Quote from: nullius on Today at 07:06:25 AM

Quote from: JayJuanGee on Today at 04:55:18 AM

So, for example, if the payoff for betting correctly is 5%, but the loss of betting incorrectly is 1%, but the odds of getting the 5% is 2/5 because the trader has good predictive skills and is able to hit with that level of precision, then surely if the trader has assessed the odds correctly, then largely in the long term for every 5 times that the trader plays those odds, s/he will get 5% twice, and s/he will lose 1% three times, which seems to be decent profits of somewhere in the ballpark of 7% from those 5 trades.

Jay, lets take this as scientific gambling: Pop those numbers into the Kelly criterion!

If I believed that SwayStar could reliably gain 5% on even close to 40/60 odds (acknowledging that thats just your off-the-cuff example probability, not what she claimed) versus 1% losses, then I would practically beg her to let me send her all of my money right now, on agreement to let her keep half the profit (or hell, even most of it) as a management feejust keep hitting those trades! Because I would get rich quick that way.

Really, do a little back-of-the-envelope calculation. Geometric growth (what Kelly addresses) is funny. Turn 0.005 BTC into 1 BTC kind of funny, and more.

Of course, Im not exactly doing that. Just call me a skeptic.

Quote from: JayJuanGee on Today at 04:55:18 AM

If the trader realistically assess the odds of a price move - yeah, sure a BIG "if" because frequently the assignment of odds is not very accurate, [...]

Yeah, I understand that the odds are never going to be that clear to assess, so in that regard, the devil is in the details, because usually the odds are not going to be so easy to figure out.

Yeah... about that...

Quote from: JayJuanGee on Today at 04:55:18 AM

Also, some traders roll their profits into their trading stash, and other traders will take some profits off the table on a regular basis in order to use for living expenses or just to stack away some of their profits.

If you could be certain of the odds, and if the odds are EV+, Kelly bets that roll profits back into the pot are, of course, mathematically optimal for growth in the sense of I no longer care what the market does, because my portfolio already went to the moon. Confirmed science, lulz. (Hey, theres that IF again.)

We likely realize that normies will do the wrong thing, even if they can accurately assess the odds, so in one sense, if we take out one of the variables (regarding assessing the odds), then the only step would thereafter to be to set up a system that takes advantage of those odds in order that you are always winning when you let the system play out (because you know the odds).

Sure, in bitcoin we might not exactly know the odds, but many of us who have gotten into bitcoin did so because we had concluded that the odds of it going UP in the long run were greater than the odds of it going DOWN, even though in the short run we might end up witnessing a lot of DOWN and a lot of SIDEWAYS that was NOT our preference, but if we ended up being correct that in the long run BTC would end up going UP, then so long as we were somewhat weighted towards UP, then the whole bet ends up being a patience game to wait out the term.

There are additional strategies that can be employed also, if you add an additional variable regarding taking advantage of volatility. No asset that is somewhat tied to free market forces is going to go up in a straight line, so in that process we can anticipate that volatility is almost inevitable in BTC, so there are ways to structure your BTC strategy and approach to take advantage of near inevitable volatility. Again, you are not changing your overall presumption that the asset is going up in price, so in that regard, your whole position is always biased in favor of UPward movement at all times, even if you fairly strongly convicted that the price is going down in the short term, you continue to bias your portfolio towards up, in order that you never lose in the long run, even if in the short term you will likely lose some value if the shorter term down ends up playing out as you anticipated.

So, ultimately, even if you play around with volatility and downward bets along the way, so long as you are continuously structurally biased towards upward BTC price movements, then the only thing that you ultimately need to be correct about is that the BTC price is going up in the long run... and so far in BTC's history, we have witnessed that it has ultimately gone up, even if while there has been some periods of more than 3 years of down, flat and failure to get back to certain previous high price points.. but if you are holding 4 years or longer, so far in BTC's history any single satoshi that you would have bought would have been profitable on that time frame.

Of course, past performance is not a guarantee of future performance, but many of us still recognize that there remain decent prospects for anyone investing four years or longer in terms of at least having some level of preservation of value and even profits so long as they are mostly betting on up, which largely means accumulating BTC and regular DCA, buying on dips and HODL have been amongst the best of the core strategies (which also means strive to engage in strategies that do not put yourself in a position, at any point, in which you have to sell any of your BTC, except at a point that is completely of your own choosing)..