Lochend and Glen - put money where mouth is, page-9

  1. 1,383 Posts.
    No you've got it wrong. What you are saying is that random walk is the thing. Based on that, you must accept Black-Scholes probabilities that the stocks will go below a certain point in a certain time. Depending on volatilities, that probability might be greater than 0.5, but it is probably a lot less.

    So if random walk holds, then the chance that I can make accurate predictions consistently using head and shoulders is very low, tending to zero according to the number of predictions I make and how far out of the money they are. Eventually, the probability that I am just a lucky guesser will fall to one in a zillion - and as I wont be making any money I'll give up long before that.

    But you have to start somewhere, and four confirmed H&S was a good place.

    But you know, you should have accepted that bet, because both BHP and BBG had only been below the neckline for a couple of days, not long enough for a proper confirmation - and now they have jumped back up again so I have to withdraw them from the list.

    Anyway, it will be worth keeping an eye on the predictions - if they are hopelessly wrong, you will be able to say I told you so.

 
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