Midas formula won't exist.. you know why?

I found this article very interesting in BBC's website. People may wonder why i choose this from that website, there underneath an intriguing information.  ie.. Our S&P CNX NIFTY was based on Black-Scholes model only. I hope this article enlighten our profound quest for KNOWLEDGE. 

This is the extraordinary story of a beautiful mathematical formula that changed the world, the financial markets, and indeed capitalism itself. It could do the unthinkable - it took the risk out of playing the money-markets. To its inventors it brought the Nobel Prize for economics. To those who used it, it brought great wealth. But this glittering tale would end in tragedy.
The Black Scholes formula was invented 36 years ago, by three young mathematicians. They had been trying to solve a problem that had plagued economists for centuries - how to counter the randomness of market forces and the irrationality of human behaviour that made the markets dangerously turbulent. Whilst pondering this dilemma, they made a remarkable discovery.

The search for a way to price option contracts began in earnest when the thesis of an unknown student named Louis Bachelier   was unearthed in the 1950s. Working at the beginning of this century, Bachelier had set out to do something no-one had ever done before - using a series of equations he created the first complete mathematical model of the markets. He had realised that stock prices moved at random and that it was impossible to make exact predictions about them, but Bachelier said he had also found a solution - through the pricing of a financial contract called an option.
The risk in the stock market is that if you buy a stock today the price can drop in the future and you could lose money but if you pay for an option contract this gives you the right to wait and buy the stock if it reaches some agreed price in the future, but there's no obligation. If the stock fails to reach that price you can opt out and you would lose only the cost of the option. In theory options are a perfect way to get rid of risk, but there was a problem. How much would someone pay for such absolute peace of mind?

 
 Bachelier believed that if someone could discover a formula that would allow option contracts to be widely used, they would be able to tame the markets completely, but he died before he could find it. By the end of the 60s, academics were no nearer to pricing options than they'd ever been. But all this was about to change when Myron Scholes and his colleague Fischer Black set out to tackle the problem of options…
At its simplest level, the Black Scholes formula could be used to hedge against losing any bet, by working out how to place another bet in the opposite direction. That way, you couldn't lose. The formula had the almost magical ability to allow you to make a fortune with the minimum of risk. But there was one problem. In the time it took to make the calculation, the fast moving markets had moved on and the calculation would effectively be out-of-date.

However, unbeknown to them, the problem had already been solved by a financial genius called Bob Merton. Using an idea taken from rocket science, the value of an option could now be constantly recalculated and the risk eliminated continually.    

Myron Scholes and Bob Merton joined forces with the greatest dealers on Wall Street, and started a legendary company - Long Term Capital Management (LTCM). Relying on mathematics, the company traded and borrowed on a scale never seen before. But the mathematical model was based on normal market behaviour and unforeseen events were about to send the markets wild. The calculations in LTCM's models became hopelessly out of kilter, and when the company collapsed in 1999, it nearly brought down the entire global economy. 

Metatrader vs Amibroker

Though plenty of softwares are  available for stock markets, these two softwares are more famous than the others in Indian scenario. Here i present some of their characteristics and details about edge over the other...

Metatrader

1. Metatrader is complete brokerage complex with full back office back end
2. Metatrader can't be connected your Real time feed direct from client end and feed is always restricted to what your broker provides.
3. A good custom indicator support is there based on MQ4 and trader can opt same for development for automatic trading strategies directly in platform
4. Backtester and genetic optimization for optimization stuff
5. Simple and Free client end and very user friendly even in few hours of 1st look around platform
6. A neat and clear charting features suffice above average purposes.


Amibroker

1. Amibroker a decent charting package and you can't trade straight from Amibroker or process your orders
2. External datafeed can be connected via local databases and plugins, so leaves some choice for selection of feed the client wish
3. AFL based coding and back testing possible, but not sure how accurate is its backtester
4. Scanners avaliable
5. Simple and neat interface

Before going demo to live account

Shifting from demo to live A/C is not an issue. But hasty decision may mar our account so before shifting please understand what we gonna need. For the following questions if u able to answer decisively, one can go ahead but if feeble YES or NO exist, just stay away and learn the tricks before you reenter. Because these things define you life....

•  Have you tried trading different time frames?
• Have you experimented with trading different styles?
• Have you been trading on a regular basis for six months or longer?
• Can you properly rationalize each trade you take?
• Are your winning trades outweighing your losing trades over a long term?
• Do you have a process for recording and reviewing your trades to improve performance?
• Have you made adjustments in your trading system after becoming discontent with the outcome?
• Are your winning trades outweighing your losing trades over a long term?

Of all forms of caution, caution in trading business is perhaps the most fatal to true happiness.
                                                            -- Ajith Bsc MBA