Order from Chaos. Beyond the second law of thermodynamics

...which states that for every natural process, disorder must remain the same or go up.

In capital markets, where money flows from the many to the few, this would be like shaking a box full of bugs and ending up with a rabbit at the end. The second law states that disorder must always increase in any natural process (defined as usable energy available).

How do the maestros do it? Not counting cheating, of course....

It's just like inside a laser which takes disordered light energy and turns it into the exact same wavelength, phase, and direction by using a crystal, mirrors, and some voodo related to the resonance of the rock.

By exciting a crystal with only one possible mode of vibration, placing the mirrors the exact distance needed, and some other stuff I'm not smart enough to articulate here, you get a light beam that is nowhere to be seen in nature, it's so powerful.

Therefore to absorb all those stoploss orders being popped every day and deposit them into your account by developing your own special resonant frequency that is self-amplifying, in only one direction (gainz).

A good example is to only get on a trend when momentum is rising and volatility is falling, since it is exactly like inside a laser, where energy is increasing and disorder is decreasing:

 

If one can predict/see a real trend in real time (not in hindsight) that’s a tremendous edge. All theories are useless.

 

The second law of thermodynamics applies to closed system.

"There's a sucker born every minute"

Dumb money is pouring into the markets all the time

 

Thanks. Didn't consider that.

 

After 4 decades, I forget about those laws,
enthalpy, entropy ... things.



But I remember some thermodynamic things :
heat travels from a hot body to a cold body.


Similarly,
money travels from lazy/gullible people to smart/hardworking people.

 

OK, thanks again for schooling me on the open system of the market, and how low quality traders are always entering the box, chasing price, and fueling the trendz that I like to hop on if I'm lucky enough to find them.

In this context, wouldn't it be great if we had some data on how many new accounts are being opened at the various retail brokerages? Imagine the correlations.....