More details can be found here (but it is not from Alexander Kotov) you should see many analogies with trading process:
"The dynamic
evaluation of a position, as concluded after the analysis of the best
move, should match the static evaluation of the position performed
before the analysis." (Note: static = without moving the pieces;
dynamic = moving the pieces) In layman's terms, "You should be
able to find a move which keeps your position about as good as
you think it is." For example, if you think you are better, you
should be able to find a move which leaves you better! It is just
that simple, but this law contains some powerful implications.
I would be remiss if I did not let the reader know that there is a
relevant rule in mathematical game theory which says that, "In all
games of full knowledge and choice (tic-tac-toe, chess, checkers,
go, etc.), your position cannot be better after you make your move
than it was before." The reason/proof is simple: before you move,
your position is exactly as good as your best move can make it -
make anything less than your best move and your position is not as
good. For example, it would not make any sense to say that
"Anand is up a Knight against Kasparov, but Kasparov is winning
because Anand will blunder and put his Queen en prise!" -
Evaluation of positions always assume "with best play," so if one
makes the best play, that evaluation must stay the same!
I have had people argue that this mathematical theorem is
untrue(!). They reason that White's position after 1. e4 is "better"
than it was before 1. e4 because of the extra center control and
mobility for the Queen and Bishop. But this argument does not
hold water, because in the initial position White can always play 1.
e4 if he thinks that is the best move, so his position is at least as
good as 1. e4 would make it. That extra mobility one gets from
playing e4 does not make White's position "better"; they do not
realize that there is a counterbalancing "cost": it costs the tempo
that was used to play e4 - it is no longer White's move!
The Steinitz law about dynamic analysis matching static analysis is
really just a practical way of interpreting the mathematical
theorem! What Steinitz is saying is that if we understand how to
statically evaluate a position correctly, then in order to match that
evaluation there should be a "best move," found by dynamic
analysis, that preserves that evaluation. Therefore, Steinitz is just
really re-stating the "best move preserves the evaluation" theorem.
What practical use it that to us? More than you might think!
When you are solving a problem from a chess book, you are given
a goal: White to play and win or Black to play and mate in 6. But
when you are analyzing a position during a real chess game, your
goals are not so well defined. However, you can make use of
Steinitz' law to set a goal.
For example, suppose you look at the position and say to yourself,
"Here are my weaknesses and strengths, and here are my
opponent's weaknesses and strengths; based upon these factors, I
would judge my position to be superior by X amount." Therefore,
you should be able to find a move that is "X good" - that is your
goal!
Moreover, it is important to note that the above process of
evaluating strengths and weaknesses should help point out your
proper plan - it almost always has something to do with moves that
(1) Take advantage of your strengths and/or your opponent's
weaknesses; or (2) Try to negate/eliminate your weaknesses and/or
your opponent's strengths.
The following is an example of using Steinitz' law. I had a friend
who was an expert level player who was aware of the static vs.
dynamic law. I gave him the following "White to play and find the
best move" position from Adrian deGroot's wonderful Thought
and Choice in Chess (deGroot's book explaining how he
performed one of the best scientific studies on how chessplayers
think) (See Diagram)
White: Kg1, Qd3, Rc1, Rf1, Nc3, Ne5, Ba2, Bg5; pawns - a3, b2,
d4, f2, g2, h2
Black: Kg8, Qb6, Rc8, Rf8, Nd5, Nf6, Bc6, Be7; pawns - a7, b7,
e6, f7, g6, h7
DeGroot Position "A": White to Move. My friend statically
evaluated the position as better for White. However, once he
started selecting candidate moves and analyzing them, he could not
find a continuation that matched his static evaluation - i.e., he
could not find a position where White was ahead as much as he
thought White should be. At this point he could have done one of
three things:
(1) Realized his static evaluation was too high, and lowered his
expectations. However, to justify this he should find a reason why
he over-evaluated his position;
(2) Realized that he hadn't found the best move, and play an
inferior move because his clock is running and it isn't worth the
extra time to try and find the better move; or
(3) Kept searching until he found a move which matched his static
evaluation.
