Intuition Amplifiers 2

Ah! Excellent question! In your example you have just used “If – Then” type of statement: “If the toilet seat is up on my volatoilety icon, and go back to sleep if the seat is down”.

That is a serial, sequential type of logic. What I am talking about is different. For example, if your wife sees that the toilet seat is up she gets mad at you! She perceived the image of the lifted up seat and the entire situation in your bathroom as being “disrespectful” to her thus prompting her to other actions such as sending you to the couch for a few nights. By just looking at the lifted up seat she has just triggered the whole chain of events that might influence your entire life for the next little while. She did not make that decision consciously but intuitively thus forcing her into the different possible “logic” decision further in time. If I look at the market and created the image that converts a present market condition to an image that triggers a well-known reaction I can control further chain of logic.

“And BTW, you just admitted that you know what parameters are good to trade off of because you have "reference points."

Of course, I am a big proponent of a proper frame of reference. However, in my universe those points are intuitive, not logical.

P.S. BTW, the arrow is still red

 

Logical thinking is the one that we are aware of: -the one that we can consciously justify, memorize and formalize. The subliminal decisions cannot be consciously registered thus they cannot be presented in a sequence of the “If – Then” statements. In other words, for our intuitive, subliminal decision making there could not be a Turing type of an algorithm that is able to adequately model it.

 

BTW, I forgot to comment on Galton. I think it is important to mention his work on regression here. It will be relative later in the discussion.

The concept of regression comes from genetics and was popularized by Sir Francis Galton in the late 19th century with the publication of “Regression Towards Mediocrity in Hereditary Stature”. Galton observed that extreme characteristics (e.g., height) in parents were not fully passed on to their offspring. Rather, the characteristic in the offspring regressed towards a more mediocre point (a point which has since been mathematically shown to be the mean). By measuring the heights of hundreds of people, he was able to quantify regression to the mean, and estimate the size of the effect. Galton wrote that, "The average regression of the offspring is a constant fraction of their respective mid-parental deviations." This means that the difference between a child and her parents on some characteristic was proportional to her parents’ deviation from typical people in the population. So if her parents were each two inches taller than the averages for men and women, on average she would be shorter than her parents by some factor (which today we would call one minus the regression coefficient) times two inches. For height, Galton estimated this correlation coefficient to be around 2/3: the height of an individual will center on approximately 2/3rds of the parents deviation.

Although Galton popularized the concept of regression, he fundamentally misunderstood the phenomenon; thus, his understanding of regression differs from that of modern statisticians. Galton's was correct in his observation that the characteristics of an individual are not fully determined by their parents; there must be another source.
However, he explains this by arguing that, "A child inherits partly from his parents, partly from his ancestors. Speaking generally, the further his genealogy goes back, the more numerous and varied his ancestry, until they cease to differ from any equally numerous sample taken at haphazard from the race at large. In other words, Galton believed that regression to the mean was simply an inheritance of characteristics from ancestors that are not expressed in the parents; he did not understand regression to the mean as a statistical phenomenon.

In contrast to this view, it is now known that regression to the mean is a mathematical inevitability: if there is any random variance between the height of an individual and his/her parents (providing the correlation is not exactly equal to 1) then the predictions must regress to the mean regardless of the underlying mechanisms of inheritance, race or culture.

It is very interesting that Galton missed the true meaning of mean reversion, yet he has come up with a device that demonstrates this principle with amazing clarity. Galton’s “Bean Machine” that is also known as “Galton Box” consists of a vertical board with interleaved rows of pins. Balls are dropped from the top, and bounce left and right as they hit the pins. Eventually, they are collected into one-ball-wide bins at the bottom always forming a bell shape of normal distribution.

Aside from vividly demonstrating the principle of regression to the mean the Galton’s Box provides analogous proof that a normal mixture of normal distributions was itself normal! It was a stroke of genius. It was perhaps the most important breakthrough in statistics in the last half of the nineteenth century.

