Quote from rlb21079:
I've been following this thread and think I may finally have some thoughts of value:
The goal of science is to make predictions, create mathematical explanations of "reality," and prove itself by way of repetitive experiment. The goal of trading is to make money by making predictions, create mathematical explanations of the market (for some), and prove oneself by way of repetitive profit. The qualitative aspects of both science and trading are, in a sense, a failure in understanding. In other words, what one can not make formula (quantitative) one hopes they can respond to in a qualitative manner.
The question seems to me to be whether one must take the fuzzier aspects of their trading style and devise a complex program by which the system may be applied or whether one should focus these "fuzzy" aspects into simpler, more quantitative rules of trade. One could also, ignore such matters. But, I think this latter option would leave one open to their own potentially denigrative emotional input and prevent the development of trading ideas.
In science there are many simple explanations of "reality" which work very well - e.g. the acceleration of gravity=9.8 m/s2 - in many very practical ways, but that fall apart when circumstances change - e.g. one leaves the earth's gravitational field. The same I think applies to trading. One must adapt to these changing circumstances in some way or else their predictions will begin erring very greatly, very quickly.
Simple or Complex?
Designing a model to describe reality no matter how simple, is not easy. The yin and yang, so to speak, of this problem is that the more simple the model the easier it is to build, but the less applicable it becomes, and thus the more it must be adapted; the more comlex the model, the more difficult it is to build but the greater applicability it has, and thus the less it need be adapted.
Choosing the best path depends upon one's ability to compensate for the "drawbacks" of either approach. My mathematical prowess, though sufficient for most things, falls well short of PhD, what a theoretical physicist would require. Often when I get stuck in trying to transfer what is in my head onto paper, I doodle. Sometimes I find myself devising some cleverly descriptive pictorial representations of my ideas, often not but sometimes. I must cut this short so as to make a living...enjoy!
-rlb
That's the difference between an analyst and a trader.
Good Trade
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