Can anyone reflect on taking college psychology or behavioral finance for trading?

Err I typed Leibniz as an empiricist, oops.

The main point is that empiricism, of any kind, depends upon experience.

Experience can be absolutely foolish. Ie: glancing at shadows and seeing objects that aren't there. Or doing drugs or alcohol and getting hallucinations and disoriented. Experiences are unreliable even when we're sober.

This is why is hard to be a discretionary trader.

The empiricist would ask, "Is my experience of the market relevant, or is it distorted?" The empiricists find more reasons to doubt its relevance. Descartes and Berkeley trust that God isn't lying to them and giving them irrelevant and divorced experiences from reality (if it exists, Decartes, Berkeley and Hume say it's foolish to assume reality or matter exists).

Jack, did you take any philosophy classes?
 
I'm a psych major. Most useful thing that translated over to trading was the 4-5 stats courses I had to take. And because you study about and do a lot of experiments, you develop the mindset where things must be proven with the scientific method before believing it as truth. In other words being very skeptical I suppose. I believe that helps when you're developing, testing, and running strategies. Also helps ward off snakeoil salesmen.

And then my thesis helped me brush up on my programming skills and allowed me to do a lot of probability, bayesian analysis, modeling, and monte carlo simulations. I've used all of those in my trading and I'm now working on incorporating bayesian learning into my ATSes so my systems can hopefully select better trades as the day goes on. Hopefully it works.

Taking psych courses won't help with your discipline though if that's your issue as a trader. I'd say you're much better off taking stats, probability, and programming courses as it can help you define your edge.

Why did I major in psych? Cause I'm lazy, there were always < 15 hours of classes a week, could always schedule my classes for the afternoon/evening, and a 10:1 girl to guy ratio :D I like those odds brotha....

Also, it's all very interesting stuff. If I could go back I wouldn't have chosen any other path.

(p.s. don't take any woman studies courses where its a 50:1 girl to guy ratio. every girl in the room will hate you. i also dropped the class after I was told I had to write an essay on the various cultural practices pertaining to first menstruation)
 
Sorry I haven't been here. Great post, Jack. I believe I am surpassing the listening and accepting stages and trying simple rule-based strategies in my trading to begin developing trust.

Quote from stefan_777:

says our notions of the past "causing" the future are unreliable and completely fabricated by our unreliable habits of association, and he has pretty good arguments why.
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It's easy to theoretically justify things that are not provable or not provable at the time. That's why bad decisions are made, why persuasion is so powerful (I wrote an essay on why global warming was good for a joke and it persuaded a good portion in my class - when you know how many billion dollars the northwest passage saves people pay attention!), and why philosophy will never come to conclusions.

In philosophy, the only way to "win" is to theoretically turn the opposing theory upside-down, which gives credence to your theory (not at all really, but it gets more recognized). This means usually not at all proving that it doesn't work and about 99% of them try to prove wrong such a minor point that it is entirely insignificant to the opposing theory at all.

There are a few good ones, however. I remember the one on whether you should follow "heart" / "gut" / "faith" or if only logic and science (related to God debate) should be followed. The argument was that faith has no basis, but they came back and said that there is no basis that logic should be followed, and for one to believe that is a notion of "gut" or "faith."

Obviously it was written better than that, but zing! Now obviously they won the reason/debate with that one, but does that at all prove that people should follow things based on faith??? Hell no! It's just an argument loophole that proves absolutely nothing at all.

Quote from bespoke:



(p.s. don't take any woman studies courses where its a 50:1 girl to guy ratio. every girl in the room will hate you. i also dropped the class after I was told I had to write an essay on the various cultural practices pertaining to first menstruation)
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Funniest thing I've heard all week bespoke!

I am planning on possibly taking programming classes as well, but I am extremely not detail-oriented so I really suck at it (did some engineering-related programming in high school). Definitely a pass/fail class I can use just to pick up a few things for automated strategies. I really hate it, though.
 
Quote from stefan_777:

Jack Hershey, I'm talking about Hume. The major empiricist after Descartes who didn't have a solution to empirical skepticism, where the earlier empiricists like Berkeley and Leibniz gave a solution to empirical skepticism, which trusted God that their perceptions were coherent with reality. Their "solutions" are just as ridiculous as Descartes’ solution, which also depended on God.