Mean reversion theory has been used to create market trading strategy for many years.
Typically, the trading algorithms that are based on mean reversion suggest that prices and returns eventually move back towards their mean or average. This mean or average can be the historical average of the price or return or another relevant average such as the growth in the economy or the average return of an industry. This theory has led to many investing strategies involving the purchase or sale of stocks or other securities whose recent performance has greatly differed from their historical averages. However, a change in returns could be a sign that the company no longer has the same prospects it once did, in which case it is less likely that mean reversion will occur. In the event of drastic market price moves caused by “flocking behavior” or “spontaneous synchronization” mean reversion might lead to significant losses as that reversion might not occur for a long period of time.

 

The OP is now stating the market is a system and the observer is best served by a sensing support system.

The rock bottom basic principles of the market operation afford such a simple approach.

Intuition is formed from heritage and nurture. Everyone has it.

I do "takings" by my subconscious perception.

Serving observers is simple.

We all have knowledge and skill sets that "work" automatically.

For markets, facilitating the observer is done by providing a fully differentiated inference and giving him a display to sense that allows his mind to know ahead of the Present precisely how the near term future will certainly move into the present.

As said H and L are what is used. So is the independent variable.

The OP stated the correct display format as well: relations of H's, L's and V's to what is there in the Present.

I color shapes that do not matter.

I put a "U" in a column of grouped information (automatically if the information may be used).

Lastly, If past H, L or V information can be a reverence, it is uniquely carried to the present for reference.

Thus, I continue to take the full offer of a market (which for me is my goal).

To drop about 50% of grouped information from the market use the following as TRUE.

(((H.1 >= H) and L.1 <=L)) and ((V.1 < V)))


What is left that move the dependent variable to ue to make money?

The definition of relative trending being True.

To wit:

(((H.1 < H ) And (L.1 < L)) Or ((H.1 > H) And (L.1 >L)) And ((V.1 < V)))

But then you ccould ask ask what about the relative relationship not included in irrelevant grouped information and relevant grouped information, i. e. , (H.1 < H) and (l.1 > L) for any V relationship. This is part of trending.

Finally. It is humorous to think about those who do not see the completeness of how the above forms a total system.

Well the trend End Effects have been defined as a set. Any observer can be satisfied with this ease of determination.

Those who love elegance and sophistication do go further. Check out the sets and subsets I gave the OP before. There, I posted the quantification.

Monitoring and analysis require the use of human culture's findings regarding quantification and qualification. Operators have a required order of use that comes from systems and systems analysis.


I like reading the posts of those to who these things remain opaque. It is interesting to surmise just why they became so screwed up. I mean how did the majician get the definition of traending screwed up. Was it just carelessness or did he purposefully discredit himself? How did marketsurfer get duped so easily from 1990 onward. Was it just the astrologer who deceived his mind?

So it looks like:
experience>>>>>inference>>>>>symbolism>>>>>intuition>>>>>> 90% learning failure.

It was good to see the toilet seat and it's misrepresentation. What good is using the power of "permission" and only look at half the analysis.

 

why do i have to read your mumbo-jumbo?

 

Get yourself a few EMDR treatments so you can revise your thinking as a consequent of personal experience. Or at least do more reading.

 

I wrote a short story. I think it summarizes well the topic of this discussion. I cannot paste it in one post, so I will do it in a few consecutive ones. Please read. It should be entertaining.
Cheers,
MAESTRO

 