Well, since my friend was not playing a real game with a clock, he
certainly didn't do #2! Instead, he stated out loud - I was tape-
recording his evaluation - that he was convinced that his static
evaluation was correct and that he just hadn't found the right
continuation yet ("There must be a better move!"). He continued to
search until, mirabile dictu!, he finally found the continuation that
made him satisfied (and according to deGroot and future computer
analysis, it was the right move! - For those of you who want the
answer, the best move is 1. Bxd5!).
So, what does this mean? It means that your feel as to how good
your position is can set your expectation for your search. If you are
losing, you should not expect to find a move that wins. If you feel
you are better by a certain amount, you should be able to find a
move that evaluates, after analysis, to be as good by about that
same amount.
Of course, we are only human and make mistakes - as do our
opponents! There are many positions which "look bad", but are
actually good because they contain a good continuation. And your
opponent can make a subtle mistake in what was a winning
position that will let you have a draw or even a win, just through
tactical (and no apparent positional) means. However, pick up any
book that has many "play and win" problems and most of the
positions will look "good" to you. That means that your evaluation
capability is working correctly: the position looks good; it is now
up to you to find the continuation that justifies that "goodness." Of
course, occasionally the author is able to throw in some problems
where the situation "looks bad", but there is a tactical continuation
that saves the day.
One should not get too carried away with this new found
knowledge. Being aware of this Steinitz' law is theoretically
important, but sometimes in practice it is not as much use as we
would like it to be. As John Watson points out in his great new
book, Secrets of Modern Chess Strategy, the best modern players
primarily evaluate the position on what their dynamic evaluation
tells them, and are not held back by fears of static drawbacks. In
other words, "If it works, play it!"
"The dynamic
evaluation of a position, as concluded after the analysis of the best
move, should match the static evaluation of the position performed
before the analysis." (Note: static = without moving the pieces;
dynamic = moving the pieces) In layman's terms, "You should be
able to find a move which keeps your position about as good as
you think it is." For example, if you think you are better, you
should be able to find a move which leaves you better! It is just
that simple, but this law contains some powerful implications.
I would be remiss if I did not let the reader know that there is a
relevant rule in mathematical game theory which says that, "In all
games of full knowledge and choice (tic-tac-toe, chess, checkers,
go, etc.), your position cannot be better after you make your move
than it was before." The reason/proof is simple: before you move,
your position is exactly as good as your best move can make it -
make anything less than your best move and your position is not as
good. For example, it would not make any sense to say that
"Anand is up a Knight against Kasparov, but Kasparov is winning
because Anand will blunder and put his Queen en prise!" -
Evaluation of positions always assume "with best play," so if one
makes the best play, that evaluation must stay the same!
I have had people argue that this mathematical theorem is
untrue(!). They reason that White's position after 1. e4 is "better"
than it was before 1. e4 because of the extra center control and
mobility for the Queen and Bishop. But this argument does not
hold water, because in the initial position White can always play 1.
e4 if he thinks that is the best move, so his position is at least as
good as 1. e4 would make it. That extra mobility one gets from
playing e4 does not make White's position "better"; they do not
realize that there is a counterbalancing "cost": it costs the tempo
that was used to play e4 - it is no longer White's move!
The Steinitz law about dynamic analysis matching static analysis is
really just a practical way of interpreting the mathematical
theorem! What Steinitz is saying is that if we understand how to
statically evaluate a position correctly, then in order to match that
evaluation there should be a "best move," found by dynamic
analysis, that preserves that evaluation. Therefore, Steinitz is just
really re-stating the "best move preserves the evaluation" theorem.
What practical use it that to us? More than you might think!
When you are solving a problem from a chess book, you are given
a goal: White to play and win or Black to play and mate in 6. But
when you are analyzing a position during a real chess game, your
goals are not so well defined. However, you can make use of
Steinitz' law to set a goal.
For example, suppose you look at the position and say to yourself,
"Here are my weaknesses and strengths, and here are my
opponent's weaknesses and strengths; based upon these factors, I
would judge my position to be superior by X amount." Therefore,
you should be able to find a move that is "X good" - that is your
goal!
