I Liked the solution of making 100 dif. personalities and let them buy stocks.

I am trying to think of a way to code this simply....

Different personalities will simply be that different people take different things into account. For example one person might really follow and believe the news so if he were to see that a company made a new gadget he might right away buy lots of stocks. Another person wouldn't care about that he would concentrate more on the stock's pattern. Before I start I throw in a few factors like the above news report. Than my people will go out and buy stocks. I will get a rating rated 1-100 of this stock from each person then I will adjust prices accordingly.

What do you think?

Edited by - medovids on January 16, 2002 11:03:03 PM

It seems to me that the argument about whether the market can be modelled by a random number generator issues from a difference of perspective. On the one hand the AP is suggesting that a random sequence would look like a stock price sequence while on the other hand InnocuousFox is suggesting that the market is not random. You''re both wrong and you''re both right!

Certainly, the market is not random. The market price is the result of actual trades of shares and some specific rules. The market price is one factor in the decision making process of buyers and sellers. Countless other factors drive these decisions so that to predict the market exactly one would need to know EVERY causal influence between system variables and the value of every variable in the a model of the market and its players, as well as encode the rules upon which buyers and sellers make their decisions.

This is not possible. Indeed, it''s not possible for most dynamic systems in the real world. We can however approximate the system with a model that attempts to explain the approximate motions of the market price. If the model is a good one, then the unexplained residual variability in the market price may approximate a zero mean random process. In which case, we could use the deterministic model and a sample from this zero mean random process to model the stock price. Alternatively, the variance in the random process gives us an estimate of the uncertainty in the value returned by the deterministic process.

So, given this, it could be said that the stock price is driven by a stochastic process (rather than a random process, which is subtely different). This is what the AP was suggesting.

So, rather than argue over whether the stockmarket is truly random, lets argue over whether the market could be successfully modelled by a stochastic process. At least that argument would have some value!

Cheers,

Timkin

It appears that Medovids wants a little more meat in his stock market meal! Okay then, here some ideas about HOW to model the investors in a stockmarket.

Let''s assume that there is just one stock being traded. The ideas here trivially extend to n stocks.

Each investor must have a perception about the current market value of the stock. Their perception will be that the market price of the stock is: 1) over-valued , 2) fair , or 3) under-valued .

Secondly, each investor will have a risk based strategy for acting in the market. Some investors will be risk-seeking , others will be risk-neutral and finally others will be risk-averse . Most people are risk-neutral with small amounts of money; are risk-averse with larger amounts when they have a positive wealth pool; and are risk-seeking when they are in debt. A good example of the latter is people with gambling addiction. They are prepared to keep throwing good money away on the slight chance of a big win to clear their debts.

I''ll leave it up to you to think about how you might work these ideas into a simulation of investors in a market. I might offer some more ideas about this tomorrow.

Cheers,

Timkin

I am looking too make a stock market game where you buy the stocks you want and you try too make money!

What I wnat is too make the stock market prices realistic. From what I understood that is exactly what we are trying to figure out.

sorry for the misunderstanding.