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outsource
Registered: Jan 2010
Posts: 282 |
09-11-10 04:19 AM
An exact science is any field of science capable of accurate quantitative expression or precise predictions and rigorous methods of testing hypotheses, especially reproducible experiments involving quantifiable predictions and measurements. Mathematics, physics, chemistry, as well as parts of biology, psychology, and the social sciences and TRADING can be considered as exact sciences in this sense.
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Arthur Deco
Registered: Jun 2004
Posts: 1898 |
09-11-10 02:07 PM
Bear in mind that one expects the scientific method of cyclically observing, measuring, hypothesizing and testing to converge on a viable compact stationary theory. Trading doesn't always cooperate.
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Petsamo
Registered: Apr 2009
Posts: 2153 |
09-11-10 02:30 PM
Quote from outsource:
TRADING can be considered as exact sciences.
I came out with a spreadsheet, where I quantified that if FXI & INP finished above or below their target prices, there's a 60% probability that SPY will gap up or down the following day. So, there's a 40% failure rate.
The problem with these technicians is they generally don't give failure rates. Like this Hindenburg Omen, for instance, "Oh my God! The market's gonna crash!" 
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Gabfly1
Registered: Nov 2009
Posts: 5295 |
09-11-10 02:55 PM
Quote from outsource:
An exact science is any field of science capable of accurate quantitative expression or precise predictions and rigorous methods of testing hypotheses, especially reproducible experiments involving quantifiable predictions and measurements. Mathematics, physics, chemistry, as well as parts of biology, psychology, and the social sciences and TRADING can be considered as exact sciences in this sense.
Psychology and other "social sciences" are nowhere near exact sciences. Since trading involves human behavior and variables which cannot always be foreseen, let alone exactly how they will be weighed by the market's participants at that particular time in conjunction with all the other variables then at play, it is not a pure, exact science. You cannot even establish a legitimate probability distribution with numeric specificity insofar as future price action is concerned. Any specificity is limited to frequency distribution of past price behavior. There can be a meaningful difference between the two for the reasons I just cited. With a true probability distribution, you can measure risk precisely. Without one, the outcome is rather more uncertain. If trading were an exact science then you should be able to predict with precision and accordingly trade quite large in relation to your account size. Do you? I would hope not, because uncertainty requires a larger margin for error than probability. I wouldn't confuse reasonable reliability over time with exactitude if I were you.
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