Quote from Cutten:
But all human behaviour is based entirely on past events. Everything we know and have learned is based on how the world used to be. Science, technology, experience - all based on the past. All have so far worked very well for predicting the future.
Even with the flip of a coin, the probability is based entirely on past events. How do we know that in future, coins will not all land heads and we never see a tail again? We don't - we simply assume that it will continue like the past, and flip 50/50 over the long run. The same phenomenon applies in trading. If a certain market behaviour has in the past usually led to a certain outcome, then the odds bet is for that to happen the next time. There is no other way to trade. Every trader is making bets based on either opinions/hypotheses which are not tested against the past (i.e. random guessing), or ones that are. Thus all traders who have a system (including discretionary traders) are making the bet that the future will in some respect be meaningfully like the past.