A Time Traveler and a Trade | Traders Hideout


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A Time Traveler and a Trade

  #9 (permalink)

North Carolina
 
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
 
Posts: 644 since Nov 2011

@TheShrike In this case case he said there was X% chance of quadrupling and Y% chance of losing then it means either (1) he wants to convey this is a very good trade but why the disclaimer? or (2) he knows the true distribution of returns or (3) he lies. We will ignore 3 because it wasn't part of the original information.

He says "your current trade" but only repeatable events can have a probability. It means there must be both a 100% certainty that you can quadruple your wealth if you hold the trade and a 100% certainty that you will lose it if you hold the trade beyond triple beyond your net worth. The only variant in this case is your free will and what you decide to do. This is the only information the time traveler doesn't have. As such, I would hold the trade until a few percent below quadrupling my wealth and then close it.

In addition, if I am allowed to trade the options, I would also open a huge risk limited bet on volatility. However, I would be sure to risk less then my net worth so it that it could not have impacted the information he imparted on me. I would also be sure to open it as a "new trade" so that it would not be subject to the prior.

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