At the late hour of the hot summer sunset two men were walking towards the northern part of Central Park. One of them, approximately fifty five years old, dressed in a beige polo shirt and navy-blue summer pants, was stocky, silver-haired, nicely tanned gentleman who carried his brown leather briefcase under his right arm. His clean shaved face was garlanded with stylish J.F. Rey glasses of quite a futuristic design. The other, a tall, slender younger man with short-cut, spiky hair, was wearing a black T-shirt, light comfortable trousers and black sneakers. The first (let’s call him James McCarty) was a well-known editor of one of the trendy and popular online trading magazines and his younger companion (we should call him Michael Boulez) - an ex-NYMEX floor trader who was desperately trying to find his new career as a technical writer. Once they passed the Great Lawn Softball Field 5, the pair quickly turned towards the Loeb Boathouse - a famous icon of Central Park. It was somewhat unusual that on this hot and sweaty evening when the sun was falling into arid smog somewhere beyond Greenwood Heights, no one was sitting under Boathouse’s bright-green roof and no one was having an ice-cream on its breathy patios - the place was empty.
“I’ll have a pint of Guinness,” McCarty asked the barman when they dropped their tired bodies onto refreshingly cold leather covered bar stools.
“We don’t have Guinness,” the barman said, whipping his sweaty face with a small white towel.
“All right, what do you have on tap?” Boulez inquired in a rasping voice.
“Stella, Brooklyn Lager, Old Speckled Hen and Yuengling Lager”.
“We’ll have two Stellas ...”
The beer produced a profusion of white foam, and the air began to smell of an old European Pub. Having finished drinking, both men became more relaxed, paid, and sat down on a bench facing the Lake.
Here a strange thing occurred. McCarty suddenly felt a sharp needle pain in his chest. He was instantly gripped by fear; completely unjustified, yet so strong that he wanted to run to his car and immediately drive it very fast until he reached his home in Long Island.
McCarty looked around in irritation, not understanding what was going on. He wiped his forehead with the back of his hand, thought: “What is the matter with me? This has never happened before. My heart’s acting up ... I’m overworked ... Maybe it’s time to send it all to hell and go to cottage for a few days...”
And here another wave of sharp pain and dread took possession of McCarty’s heart. He shut his eyes. When he opened them again, he suddenly felt that it was all over, the needle had popped out of his heart and the bids of cold sweat no longer were rolling from his forehead.
“Jesus!” exclaimed the editor. “You know, Michael, I nearly had a heatstroke just now!” He attempted to smile, but fright still jumped in his eyes and his hands trembled. However, he gradually calmed down, fanned himself with his leather briefcase and, having said rather cheerfully: “Well, Michael as I was saying ...” went on with the conversation interrupted by their beer-drinking.
This conversation was about Logic and Intuition. The thing was that the editor had just received from Michael a long, highly technical article on Intraday Trading Strategies that Boulez had written in hopes to publish the whole series of similar papers in McCarty’s magazine. Michael had nearly spent two month writing this article, but unfortunately the editor was not at all satisfied with it. Being an ex-floor trader Michael had depicted the main subject of his article – active trading - as a set of rituals; a “how-to” guide on using Technical Analysis to enhance one’s abilities to apply a given price chart pattern to make Buy/Sell decisions. The article was written in a very traditional style and covered the subject somewhat well, however, in the editor’s opinion the article had to be completely re-written. And so McCarty was now giving Michael something of a lecture on the Quantitative Analysis with the aim of accentuating Michael’s essential error.
It is hard to say what precisely had let Michael Boulez down - the life-long trader’s mentality or a total unfamiliarity with the theoretical principles he was writing about - but his Active Intraday Trading article came out, well, totally naive and looked like a manual on how to assemble an IKEA furniture set.
Now, McCarty wanted to show to Boulez that the main thing was not how the skill and experience of using the chart patterns for trading could be, profitable or not profitable, but that this skill, simply is irrelevant, and all the “fairy tales” about super traders and their remarkable intuition and their abilities to spot a profitable trade were mere fiction, the most ordinary mythology that has nothing to do with the theoretical foundations of Quantitative Analysis.

 

