Trading: Art or Science?

Joe Ross

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I believe trading is far more an art than a science. For one thing, if trading were a science, then we should all be able to enter the same trade at the same time, and exit at the same time, getting identical results. We all know that just isn't so. Yet if trading were scientific, we should be able to get identical results by doing the same thing. I believe such expectation describes the "scientific method."

In addition, if trading were scientific, we should be able to come up with a "get rich" formula that would work all the time. We could then all retire and never have to work again. We all know this isn't so either.

When we, as traders, make a trading decision, most of the time we do not fully know why we are making that decision.

You look at a market, you think about taking a trade in that market, and at some point you pull the trigger. You have thought of dozens of things in the time interval leading up to your entry. If I were to ask you, "Exactly why are you buying what you are, or why are you selling what you are?" you would probably not be able to give an accurate answer. You may be able to give a few reasons, but it will most likely not be the full answer. A lot of your decision to enter is subconscious. You do not really know why you entered, especially if you are day trading. To that extent it is more an art than a science, because you cannot fully demonstrate why you are doing what you are doing.

But you could say, "I fully know what I'm doing. I am taking the trade because I am following the signals of my method or system." Wonderful, you have just proved my point. When you are blindly trading signals from a method or system, you truly don't know why you are taking the trade. You are essentially acting like a robot, pre-programmed to follow signals whether or not they make sense.

I am not disparaging trading that way. If a method or system produces winning results, then what you are doing is following a statistically proven plan. All methods and all systems are based on statistics. The odds on any single trade are never more than 50% win or lose. However, the probability for a succession of trades is quite another story. If you are trading a method that wins seven out of ten times that you enter, and the method has produced a loser three or four times in a row, then the probability for a successful trade increases each time you enter the market. Sooner or later, over a series of trades, you are going to have the result of seven winners against 3 losers. That is statistically valid; however, it is not exactly rocket science. You will have proven that trading is an art -- the art of following a statistically valid plan.
 
Thanks for your posts Joe, they say always say just enough to start a debate in my mind about certain ideas which I then have to go away and think about and inevitably make me learn something. (I know what I mean anyway :D)
 
What total rot.

Do you know what a "specious argument" is?

Here's an example -

"Trading is more of a science than an art. If it were an art, we'd all be happily expressing ourselves profitably in the market.. this doesn't happen, so trading must be a science."

Grade A claptrap I'm afraid.
 
However, the probability for a succession of trades is quite another story. If you are trading a method that wins seven out of ten times that you enter, and the method has produced a loser three or four times in a row, then the probability for a successful trade increases each time you enter the market.

This is just plain wrong.

If I toss two heads in a row, am I more likely to see a tail on the third toss?

Durrrrr....
 
This is just plain wrong.

If I toss two heads in a row, am I more likely to see a tail on the third toss?

Durrrrr....

I know how probability works, all i was saying was when I read Joe's posts it makes me think about things, maybe its the way they are written. I don't always agree with the sentiment but hey I find them thought provoking:p
 
To be brutally honest I would say trading is nor art or science. Science is all about proving theory's using experimental research and coming to a conclusion and art is deliberately arranging elements to please the human eye. Trading on the other hand is just the result of limited resources on our planet and the human desire for these limited products what ever they may be. Lets face it If everything on earth was unlimited everything would be free and because there not unlimited there a price to pay for it.
 

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......... and art is deliberately arranging elements to please the human eye.

Have you been to the Tate Modern recently? I think lecturers at Goldsmiths and Nicholas Serrota might have something to say about your postion on art ;)

Brian Sewell would agree with you though.
 
Have you been to the Tate Modern recently? I think lecturers at Goldsmiths and Nicholas Serrota might have something to say about your postion on art ;)

Brian Sewell would agree with you though.

nope never been to tate modern i dont like mordern art eather plus iv never been to any art lectures just my opinion :)
 
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