Good evening dukascopy contest traders,
I believe you guys spending a wonderful weekend with friends and family at ease of your home.
Its weekends so I won't analyse charts or anything during my resting day, but I have a good topic for you to read while you are free resting.
Have you ever had a temptation to trade against a trend after a one sided price movement? I believe you have, so do I. I think its related to Theory called GAMBLER'S FALLACY. I'll write a brief explanation what I understood from it and you can read or research more on the web, as there are tons of materials to go through.
Gamblers fallacy happens when person denies the randomness of an event by believing that non-occured variable will have more chance on next event. Lets say you roll a normal dice with 6 sides and numbered from 1-6, and it lands on 1 and most of us might believe WITHOUT EVEN REALIZING that we have more betting bias towards other 5 sides. But in reality the total randomness is when the previous event doesn't affect future events, in other words every time dice rolls its independent from past results.
A very good example I found on the web: On August 18, 1913, at the casino in Monte Carlo, black came up a record twenty-six times in succession [in roulette]. … [There] was a near-panicky rush to bet on red, beginning about the time black had come up a phenomenal fifteen times. In application of the maturity [of chances] doctrine [the gambler's fallacy], players doubled and tripled their stakes, this doctrine leading them to believe after black came up the twentieth time that there was not a chance in a million of another repeat. In the end the unusual run enriched the Casino by some millions of francs.
Funny thing is I have seen similar black streak in roulette when I was a student in London, Uk. In Empire casino on leciester square I have seen nearly 10 black in a row, and some gentleman was betting continuously on the red loosing couple of thousand pounds, and the dealer said sarcastically "You know in the financial markets they say "trend is your friend"".
Oh well, its quite late here, so see you next.
Gerelt-Od
I believe you guys spending a wonderful weekend with friends and family at ease of your home.
Its weekends so I won't analyse charts or anything during my resting day, but I have a good topic for you to read while you are free resting.
Have you ever had a temptation to trade against a trend after a one sided price movement? I believe you have, so do I. I think its related to Theory called GAMBLER'S FALLACY. I'll write a brief explanation what I understood from it and you can read or research more on the web, as there are tons of materials to go through.
Gamblers fallacy happens when person denies the randomness of an event by believing that non-occured variable will have more chance on next event. Lets say you roll a normal dice with 6 sides and numbered from 1-6, and it lands on 1 and most of us might believe WITHOUT EVEN REALIZING that we have more betting bias towards other 5 sides. But in reality the total randomness is when the previous event doesn't affect future events, in other words every time dice rolls its independent from past results.
A very good example I found on the web: On August 18, 1913, at the casino in Monte Carlo, black came up a record twenty-six times in succession [in roulette]. … [There] was a near-panicky rush to bet on red, beginning about the time black had come up a phenomenal fifteen times. In application of the maturity [of chances] doctrine [the gambler's fallacy], players doubled and tripled their stakes, this doctrine leading them to believe after black came up the twentieth time that there was not a chance in a million of another repeat. In the end the unusual run enriched the Casino by some millions of francs.
Funny thing is I have seen similar black streak in roulette when I was a student in London, Uk. In Empire casino on leciester square I have seen nearly 10 black in a row, and some gentleman was betting continuously on the red loosing couple of thousand pounds, and the dealer said sarcastically "You know in the financial markets they say "trend is your friend"".
Oh well, its quite late here, so see you next.
Gerelt-Od