He argues that all we have is our perceptions. The way we connect them is completely habitual and unnecessary. Eg: We assume a book will drop if we let go of it, only because we expect it to, due to what we have seen in the past. It doesn't mean we are right or making a necessary claim. Our expecting it to drop doesn't mean anything, because if all we have is our perceptions, our perceptions teach us everything about the world and our perceptions lie to us all the time. We habitually assume and anticipate things, even though they could potentially be otherwise.

Hume screws up science, because in science we're making claims of causality. Since we have no perception of causality, according to Hume, our notion of causality is absolutely ridiculous.

If we apply Hume to trading, the same thing happens. We assume our setups are relevant to making profits, because we are assuming things that happened in the past(price action, chart formations, moving averages etc.) will influence the future price.

Hume says our notions of the past "causing" the future are unreliable and completely fabricated by our unreliable habits of association, and he has pretty good arguments why.

Hume basically screws up inductive logic (science) and reduces formal logic to inductive logic, Hume would argue both are based upon experience, and can be overthrown by experience.

I don't believe him, I think he's mistaken in some important points. But anyway....

If you want a solution to Hume's skepticism, read Kant.

BTW. The philosophy of history is covered mainly by Hegel, he's not an empiricist. But a great philosopher nonetheless.
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Add me to the long line of stoned philosophers (or was that trashed philosopher's stone?) who finally came to their senses that a fat degree in philosophy is absolutely useless. Popper sums up exactly how I feel about the whole damn thing.

“In my opinion, the greatest scandal of philosophy is that, while all around us the world of nature perishes—and not the world of nature alone—philosophers continue to talk, sometimes cleverly and sometimes not, about the question of whether this world exists. They get involved in scholasticism, in linguistic puzzles such as, for example, whether or not there are differences between 'being' and 'existing'.” (Karl Popper, Objective Knowledge)
 
Quote from TraderGreg:

It's easy to theoretically justify things that are not provable or not provable at the time. That's why bad decisions are made, why persuasion is so powerful...and why philosophy will never come to conclusions.

In philosophy, the only way to "win" is to theoretically turn the opposing theory upside-down,
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Philosophies in particular come to conclusions. But as a whole, just like any other diverse discipline, there are disputes.

To the guy who quoted Karl Popper, I'm amazed at how many people like to quote and cherry pick philosophers without checking what they actually argue for. Quote their arguments, not their opinions, which usually tend to contradict over time..

The context of what they said is important to consider.
Karl Popper was a critic of empiricism in response to Hume, he followed Kant's footsteps in accepting realism. He gave his own take on solving the problem of induction that Hume famously presents.

I don't know how people could disagree that empircism fucked science and common sense, among other things, I'll just assume they never read Hume.
 
Thanks for the book recommendation, psytrade! :) It is on my list of books to read when I trade enough money to afford it, haha.

Quote from stefan_777:

Philosophies in particular come to conclusions. But as a whole, just like any other diverse discipline, there are disputes.
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I'm looking forward to hearing an example, Stefan; I don't think philosophy can legitimately come to a conclusion.
 
I noticed you mentioned Hume.

I commuted from Greenwich to Columbia when Danto was a Prof there.

At one point in my life I was dealing with considering being invited to do two half time jobs: director of research at Drexel and Head of the College of General Studies at Penn. This was following a stint running two of the five divisions at UCSC (Academic interface programs and the evironment divs.) I've declined positions in Zurich (Jung Inst) and Michigan (Dept of Psychiatry).

Information Theory dictates that inductively derived algorithms do not work. In time based non stationary problems certainty is a requirement. To learn that the future is not the subject of trading is best done through philosophy as I suggested. In philosophy, all the contributors are what gives you the selection of theories from which to choose.

I chose the non probabilistic fork of information theory for producing an algorithm, in part, because of my specific experience with Danto in his approach to the study of possible philosphies of history.

For me, this is backed by dealing with how the mind works and is built (Building the mind is a process.)

Today, on NPR, I heard an interviewer draw out a neuro scientist on a study of a blind person who could walk through maizes without bumping into anything. The person became blind due to parts of his brain becoming damaged his optical nerve was not damaged and testing prved he was sonsorily blind by the tests that were performed.