It must be said that the editor was a well-educated man and in his conversation he very competently referred to many known financial scientists - for instance, the famous Nassim Taleb and his bestseller “Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets” in which he had never mentioned the actual trading techniques yet clearly had underlined the probabilistic structure of rational decision making. Displaying a solid erudition, McCarty also informed Michael, among other things, that Dr. Mandelbrot in his book “The (Mis)Behavior of Markets” specifically criticized the modern market efficiency theory and suggested that the Bell Curve as a foundation for the regression-to-the-mean trading models is severely overrated.
Michael, for whom everything the editor was talking about was a revelation, listened attentively to McCarty, fixing his deep-set eyes on him and trying not to miss any of the useful references that the editor was mentioning with such fluency.
“There’s not a single stock, futures or FOREX trading book out there”, McCarty was saying, “In which, as a rule, the author would not attempt to recycle the old “Head-and-Shoulders” along with all the usual “MACDs”,” RSIs” etc”. And in just the same way, without inventing anything new, Michael’s article simply rearranged all known chart reading techniques under the questionable flavour of market folklore without the offering of any insights into the market’s quantitative and probabilistic nature.
McCarty’s loud voice resonated out in the deserted Boathouse deck, and as the editor went deeper into the logic of probabilities, which only a highly educated man can go into without risking a broken neck, Michael learned more and more interesting and useful things about the 1900 doctoral thesis of Louis Bachelier, Theorie der Prämiengeschäfte (Theory of Premium Contracts) written by Vinzenz Bronzin in 1908, Hafner/ Zimmermann analysis of premiums and many other Efficient Market Theory contributions that Michael had no way of knowing in his more than twenty year career as a derivatives trader. And just at the moment when the editor was telling Michael about the differences between the Mandelbrotian and Gaussian Probabilities a man walked onto the Boathouse deck and sat on the next bench not too far from where Boulez and McCarty were sitting.
The man was quite tall; he was wearing an expensive grey summer suit and soft suede shoes. He looked to be a little over fifty; his mouth was somewhat crooked, his face was clean-shaven and his dark hair was fairly long.
The man gazed around at the tall buildings of Lower Manhattan making it obvious that he was seeing this part of New York for the first time and that it was very interesting to him. He shifted his glance on the upper floors, where the tinted glass magnificently reflected the split-in-half sun which was turning into a bright copper disk, then moved it lower down to where the windows were beginning to darken before evening, smiled condescendingly at something, narrowed his eyes, put his elbows on his knees and rested his chin on his joined hands.
“For instance, Michael,” McCarty was saying, “you explained very well that using a moving averages crossover indicator one could trade quite reliably, however, you have not offered any proof of why it should work in any given market condition, what makes it more desirable than simply playing a random guessing game and why the trader’s intuition, experience and skill should be taken out completely from his or her rational decision making …”
At this moment the editor has interrupted his speech because the man on the next bench suddenly got up and walked towards them. Both Michael and McCarty looked at him in surprise.
“Excuse me, please,” the approaching man began speaking, with a slight foreign accent but without twisting the words, “I could not help overhearing you. The subject of your conversation is very interesting to me ...”
Here he politely smiled, and the pair had nothing left but to smile back at him.
“May I sit down?” the man asked politely, and Michael and McCarty somehow involuntarily moved apart; the man nimbly sat down between them and at once entered into the conversation:
“Unless I heard wrong, you were saying that the trader’s anticipation skills and the subliminal decision making abilities are worthless?” the man asked, turning his dark eyes to McCarty.
“No, you did not hear wrong,” McCarty replied politely, “that is precisely what I was saying.”
“Ah, how interesting!” exclaimed the man.
“What the hell does he want?” thought Boulez, frowning.
“And do you agree with your mentor?” inquired the stranger, turning to Boulez.
“It’s hard to disagree with pure logic,” confirmed the man, who instantly took the safest side of the argument following his trader’s instincts.
“Fascinating!” exclaimed the uninvited debater and, devilishly smiling, he said: “Forgive my pestering, but, as I understand, along with everything else, you also do not believe in Intuition or Perception as valid tools to make trading decisions?”
“No, we don’t believe in those,” McCarty replied, smiling slightly at the foreigner’s unusual remark, “we believe in the objective reality of mathematical models and not in “hunches” or “suspicions” that could never be formally modelled.”
The foreigner sat back on the bench and asked, with a hint of sarcasm in his voice: “You consider yourselves as “quants” then, right?”
“Yes, we’d like to think of us this way,” McCarty smilingly replied throwing a quick look at Michael who was getting angry at the foreigner.
“Oh, how interesting!” the foreigner replied cheerfully and began swivelling his head, looking from Michael to McCarty.
“In our business the word “quant” does not surprise anyone anymore,” McCarty said with tactful politeness. “The majority of all the financial institutions, banks, hedge funds and all sorts of portfolio managers consciously and long ago ceased believing in the fairy tales about traders like George Soros; they prefer mathematical algorithms and quantitative analysis to run their funds.”

