"Players on losing streaks went for riskier and riskier bets, taking bets with higher odds against in the hope that a big payoff would make up for their losses. Players on winning streaks went in the opposite direction and made bets that were more likely to win as their streaks went on."
Situation looks similar to widely known disposition effect in behavioral finance, when investors/speculators tend to hold losses, but cut winners.
The following 2 users say Thank You to Cornix for this post:
As with any game of chance each game is a separate event and must be treated as such.
One draw of the lottery does not affect the next, one round in poker does not affect the next, etc.
And so the same with trading, each trade needs to be separated and work individually. But often we don't do that, we cut a winner short to lock in profits to recoup what we lost before. Or we let a loser run because we cut an earlier winner short, hoping that it will come back. I think this is one of those golden nuggets in trading.
If you can separate each trade, not care about winning or losing that trade, and work to increase your reward you can do well trading.
The following 3 users say Thank You to tturner86 for this post:
A long time ago I played with an .exe of a roulette simulation where the wins were plotted around a zero line and it went up and down like a chart. I tried to "trade" it and after maybe a week of trying I wasn't able to make profit. Even if the price went 50 blacks (or reds) one way and you entered in opposite it could still go 50 against you. Whatever happened before doesn't matter.
It's probably a common knowledge though
Last edited by ReaM; May 14th, 2014 at 08:39 AM.
The following 3 users say Thank You to ReaM for this post:
The question is in TIME. Maybe that week was series of misfortunes and If you traded in the second week you would make up for your losses. Maybe month. Or Year. Maybe in longer run. That's why deposit has significant importance in your trading success.
It's different with the markets as you can see spots where inefficiencies occur and take advantage of it. You just know what your edge is. But in roulette, you keep seeing patterns that look like patterns but they don't work, it's just randomness, things just don't make sense there after a while. You think you see things, but the results prove you wrong time and time again.
I think there's enough proof in the world that you can't trade roulette profitably (unless you exploit the mechanics of the ball, somehow, which doesn't count as it's not about exploiting here). Even if you decide to bet on black after a streak of 12 red, it's still the same 18/37 to go either way on the next, less than 50%.
Last edited by ReaM; June 25th, 2014 at 11:51 AM.
The following user says Thank You to ReaM for this post: