Been stuck in the house with the weather so bit active an im also bit alert to what the markets going do as its all time highs around some markets etc etc .
Be good topic Kangagirl how you prepare yourself for a market that could turn on your expectations for weekend topic maybe.
Fixed the door handle on the trouble an strifes car though today an have been having fun all day keeping the humour up between the two of us .
More sweat come out of me than a punctured cactus in about ten minutes it took to do because of the humidity .
Ive never really had a feedback on the stt knowledge library catalogue an haven't used it myself for awhile either maybe some newer don't realise its there each week.
The type of things made easier for by the catalogue by the time i scrolled i had got two the second an come up with this beauty before going further down the diary series .
Trading choppy waters .
Choppy Waters Post #: 18061349
Recently been reading a book called "Black Swan" by Nassim Taleb (Derivatives Trader/Hedge Fund Manager):
He described the markets as Platonic - The human tendency to find patterns, build a mathematical model and believe in this model. Probabilistic distribution (bell curve), Decision Trees, probable risk are all Platonic.
When markets come in contact with a messy reality we get a Platonic Fold - basically where the gap between our probabilistic expectations and outcome are so far apart from the reality. Usually created by black swans... these are our GFC's.
So what makes a black swan?
You have 4 possible outcomes
1. Known Known - Know the risk and know the circumstance it occurs
2. Know Unknown - Know the risk and don't know the circumstance
3. Unknown Known - Not know the risk but know the trigger circumstances
4. Unknown Unknown - Black Swan.
Number 3 and Number 4 are the most dangerous and usually cause crashes in market.
3. I don't know how much I'm going to lose, I just know if this happens my money will be gone - UK.
4. I don't know how much I'm going to lose, and I don't know what will cause it either - UU.
I'm no expert on the Brexit but I feel it's a known known. We know the risk (what affect the Brexit will have) and also know the circumstance (Britain leaving or staying)