Moreover, it is important to note that the above process of
evaluating strengths and weaknesses should help point out your
proper plan - it almost always has something to do with moves that
(1) Take advantage of your strengths and/or your opponent's
weaknesses; or (2) Try to negate/eliminate your weaknesses and/or
your opponent's strengths.
The following is an example of using Steinitz' law. I had a friend
who was an expert level player who was aware of the static vs.
dynamic law. I gave him the following "White to play and find the
best move" position from Adrian deGroot's wonderful Thought
and Choice in Chess (deGroot's book explaining how he
performed one of the best scientific studies on how chessplayers
think) (See Diagram)
White: Kg1, Qd3, Rc1, Rf1, Nc3, Ne5, Ba2, Bg5; pawns - a3, b2,
d4, f2, g2, h2
Black: Kg8, Qb6, Rc8, Rf8, Nd5, Nf6, Bc6, Be7; pawns - a7, b7,
e6, f7, g6, h7
DeGroot Position "A": White to Move. My friend statically
evaluated the position as better for White. However, once he
started selecting candidate moves and analyzing them, he could not
find a continuation that matched his static evaluation - i.e., he
could not find a position where White was ahead as much as he
thought White should be. At this point he could have done one of
three things:
(1) Realized his static evaluation was too high, and lowered his
expectations. However, to justify this he should find a reason why
he over-evaluated his position;
(2) Realized that he hadn't found the best move, and play an
inferior move because his clock is running and it isn't worth the
extra time to try and find the better move; or
(3) Kept searching until he found a move which matched his static
evaluation.
Well, since my friend was not playing a real game with a clock, he
certainly didn't do #2! Instead, he stated out loud - I was tape-
recording his evaluation - that he was convinced that his static
evaluation was correct and that he just hadn't found the right
continuation yet ("There must be a better move!"). He continued to
search until, mirabile dictu!, he finally found the continuation that
made him satisfied (and according to deGroot and future computer
analysis, it was the right move! - For those of you who want the
answer, the best move is 1. Bxd5!).
So, what does this mean? It means that your feel as to how good
your position is can set your expectation for your search. If you are
losing, you should not expect to find a move that wins. If you feel
you are better by a certain amount, you should be able to find a
move that evaluates, after analysis, to be as good by about that
same amount.
Of course, we are only human and make mistakes - as do our
opponents! There are many positions which "look bad", but are
actually good because they contain a good continuation. And your
opponent can make a subtle mistake in what was a winning
position that will let you have a draw or even a win, just through
tactical (and no apparent positional) means. However, pick up any
book that has many "play and win" problems and most of the
positions will look "good" to you. That means that your evaluation
capability is working correctly: the position looks good; it is now
up to you to find the continuation that justifies that "goodness." Of
course, occasionally the author is able to throw in some problems
where the situation "looks bad", but there is a tactical continuation
that saves the day.
One should not get too carried away with this new found
knowledge. Being aware of this Steinitz' law is theoretically
important, but sometimes in practice it is not as much use as we
would like it to be. As John Watson points out in his great new
book, Secrets of Modern Chess Strategy, the best modern players
primarily evaluate the position on what their dynamic evaluation
tells them, and are not held back by fears of static drawbacks. In
other words, "If it works, play it!"
Don't get fooled by the mind baby! There is no wrong or right answer to this uestion/satement.. It is just whatever works, period. In my opinion people have a hard time with the market because they make it out to be very complicated, and it can be, just like life. But there are important similarities and one should apply them. What I have seen is this, whatever drama one has got going on, it will be magnified and played out in the market and be reflective in trading results. That is why the rich keep getting richer 
Oh I digress. For me....here comes the methaphor.... personally I figured out that there is a big difference between sport fishing for Sword Fish and commercial fishing to feed the family and or city...country blah blah. That is why I cast a large net through our analytics tool and then it is all about money management. That is why I am stoked about the recent run, but don't really care if we go up or down or wiggle around from here. There is always something going on somwhere and it is good to be a trader today! Surf's up in Del Mar!