Hi OddTrader, This is in fact a very nice and relevant quote that you bring us. It questions the interrelationship between TA, science, art and implicitely: 'market speculation'. (Oops, I forgot to mention 'analyst' not knowing very much what this is for a kind of beast - going by the direct reference to 'pictures', I couldn't help but musing about Mandelbrot's. ) It all boils down to understanding what is "KNOWLEDGE". You can't 'reliably' make money in markets if you fail in this understanding. Thanks for the quote. nononsense
http://www.elitetrader.com/vb/showt...713&highlight=deming+and+knowledge#post393713 http://www.elitetrader.com/vb/showt...956&highlight=deming+and+knowledge#post439956
You jump at once into the nitty, gritty. Many, many questions to be answered here. In fact, talking about 'Process Control', you most certainly think about applying "knowledge" of the "scientific kind" to this endeavor. During all my life I have been stupefied by the very small number of people, even in academic circles, being able to formulate a cogent answer to the question: "WHAT IS SCIENTIFIC KNOWLEDGE?" Any nut in the street though uses the word 'science' in almost every other sentence, this in order to 'prove' the 'veracity' of his uttered nonsense. No wonder misunderstandings sometimes occur in these matters. Looking at this from a selfish side: no meaningful profits could be made from speculation if it were not for the large number of participants unaware of the questions you raised. nononsense
That was Harry's gem, not mine. I think you're quite right about the mystical "science" of price dynamics. Of which much has been discussed systematically by this book: Forecasting Financial Markets: The Psychology of Successful Investing (Hardcover) by Tony Plummer Publisher: Kogan Page; 4th edition (May, 2003) http://www.amazon.com/gp/product/0749439394/102-3846603-1642532?v=glance&n=283155&s=books&v=glance Probably Harry and/or Hypo could enlighten us more when they have time.
Don't put Hypostomus Pexostomus in the same bag with that cut & paste shrimp, Harry! Hypostomus is without doubt the most talented original writer of Elite's. nononsense
a) The Plummer is fascinating, although it is no longer on my shelf. He postulates that market price action is three dimensional, but that we don't know that because we only see the charted two dimensions of time and price. He says we are actually looking at a spiral from the side. b) Oh, my! Epistemological discussions on ET? I will offer that the answer is in Michael Polanyi's "Personal Knowledge", one of the most informative reads of my mis-spent youth. The key is the difference between explicit and tacit knowledge. ET wants explicit.
Market action almost certainly is on some sort of multi-handle sphere, also known as a n-torus. The torus is almost certainly non-commutative. Also, most market analysis is done on Hilbert Spaces. That is probably also incorrect because market-time is not well defined or well encapsulated by this space. nitro
Here is a paradox he subtly stated in the book: "Technical analysis focuses attention on what the majority of investors are doing at any given time, while simultaneously enabling successful investors to stand aside from the crowd mentality. It is a Rational approach to a non-rational environment."
Some Technical Analysis should be taken seriously as many of the techniques are honest to goodness mathematical techniques. For example it can be shown that Moving Averages are optimal filters. Most traders use them as guideposts in addition to using their discretion. The TA sets a context in which they can tell when they are wrong, but the real talent comes in the discretion that knows how to use TA. Discredeting TA as the ONLY tool that one can use to make money (let alone as an explanation of market dynamics) without discretion is trivial and has been done numerous times. nitro