you made my day. i honestly think that many times when people refer to game theory within trading context they in essence mean very simple things. like: always link your betsize directly to your chances. i think that this is essentially the true secret of poker. i would not expect a pro poker player to bluff against another pro. if there are three, the weakest will deliver all his chips, between the remaining luck will be the key factor. but who am i to tell ...
interesting. To me game theory means something more complex: http://en.wikipedia.org/wiki/Game_theory Have you seen "A Beautiful Mind"? John Nash won a Nobel Prize for his work on game theory. Surprisingly, he won a Nobel in economics, but he is a mathematician
in my understanding this is not the usual context in which game theory is used in trading context. but i might be proven wrong. the importance of modern game theory is that it shows that the invisible hand as proclaimed by economist john smith is a suboptimal concept for both society and the single decisionmaker. that is quite something, since up to this finding ecomonists were sure that rationale egocentric ambition would serve society and the individual best. whereas the new game theorists are more in line with categoric imperative. at least that is my understanding.
Physics, both relatiavisitic and non-relatavistic goes for the jugular statisitally and probabilitywise. Get a starter book on statisitical mechanics, for example. Lipshitz and Landau will start you.
Go to a few ISAGA conferences and you will meet some of the neat contemporary players. Especially focus on casual meetings with the panelists who do the Q's to the paper presenters. Systems theory is where the Risk minimization automated box comes from and there you saw how what you think is parallel threads is really a case of using an apropriate numeration base. Shortly you will find out that each system of numeration has its own algebra and that most people use transformations to get to use algebra and convert back to the original math functionality. If someone cut your balls off in school don't worry about it. Get yourself to a place with some resourses (human and otherwise).
It is a mixture of both, some things are parallel and some are serially dependent, it depends on how you design your system. Thanks for the advice. I never went to school actually, but I've recently started studying this stuff (numerical simulation,control), with a professor on an individual-study basis..should be fun to have someone who understands this stuff, instead of reading and thinking all day.
Series/parallel is what I meant, loosely, by the combo of terms steering and focus. I'm glad to hear that you are saddling up with another person. I'm sure he is an adept trader as well. You both will have your work cut out for you to recover from the commodities false start (which still puzzles me). ISAGA papers and being a panelist and a thoeretical physics background were all interwoven with my trading carreeer with began right after grad school. This combo precluded my becoming entranced with applying anything but logic to the money making opportunity. Logic turned out to be the only pathway to iterative refinement of effectiveness and efficiency for making money based upon the potential that the market offers. I feel that I learned very soon that, in gaming theory, the market only deals continually; there is no game, in fact, if no set of rules is involved since the market only deals continually. Backtesting is simply an intemporate measure used to find out the dealing sequence. Logic, I feel, focuses on the participants and their psychology, strategies and responses. Front running these is a logical approach. Series parallel logic networks with the minimum degrees of freedom as inputs allows for a "sufficiency" based network to constantly reset to appropriately activated defaults for continuing to make money or to deal with only one end effect that involves taking profits and commencing another leg of profit taking. Market pace and market sentiment emerge as pertinent descriptors for controlling the five stages of front running that are required. Interpret front running as a name for " anticipation" of the whole range of alternative paths, possibly electable. Market participants, collectively, continue to close paths (in one or more dimensions) singly or in blocks until one path remains and it becomes more acceptable than remaining in situ. Weighting matters as can be seen by the characteristics of sentiment and pace. The most interesting weighting comes from the persistence factors associated with both. A philosophy of the symmetry of history best applies. I use MLR for this. Three durations suffice and the vector angular velocity works best. This is an application of convergence/divergence and simultaneous first and second derivatives. i psent about 25 years getting down what the market does, how it owrks and why things happen the way they do. With these details in mind, I was able to get the logic that epicts the markets straight. when the eminis weree invented another opportunity hit the streets because a new set of participants arrived on the scene. They are in stark contrast to the "smart money" that has been around since time immemorial. You can see here in ET how the maths that differentiates the moves of smart money and others operates. It is a defined leading/lagging relationship all now posted in software for anyone's use. This is the embodiment of front running at its best. It is a logic based approach simply because there is no gaming element involved. Position trading is done the same way. The trading cycle is front run for an average daily profit of 4 to 7 % depending on amount of capital being used. Look at the last five chronological shifts in market analysis techniques and strategies. Which one is still predominent in ET? Why? What is wrong with that picture?