RWT-008: Forever is a Long Time
Posted on January 28th, 2010
Written by Richard
Posted in: N/A (old archives)
I’ve posted RWT-008, which goes over some basic game theory as it applies to a common trading decision: taking profits vs. letting the trade ride. In a canned example, I show how you can mathematically decide which option is best, and also give a way to model the imperfection of the common trader when it comes to maximizing profits. A key point is how the decision changes when you get to make a choice lots of times versus just once, and how traders irrationally seem to act as if every trade is their last!
It can be viewed here: RWT-008, or of course it is listed as #8 on the articles page.
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© 2010 Richard Todd. I am not a financial advisor, and nothing on the site should be considered investment advice or actionable recommendations. I'm just an individual, saying what I think, and sharing my experiences.