Several of those I work with in trading can easily recognize what those on the radio do not and probably will never understand.

The belief that sensing leads to perception leads nowhere. Only 10% of perception comes from sensing, mechanically speaking ,in reference to the mind's processes.

Trading has little to do with looking at the screen and its display.

By dealing only in certainty and creating an algorithm that parallels the mind's building process, it is possible to extract the offer of the markets optimally.

Induction is avoided by using logic scientifically. That is, the null hypothesis must always be used to build the "diiferentiation" of the mind via the mind's neuro plasticity building activities.

This person talked about in the interview is known by his initials. He is blind by all the sensory tests and examinations. Two strokes made him blind. His nerves work as before beause they were tested and as expected were not part of the strokes he endured.

I know he could sit in front of a screen and trade just as he can walk thorough maizes (the maize experiments were an after thought of his treatment folks where they got the surprise of their lives).

People who progress through stage after stage of skills acquisition purposefully, all have the common experience of the blind person going through the maize.

No one who is haphazardly going through looking at screens (The 10,000 hour mythical appraoches). That I have read about have this common experience I mentioned....

It is not just the measuring of that person going from sympathetic to parasympathetic; it is more about what happens from day to day and sleeping in between each of these days.

A non inductive process centered on certainty and just dealing in the Present where all trading happens is able to add more and more skills until taking the offer becomes the asymptote.

All of this turns out to be accomplished by differentiating the inference of the trader. Most of it happens during sleep times when sensing is eliminated from the mind's processes.

The common experience is doing trades that turn out to be correct but this doing process is not a conscious one.

typically and occasionally a person wakes up and go to trade and trading has an "aha" associated with it. This is an after effect of the doing of trades that turn out to be correct.

Before, the trades were correct without conscious perception; after, they are correct because their is conscious perception.

Building the mind is largely done unconsciously. Skills acquisition comes from a flowing process whereby the unconscious leads the conscious.

People in this mind building process are in it because the algorithm parallels the neuro plasticity mechanisms the body used to build differentiation in the mind.

Any skills acquisition process that is contrary, affords the human's defense system the Fight or flight response and Bohr effect to go into operation and surface survival strategies instead of mind building. fear, anxiety and anger dominate while trading is happening for this sort of person.

How could this blind person avoid the obstacles in the maize? Why don't the people working with him know why the phenomena occurs?

They are like most people who are engaging in skills application and do not know, thoroughly, how the mind works.

Mostly everthing philosophy majors talk about and do is based on the sympathetic. This is the system of activity of the human who is oriented to his survival and thinks to survive. Look at the % of your energy devoted to this even in the severe state of the Bohr Effect depriving you of 50% of the 0 --2 supply to the brain.

the blind person is using his eyes to sense and sending the information to his unconscious which precedes and parallels his function other than what he does to report out orally what he "can no longer see". But his mind does still conducts his body around all of the objects in the maize simply because that "unconscious", non "visual" portion of his mind still works and has the connections to his bodily movement.

"I can't tell you why a took that trade but I know it was the right thing to do". Of course, the mind is still growing the consciousness from the operating unconscious. Synaptically speaking, it is a doubling down on the neuron intensity of wiring (1300 to 2700 connections per neuron).

Inference makes up 90% of perception and sensory is 10%. Philosophy does little to think critically about how the mind works, what is available and how it is available.

The pragmatic aspects of taking the market's offer optimally, come down to two kinds of perception: what perception is philosophically and what the mechanics are of perception.

About 100 millisecond sweep rates, the trade can use his eyes and trade "unconsciously"; when you slip down to fast sweeps of information then use an ATS and read the print.

Thinking is fun but critical thinking is how intellectual progress is made.
 
Greg, philosophers personally come to conclusions all the time, and they argue with eachother all the time.

But if philosophy wasn't contentious, there wouldn't be any such thing, because the questions it addresses would already be answered, the truth would be obvious, and there would be no need to formulate arguments.

Since that will never happen, just like in other disciplines, coming to a unified conclusion is irrelevant.

Jack Hershey, I appreciate your insight in psychology and how the mind works, you're giving the specific details philosophers intentionally overlook. Philosophy and Psychology help eachother in many ways, but they also can come into conflict, but it's all for the sake of rigorous reasoning.

Have a good one guys, Merry Christmas.
 
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