Markets and mysticysm

[Patrik]

Patrik,

Mysticism is too laden with religious/sacred connotation for me to take seriously.

Numerology or astrology, for example, may well work for some people, but the underlying rationale doesn’t stand up. There could well be a scientific basis, but Jupiter aligning with Mars (cue for a song) isn’t it. And isn’t that what mysticism is – that which seeks or awaits a scientific explanation?

Grant.

I don´t know about Astro. Once saw a guy forecast Wheat in both time and price correctly. He used the chart to apply the cycles i think. But how effective it was over time...well

As for numerology there are repeating numbers in time and price. Not only ratios like in a retrace but lengths of price can be 618 points or the squareroot of it, inverted or some geometric. Dow Jones is easy to see it in when you learn to recognize the numbers.

There was a website called stockmarket-geometry before which showed that price and/or time followed a geometric structure. But there was the same problem with forecasting perhaps.

 

[Patrik]

On this website it is explained this way:
The universe, our reality, is created by thought consciousness which manifests in physical reality through a geometric blueprint that we call Sacred Geometry. It repeats in cycles giving the illusion of linear time "

http://www.crystalinks.com/sg.html

 

[grantx]

Mathsfreak,

“It would seem that something only becomes believable once it is explainable”.

A lack of credibility is no deterrent for some people.

Patrik,

How many times do we see references to people who claim to have predicted major tops/bottoms or turns and made a fortune? Given the number of traders, investors, analysts, etc world-wide it shouldn’t be too surprising a single participant is spot-on at some point. But are they consistent?

I can accept quasi-mystical systems work for some people but I think this reveals more about the skill (familiarity, ‘in-tune’ with a system) of the user rather than the strengths of the system.

Thanks for the web link. I’ll check it out.

Grant.

 

[alexander]

Im not saying I think fib retracements work, I just meant the fact that that ratio appears everywhere in the universe. I might be a candidate for a mental assylum according to most, but I love all that stuff! Science is about exploring the unknown even when it does seem ridiculous.

One question nobody can answer is whether things happen because they are supposed to happen or because everyone expects them to happen that way.

Thus, if all traders believe in Fib levels, eventually they become a self-fulfilling prophecy. But the exact final level can be established purely on hindsight. You may expect 23.8% but then you get 50% and when you think that is the end, you get 61.8% retracement and then you think this is the golden ratio and the end and you see another drop to 75%. Remember dot.coms?

Alex

 

[mathsfreak]

A lack of credibility is no deterrent for some people.

But how do you define credibility? You cant just dismiss something because it sounds incredible. Yes you need sound evidence but sometimes evidnce itself it dismissed because what it suggests is too strange for our predefined ideas.
Or the evidenvce may be sound but scarce-as Sir Conan Doyle once wrote,' you could land somewhere randomly on earth many times and never once run into a tiger and therefore conclude that no such thing existed, but that wouldnt mean that they didnt.'
Lack of evidence is not evidence.

I know Im a bit of an agent Mulder but it makes life and the markets more interesting if there is some unexplainable phenomena behind them. Like any system though whether mystical or not, I still think it should be backtested.
I thought that with all this golden spiral stuff I read about in trading books there would be more people like me but oh well....

 

[mathsfreak]

As for numerology there are repeating numbers in time and price. Not only ratios like in a retrace but lengths of price can be 618 points or the squareroot of it, inverted or some geometric. Dow Jones is easy to see it in when you learn to recognize the numbers.

Do you have any good references where I can learn about this? I am more interedted in it for the sake of it rather then for forescating because I am developing my own system anyway.
As for forecasting, how perfect is any system?

 

[mathsfreak]

There is no 'link' between maths, the markets and mysticism. Any more than there is a 'link' between you and the Universe you think you observe or between your thoughts and your reality.

It is the assumption that there is a ‘link’ which sends countless numbers off down a cul-de-sac of their own construction and when they hit the brick wall the majority think they have arrived – because they can’t go anywhere else. A smaller number see the brick wall for what they think it is and give up, or chase some other dream. Fewer still, see the brick wall for what it really is – and carry on.

There are only a very few who realise there is no ‘link’ except that which we choose to imagine.

Interesting quote from someone with your name and avatar..or am I going off down a cul de sac?

 

[grantx]

Mathsfreak,

I wouldn’t dismiss anything simply because it ‘sounds’ incredible – it could be beyond my knowledge, experience. or critical faculties. But I would dismiss that which ‘sounds’ as if it’s built on sand.

By way of example, would we accept Newton’s view of the universe or the Church’s? Is your belief system based on science or the supernatural?

Excepting the last sentence, perhaps you could give an example of evidence dismissed because it is “too strange”. Are you talking of evidence or simply conjecture?

