Quote from dom993:
No offense, but this is an oversimplified view that ends-up wrong. You are confusing signal lack-of quality with noise. I would bet you are not a musician.
Wikipedia has a long article on noise, of which the 1st sentence is a good start for the purpose of this thread: "In physics and analog electronics, noise is a mostly unwanted random addition to a signal" - I would argue that the word "random" isn't a requirement to define noise, and I will use this moving foward: "noise is an unwanted addition to a signal".
Which should make it clear that noise is always relative to a signal, and cannot be defined in the absence of a definition for the signal itself.
When it comes to trading, I contend that the tape contains a variety of "signals" mixed together ... the "signals" are the footprints of many different type of players & trading strategies - I'll refer to these signals as "signal-1, ... signal -2, .. signal-n":
tape = signal-1 + signal-2 + signal-3 + ... + signal-n.
Let's use a single strategy viewpoint, and say that it is focusing on signal-1 to derive its actions. From that single strategy viewpoint, we can write:
tape = signal-1 + noise-1
w/ noise-1 = signal-2 + signal-3 + ... + signal-n.
If we were to look at another strategy focused on signal-2, we would have:
tape = signal-2 + noise-2
w/ noise-2 = signal-1 + signal-3 + ... + signal-n.
If you insist on a music analogy, then play simultaneously the 9 Beethoven's symphonies, and try to focus listening to symphony #6 for example (which happens to be my favorite of those 9) ... this will be impossible for most people on earth, and I bet would drive (literally) crazy a good number of musicians. Trading is no different.
Go back to Brass's post ... He summarized it all in 2 sentences:
