This is not my post but I am sure the author wont mind me ‘borrowing’ it. I’ve posted this outside of the newbie area in the hope that we get some quality answers from the more experienced traders although I do welcome any well thought-out answers from anyone - I hope Babypippers will rise to the challenge!
Note, there is no correct answer.
[B]LEONARDO’S TRADING TEST
[/B]
One day when trader Bob was shopping downtown, he saw a child running across the busy street without looking, just about to be creamed by a bus. Dropping his packages, Bob runs out into the street, grabs and saves the child in the nick of time.
It turns out that the child saw his father get out of his new Porsche on the other side of the street and was rushing to get to him.
The father of the child, a wealthy Wall Street arbitrageur; seeing Bob’s display of selfless courage was effusively thankful to the stranger and insists on offering him a reward.
Either he would give Bob his new Porsche right now, (worth $75K) or if Bob would be interested; a free partnership in a small deal that he’s working on —which he makes clear that there would be a 10% chance of returning $1,000,000 in a couple of months. (This is a theoretical value of $100,000.)
Which reward do you think Bob should take?
And why you think your’s would be the best choice?
One thing that it might be worth clarifying as it wasn’t clear to me the first time I read it, essentially your choice is between $75K guaranteed or a 10% chance of $1M.
10% of 1 million or 10% chance of 100 000?
edit: I got it now.
I’ve seen this test in slightly other forms. This one is more tricky as you have a 100% certain 75 000 or a 90% risk to get nothing. I think I’d actually go with the Porsche. If it were 50/50 for the million, that would be a different story.
The 75K, not only because it is guaranteed, but because I would take it and turn it around into well over 100K trading, or other speculation, well before the business venture possibly returned profit.
I opt for the 10% of 1 million.(assuming it is only one time, after which, i dont get it anymore).
However, the gain would be much higher given the possibility that more opportunity may come if there is a good rapport. I did save his kids right. Who shouldnt be grateful.
Hmmm…its really a no wrong or right answer. Its depend on an individual risk taking. I go for the big risk is because i start with nothing and i dont mind end with nothing. If strike the right spot. I could end up big big.
I like this answer best (the middle sentence… shows initive). Of course there is no right or wrong answer its entirely dependant on the indiviuals perspective. If youre Joe Average then grab the car! You get the chance to drive around in a top mark for six months, pull the women you wouldnt otherwise and can still sell it for more than you probaly make in two years… now thats a win-win set up.
If youre already making big Dollars then you can afford the mark of choice and the women. Then why not take a punt?
I think that relates to a psychological theory, the name of which I don’t know in English, but we could call it the stair theory:
If you’re homeless then you don’t care about a gym membership, a nice vacation trip. Your immediate need is a home. When you get a home, you move one step up on the stairs and now your immediate need changes.
Maybe now you’d like a decent job, that’s your next step on the stairs and so on. The theory is that unless our most basic needs are covered then we don’t care about other things much.
I am a believer in that theory and I think you may be too R Carter ;). For those that haven’t climbed that many steps up, the Porsche is the smarter choice.
If you’re already wealthy, then those needs that a Porsche can satisfy are likely already covered, and you will instead be better off taking a chance at the really big win.
I’d trade both in for karma points instead, then proceed to literally trade the next NFP blindfolded. i.e. on the next coming first Friday of the month
GMT 13:29 - ensure a finger is over F9*, wear a definitively opaque sock over my head and count to sixty
GMT 13:30 - click randomly until I hear a swoosh**
some time after GMT 13:30 - press F9 click randomly until I hear another swoosh. I remove blindfold -> $$$$$? profit
Now if the second swoosh was actually the sound of second buy or sell, fate is on my side for double the money. I wait for a lucky number, 7,8 or 9 days - but NOT 13 - then close both positions -> $$$$$$$$$$$$$? profit
(On a second thought if the guys rich enough to fork out a porche and if I was that fast to save his kid I’d grab it even before he offered. I mean after)
*New Trade for MT4
**Swoosh! (default MT4 sfx for trade order placement)