Re Conan-Doyle’s quote - a paraphrase of David Hulme - why did he make this simplistic statement? There is an implicit assumption that tigers exist. Why should this be doubted? Is the basis for the assumption, or belief in the existence of these tigers dubious? Why should we conclude that an absence (or lack) of evidence for the existence of tigers is evidence that tigers don’t exist? I could do nothing more than say, for example, there may be tigers in India, but there are none in my garden in Cheshire (this doesn’t preclude the possibility of invisible, very discreet tigers – or black swans - behind the shed).

“Lack of evidence is not evidence” What do you mean by this?

Are you a maths grad?

Grant.

 

[Patrik]

Do you have any good references where I can learn about this? I am more interedted in it for the sake of it rather then for forescating because I am developing my own system anyway.
As for forecasting, how perfect is any system?

Hi! No websites or anything sorry. Tried to learn cycles and geometry earlier and just spent many hours with charts. Could not make much use of it in trading although the numbers and probably also geometry is there. You can see the numbers easily. Dow Jones is good because the difference between one and another number is more clear.
You can see 1414 577 618 828 686 382 732
If a cube has side 1 then the sides diagonal is 1,4142 and the other diagonal 1,732. 828 is 2 times 414 and 0,686 is sq of 0,828 and on and on

Now i focus only on trying to read charts supply/demand and volume. At least stops seems to make it easier to predict moves. No mystery there.

But perhaps the reason for the numbers and geometry is that the future is already almost decided on some level?

 

[dcraig1]

You cant just dismiss something because it sounds incredible.

Why not ? The world is full of people spewing forth drivel and claiming they are victims of orthodoxy. They range from nutters to charlatans to the sincere but deluded. You could easily spend an exceedingly unproductive lifetime pursuing utter nonsense.

Nobody can deny that the world is a mysterious and wondrous place. Perhaps nothing is stranger that the world of quantum physics which certainly challenges our notions of common sense. It confronted Einstein who made his unease with it clear.

And mavericks in any field are to be applauded. Ultimately that is how paradigms get challenged and changed. But the true greats that have hugely added to our understanding of the world generally have at least one trait in common - they have an expert knowledge of their field to begin with. Something about seeing further due to standing on the shoulders of their great predecessors.

Viewed in this way, it is very easy to dismiss the likes of magical properties of various things. From crystals, to numbers to alignment of the planets and on and and on. This sort of stuff is generally peddled by people with no knowledge of anything in particular. They just make it up. No hard grind of the acquisition of knowledge and expertise - that's just too much work.

Play on emotions about love, money and health and there are plenty of suckers to be found.

So yes, we do need to dismiss an awful lot of nonsense out of hand. If it looks interesting, credibility of the source is the first port of call followed by evidence. No evidence - no go.

 

[grantx]

Dcraig1,

“expert knowledge” and “stuff [is] generally peddled by people with no knowledge of anything in particular”.

That’s a very subtle and significant point.

Today, unfortunately, we see a corollary to expertise (or more broadly, financial success): selling a billion records automatically qualifies one to advise on (nay, dictate) international economics and fiscal policy (Bono and Geldof). However, the value of their contribution is recognised only by those with “expert knowledge” in an unrelated field; and “those with no knowledge of anything in particular”.

The reward is limited to honours of questionable value awarded to those who cannot assume any benefit - ‘Sir’ Bob, ‘Sir’ Bono. Then again, perhaps this is intentional. Could have been worse – a peerage would have entitled them to a place in the House of Lords. Lord Onslow or Lord Geldof? I’ll stick with the former.

Grant.

 

[dcraig1]

I think I did not make my point about quantum physics very clear in the prior post.

It is simply this. The (very) strange and somewhat uncomfortable world of quantum physics is far far stranger than any mystic could ever have dreamed up.

Advocates of mysticism frequently (and rather arrogantly in my view) claim to be challenging their audience to "think outside the box", discard conventional beliefs and the like. But science is the force that has historically forced the remodelling of conventional beliefs and challenged orthodoxy - not mysticism or for that matter conventional religion.

 

[trendie]

from "Trade your way to Financial Freedom", by Van Tharp.

Chapter5: Selecting a Concept that works

the author describes various methods that can be used to trade the market, and encourages traders to find one that suits the traders personality.
he then goes on to describe a variety of methods, from "band trading" and fundamental analysis.
he then devotes a few pages to mystical concepts, under the heading "Theres an Order to the Universe".