 

Here the foreigner got up and shook the amazed editor’s hand in apparent excitement accompanying it with these words: “Allow me to congratulate you on such clarity of your mind.”
Both friends were looking at this extravagant foreigner with confused smiles and feeling somewhat uncomfortable with his eccentricity.
“But, allow me to ask you this,” the foreign spoke after some hesitation, “what, then, about the epistemological criteria of truth (or tests of truth) used to establish the objectiveness of Intuition and the intuitive judgement?”
“Well …” the editor said with rising irritation in his voice. “Not one of those tests is worth anything, and all the self-respected scientists have rejected them long ago like they have rejected Astrology, Scientology and all the other “quackery” that people were trying to sell as the “holy grail” of trading. You must agree that strictly logically there can’t be any proof of consistent intuition.”
“Logically, you said?” the foreigner asked sarcastically. “The rules of logic, as you well know, have no ability to distinguish truth on their own. An individual must determine what standards distinguish truth from falsehood as our dear Immanuel Kant said back in 18th century. I could also mention the Gödel”s incompleteness theorems, but you, of course see my point, don’t you?”
“Any real trader knows that all of these intuitions, emotions and other psychological crap must be taken out of decision making in order to be consistent and successful in trading!” Michael dropped quite unexpectedly.
“Michael!” McCarty whispered under his breath and looked at the foreigner embarrassed.
“Exactly and precisely!” the foreigner said broadly smiling and his dark eyes turned to Boulez, “just what I was hoping you’d say! Technical or fundamental models based mechanical trading is the key, right?”
“Well, yeah,” Michael jumped in again.
“But here is a question then that troubles me: if we discount emotions such as fear, anxiety and panic what made the price of gold jumping over $70 dollars an ounce yesterday? Was there a sudden shortage of this shiny metal? Have the electronic industry, microchip production or jewellery makers abruptly increased their gold consumption?” The stranger said looking straight at Michael’s eyes. “In fact, the only thing that has changed is the PERCIEVED value of gold as a “safe haven”, that is all. And wouldn’t it be very nice if you, Mr. McCarty could somehow measure that perception and buy the gold futures contracts ahead of time based on that measurement?” The strange man blurted shockingly turning his head towards the editor.
“How do you know my name?” the editor exclaimed with the definite notes of fear in his voice.
“Dear Mr. McCarty, who doesn’t know you?” Here the foreigner took out of his pocket the latest issue of McCarty’s famous magazine and the editor saw his own picture on the very first page under his very own editorial remarks. But the proof of fame and popularity, which yesterday had delighted James McCarty, this time, did not delight him a bit. He stood up, started nervously looking around in hope of seeing some other people around and involuntarily squeezed Michael’s shoulder.
“Some crazy stalker!” the editor thought worriedly, “I hope this psycho does not pull out the knife next!”
The stranger also stood up and smiled politely at McCarty. He then put his hand on his heart and said in a very apologetic tone: “excuse me for having forgotten, in the heat of our dispute, to introduce myself. I am Dr. Rouleau; I am from Canada. I was invited by the education department of the CME group to give a few lectures on Mathematical and Cognitive Psychology hear in Manhattan. I immensely apologize if I involuntarily scared you both. Here are my business cards and my ID tag that I have received today at the exchange.”
McCarty and Boulez each took the stranger’s cards and looked at them with obvious embarrassment.
“It is such a pleasure to stumble on both of you in this park.” Dr. Rouleau continued with his soft, polite voice, “although I recognized Mr. McCarty right away I am not sure I caught you name, mister ….?” The foreigner looked at Michael with a very friendly smile.
“Michael Boulez,” the writer replied still feeling awkward and extending his hand for a handshake.
The Canadian shook Michaels hand and then energetically yet gently shook McCarty’s repeating: “pleasure, such a pleasure …” to both of them.
McCarty coughed trying to clear his throat still feeling embarrassed for his sudden panic. “It is pleasure meeting you too, Dr. Rouleau, how long will you be staying in NYC?” He asked trying not to look directly at the strange professor.
“Oh, I am almost done here,” Dr. Rouleau said with the sudden sadness in his voice, “just a few more experiments …”
“Experiments?” Michael asked puzzled. “I thought you are giving lectures.”
“Why don’t we sit down?” The stranger replied waving his hand towards the bench. “I have been walking the whole day, my feet need some rest.”
The trio sat down but this time the strange doctor occupied the opposite corner of their bench.