Section 2 presents a brief introduction to the debate about predictability in financial markets. Here we will extend this investigation to other financial markets and for new trading strategies. In a previous article, motivated also by some intriguing experiments where a child, a chimpanzee and darts were successfully used for remunerative investments, , we already found some evidence in favor of random strategies for the FTSE-UK stock market. The aim of this study is precisely to check whether these mechanisms, which will be described in detail in the next sections, are more effective in predicting the market dynamics compared to a completely random strategy. This deep dependence on expectations made financial economists try to build mechanisms to predict future assets prices. Then, tomorrow, this security would be priced higher than today, and this fact would just be the consequence of the market expectation itself. If today a very good expectation emerged about the performance of any security, everyone would try to buy it and this occurrence would imply an increase in its price. Economic systems are unavoidably affected by expectations, both present and past, since agents’ beliefs strongly influence their future dynamics. Therefore, even without being skeptic as much as Taleb, one could easily claim that we often misunderstand phenomena around us and are fooled by apparent connections which are only due to fortuity. Actually, randomness enters in our everyday life although we hardly recognize it. Recently Taleb has brilliantly discussed in his successful books, how chance and black swans rule our life, but also economy and financial market behavior beyond our personal and rational expectations or control. Other groups have successfully explored similar strategies in minority and Parrondo games, , in portfolio performance evaluation and in the context of the continuous double auction. Following this line of research, we have recently investigated how random strategies can help to improve the efficiency of a hierarchical group in order to face the Peter principle – or a public institution such as a Parliament. In fact, noise has a great influences on the dynamics of cells, neurons and other biological entities, but also on ecological, geophysical and socio-economic systems. But not only physical systems benefits from disorder. In physics, both at the classical and quantum level, many real systems work fine and more efficiently due to the useful role of a random weak noise –.
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