4.10.2011 г.

Intuition and trading Forex and other speculative markets

Do you use properly your intuition in your trading? If you are successful the odds are that this is not up to your intuition.

This pictures is from the excellent book of Daryl Guppy trend trading. The picture may look somewhat complicated at the beginning. But can be easily understood. The are two things knowledge (x) and ability (y). You may expect somewhat a linear progression between knowledge and ability. The more you learn the better you will be. This progression is indicated by the line from the zero point to the right. Actually things do not happen like that .Of course at the beginning there is somewhat a linear progression from ground zero to reasonable skill and reasonable knowledge. There is a plateau of skills despite the progression of  knowledge. The more interesting is the more you learn as a chartist and technical analyst your ability to trade successfully is going lower. Guppy explains that by learning more and more patterns you will not succeed. He proposes to use a systematic method. He argues that the most successful traders are those that use a simple method that happen to be successful. The idea is that in actual trading should be executed using simple approaches (simple is a relative term, by simple I would understand systems that use a limited amount of inputs and transform them in outputs that is the trading decision (the mechanism of transformation is irrelevant to the simplicity e.g. a neural network using a limited amount of inputs can be considered a simple approach despite its mathematical complexity)).

However this chart can be analysed differently using our knowledge from the RV experiments.

Under the remote viewing approach you are all submerged in a constant flow of information they call that the matrix. The intuition may be called the ability to extract information bit by bit. The problem is that the analytical mind is trying constantly to fit this information into categories and bring sense to it. And most of the time this results in rubbish.

The paradox is the more you are knowledgeable in technical analyse the less you are able to use naturally your intuition. Yes that is a paradox because people believe that by learning more they would be more and more successful in the speculative markets. In fact this is not a thing about learning at all. You can't reasonably learn to predict chaotic time series, and get better and better. That is why I am ready to laugh when I listen somebody to announce, you need to learn to trade the markets. 

Well of course there are things to be learned and the most important is the money management. On the other hand the thing that you can't learn much does not mean that you do not have to work, because it is a really hard work designing and testing trading strategies. But people who think that be reading by heart the Encyclopedia of the Chart patterns that will make them masters are going in the wrong direction. Or others who think that they will observe a particular market and time frame for 300 hours and after that they will start doing magic are wrong too.

So if there is a paradox can something be done? The answer is yes it is possible they call it Associative Remote Viewing (ARV). This is a protocol specially designed to court-circuit the analytical overly in order to predict an apparently random event. However we mean the future, and as the future is probabilistic you have a probability not a certainty, and probabilities for the future are not necessarily the product of ARV. That leads to my conclusion that specific designed protocols of ARV can be a valuable tool but cannot be used as a sole trading tool. 

This is true for intelligence purpouses as Ed Dames say, yes Remote viewing gives results but you need at least other two intelligence sources in order to take action. As analogy for the markets that would be the same.









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