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Comment by joshu | Hacker News Reader

Yeah, no. That's called anecdotes, because when you do understand probability and backtest these strategies, they are known not to work in the large.

Stat arb is what happens when you actually do statistics, and these days it's got only a slim to nil advantage.

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Trading is like the Israeli nuclear program: those who talk about it don't know about it, those who know about it don't talk about it.

If technical analysis actually worked, you'd be able to find the "Technical Analysis Toolkit" for on GitHub, and... technical analysis would no longer work. A little bit of grepping around yields: http://ta-lib.org/ (Technical Analysis Lib).

Ergo: if technical analysis ever worked (there is some evidence it did before about 1990 when personal computers became ubiquitous) it almost certainly does not today.

The only way market timing approaches can work is if they embody significant information that is not generally available. A successful market timer has to be smarter than everyone else in the market at the time of each trade.

Anyone claiming technical analysis works is claiming that there is an inefficiency in the market that has been well-documented in public for decades, to the extent that an open-source BSD-licensed tool for identifying the inefficiency exists, and yet the inefficiency still exists.

This is simply contradictory.

An economics professor is walking down the street with a student. The student sees a $100 bill on the ground and tells the professor. The professor says, "Nonsense! If there were a bill on the ground, someone would have picked it up already!"

I actually think that in this case you are probably right, though. But I wouldn't bet my life on it.

I love this joke, because on the surface it's making fun of economists whose theories blind them to an obvious reality. But how often does anyone actually find a $100 bill on the ground?

My wife found one once on a very windy day in Denver.

Maybe Bill Gates dropped it (http://www.netfunny.com/rhf/jokes/97/Jul/gateswealth.html)

I found a 20 on the ground by a gas station pump. Its not improbable that someone taking their keys or wallet out would accidentally drop any loose bills they had.

Of course not every idea ever has been tried. But there's a lot of incentive.

Statistically it would be ok to bet your life on it, though.

Did you hear the one about the economist who drowned crossing a river that was three feet deep on average?

Haven't heard that one until now that you mention it, nice.

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