Comment by bofadeez
3 months ago
You should deploy a quant trading model based on your predictive behavior theory and compound your way to be the richest person on earth. It's not that complicated apparently!
3 months ago
You should deploy a quant trading model based on your predictive behavior theory and compound your way to be the richest person on earth. It's not that complicated apparently!
I think GP meant to say that people are not that sophisticated. Newtonian physics is not very sophisticated but fortunes have made and broke on deploying it (Roulette, dice, coinflipping etc)
statistical physics, otoh, is slightly more sophisticated than the median human so some experts have indeed made money building related models
So you are saying that if there exist quant traders making lots of money off their models, then that would be evidence that human behavior can be accurately mathematically modeled?
It's a lot more complicated than that. Eugene Fama might be a good starting point for you.
(Spoiler: most PhD level machine learning quant trading funds do not make money. Marcos Lopez de Prado can explain why that is the case: they accidentally invest in false discoveries. It's so pervasive that I often argue it's a numerical analytic proof for EMH. Most quant funds you've heard of are engaged in high-frequency market making, they provide liquidity by continuously quoting prices and earning the bid-ask spread with limited directional risk. It's not behavior forecasting. Something like order flow toxicity has predictive ability for like a few milliseconds.)
Something like this does not work: https://www.tradingview.com/v/9Ut0yL2p/
Even if it has a good p-hacked backtest with some parameters, it's not going to work in practice. It's just a novelty by/for academics.
The question is not "do all quants make money modelling human behavior?" It's "do any quants make money modelling human behavior?"
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