as earlier. Both in 2000 and in 2008 the decrease in margin debt happened just before the stock markets plunged. And in an euphoric market, which now the market is (we are having this conversation on a philosophy forum), that is where the turn happens: there isn't the guy willing to buy at a higher price to speculate on the price going higher.

Some indicators like what I and ↪Benkei discussed like Margin debt growth are good in this case. When that Margin debt growth starts to decrease at the height of the market, that is really an alarming signal, because it means that people aren't willing to speculate as earlier. Both in 2000 and in 2008 the decrease in margin debt happened just before the stock markets plunged. — ssu

That's a nice theory but it's not really consistent with the graph you provided. There are many instances when margin growth slows, where the market continues an upward trend, or it makes a slight coinciding dip then continues upward. 2020 provides a good example. But a graph of 60 years is not very good at showing things which occur over a matter of days.

The problem is that no one can ever really determine "the height of the market" unless you can foresee the crash. So there will always be people thinking the end is near, cashing in stocks and paying off margins, when the market will still proceed upward. Paying down debt can proceed in an orderly fashion, without big market drops. A true crash will not occur unless the market is pressured down far enough to force widespread margin calls. Since every individual's margin position differs, it would be difficult to determine what degree of drop would force a crash. Perhaps it would be helpful to break down the margin by sector, and determine vulnerable sectors. Consider a crash to be like a domino effect, and keep your eye on the most unstable dominoes.

Fear sells, of course, and there are those that have basically have found their niche as "permabears", yet if exclude those constantly and only talk of a crash, one can see generally when people are fearful and when euphoric.

There are many instances when margin growth slows, where the market continues an upward trend, or it makes a slight coinciding dip then continues upward. 2020 provides a good example. — Metaphysician Undercover

Last year is a good example of how trillions put into the most massive QE do have an effect to make the market and the real economy go their separate ways. The only "V"-shaped recovery was the stock market. Of course you can think that this is just the "new normal" and things have changed, that we have a new economy, but at least I'm not so sure.

How totally different and spectacular things are now from the past is shown in this interview with Stanley Druckenmiller by nowhere else than Goldman Sachs' Youtube channel:

Not following this thread though avidly following the GME/RH fiasco. Ran across this terrific article about RH's business practices, in particular the fact that it gets most of its revenue from Citadel in the form of payment for order flow (PFOF), which (illegally) front-runs the trades.

A great read if you're following this story.

https://www.zerohedge.com/markets/exposing-robinhood-scam-heres-how-much-citadel-paid-robinhood-buy-your-orders

"Frankly, we've had it with the constant stream of lies from Robinhood and neverending bullshit from the company's CEO, Vlad Tenev."

Forgive me - interesting article, but I'm not fully understanding the scam...Citadel buys orders from RH, RH offers commission free or "commission free" trades with funding from Citadel, then - I got lost.. -?

I think it means that Robinhood gives a way for Citadel to frontrun those who trade at Robinhood...if I got the meaning of the article correct. And basically this is Robinhood's business plan: to make profit in selling the information of it's buy and sell orders to market players as Citadel.

Front-running is trading stock or any other financial asset by a broker who has inside knowledge of a future transaction that is about to affect its price substantially. A broker may also front-run based on insider knowledge that his or her firm is about to issue a buy or sell recommendation to clients that will almost certainly affect the price of an asset.

This exploitation of information that is not yet public is illegal and unethical in almost all cases.

Sounds very....normal for Wall Street.

If I understand correctly, "frontrunning" means receiving orders, and buying for yourself prior to filling the orders, even if just a fraction of a second before. In the case of Robinhood, since they offer free trading, they would process significant volume in a short time period, allowing for substantial frontrunning without having to hold things up, slowing things down to build up reliable volume, producing noticeable time delays. This could produce significant profit.

Thanks for the clarifications.

And what would you say about the state of the stock exchange today? I'm currently researching this link https://redot.com/blog/top-stories-that-moved-crypto-markets/. Explain it to me, please.
Yes, I agree with the statement that the stock exchange is dirt. But our whole system is built not on moral values, but on methods of survival. The law of the jungle applies in every field.