Quote from Jachyra:
The classic example from philosophy 101 classes (at least during my college years) was something along the lines of: Two men sit in a room observing 2 alarm clocks. One alarm clock is set to go off at 7:59 and the other alarm clock is set to go off at 8:00. Once both alarm clocks have rang, the deductive observer might eventually deduce that the second alarm clock went off because it was set to go off 1 minute later than the first alarm clock, while the inductive observer might eventually induce that the first alarm clock was speaking to the 2nd alarm clock, and the 2nd alarm clock was simply being polite and talking back.
Now if you think about how some people (especially new traders) approach certain aspects of trading (i.e. the role and significance of studies and indicators as it relates to trading), you can see how easy it is to fall into the inductive trap -- did the market go up because the fast moving average crossed above the slow moving average (like CNBC's Dennis Kneale seems to believe and suggest)... or did the fast moving average cross above the slow moving average BECAUSE the market went up?
In my opinion, inductive reasoning tends to be more intuitive in our human nature... so we tend to want to react inductively... and deductive reasoning is learned through education... so education can offset our human tendencies to want to draw inductive conclusions.