"The idea that there is an order to the universe is extremly popular. Peoiple want to understand how the markets work, so it is most appealing to them to find some underlying structure...... This naturally appeals to the psychological bias that most people have of wanting to be right and to have control over the markets.... its a highy marketable idea to sell to the public. There are a number of theories involving market order, including Gann, Elliott Wave, astrological theories, and so on."

the author then explains that "..the experts seemed to be more concerned with proving (or disproving) their theories than with the issue of whether the concept is tradable." (my emphasis)

Notes: the idea of the need to be "right" is used to explain why people are attracted to systems that have a high percentage of "wins", rather the "size" of these wins.
(he explains using marbles how "expectancy" is calculated, and how a system that is right 36% of the time may prove to be better than one that is right 60% of the time.)
EDIT: because the smaller number wins may result in bigger size of gains overall, in relation to the intial risk.

he also believes that almost any system can be tradable, as long as risk/reward is quantified, and shows how random-entry could be profitable if the correct exit-technique
is used.

I suppose the issue is: whether mysticism is "true" or not is beside the point. Can we "trade" it?

 

[rols]

I think I did not make my point about quantum physics very clear in the prior post.

It is simply this. The (very) strange and somewhat uncomfortable world of quantum physics is far far stranger than any mystic could ever have dreamed up.

Advocates of mysticism frequently (and rather arrogantly in my view) claim to be challenging their audience to "think outside the box", discard conventional beliefs and the like. But science is the force that has historically forced the remodelling of conventional beliefs and challenged orthodoxy - not mysticism or for that matter conventional religion.

Have you read Dean Radin's book?
http://www.deanradin.com/NewWeb/EMindex.html

 

[dcraig1]

I suppose the issue is: whether mysticism is "true" or not is beside the point. Can we "trade" it?

The first question one should ask oneself is if mysticism is not of much use in other fields of endeavor, then why should it be of any use in trading ?

When there is money and dreams of money involved common sense often flies out the window.

I personally think Van Tharpe is overrated and very much doubt his position that entries are not important is valid. I also doubt the stuff about systems based on random entries - they have been shown not to work on the S&P. I also suspect (though without any proof) that as markets change and more and more automated systems take hold, it will become less likely that a random entry system will be profitable.

In a way, Van Tharpe throws a lifeline (and possibly false hope) to those of us struggling to create profitable systems with the reassurance that by adding proper money management things will be OK. Perhaps it ain't so.

 

[trendie]

The first question one should ask oneself is if mysticism is not of much use in other fields of endeavor, then why should it be of any use in trading ?

When there is money and dreams of money involved common sense often flies out the window.

I personally think Van Tharpe is overrated and very much doubt his position that entries are not important is valid. I also doubt the stuff about systems based on random entries - they have been shown not to work on the S&P. I also suspect (though without any proof) that as markets change and more and more automated systems take hold, it will become less likely that a random entry system will be profitable.

In a way, Van Tharpe throws a lifeline (and possibly false hope) to those of us struggling to create profitable systems with the reassurance that by adding proper money management things will be OK. Perhaps it ain't so.

I agree re: if mysticism is not much use in other aspects of life..

here again, how do we quantify what mysticism is, and how to test its viability?
dreams? dowsing? tarot cards? throw of the dice? channelling spirit-guides?

in the context of "mysticism and the markets", would mystical knowledge be evidenced in a better equity-curve?
relative to turtle-trend-following?
relative to indicator-based RSI indicators?
relative to monkeys throwing darts at the FT? (Socco has a cage full of 'em, apparently)

I may have got a bit carried away with the random-entries bit, and I acknowledge your views regarding them.
however, what if the mystic had a bad spell, would that be explained as the markets changing, or that the mystics chakras went out of alignment?

how can we test this idea? (once we have quantified it)
how can we tell if its working?
how can we tell if it isnt working?
how can we tell if its "better" than ADX(14) on the 55-min time-frame? or not.

hope I am not being destructive to the thread, but this is something I am really interested in, and hence my desire to understand it by being more than usually analytical about it. oh no, you're going to say I should use by intuitive side, arent you?

 

[dcraig1]

Have you read Dean Radin's book?
http://www.deanradin.com/NewWeb/EMindex.html

No I haven't. I will make the remark though, that quantum entanglement is a phenomena believed and probably observed to exist on the nano scale - few atoms or even a smaller sub atomic scale. It is quite a stretch to extend it to psi and objects the size of the brain. Which of course is not to say that it is completely impossible.

Without passing any sort of judgement on the book, frequently scientific theories are jumped upon to provide justification for previously held beliefs using the most tenuous of connections and no plausible mechanism demonstrated.

Interestingly, I think it is Roger Penrose who has postulated that there is an intimate connection between intelligence and the quantum nature of things.

 

[grantx]

Trendie,

Good points.

"The idea that there is an order to the universe is extremely popular.” And where there is no (apparent) order someone will create it, and sell it because a lack of order causes insecurity . And because aspects of geometry manifest in a particular field, eg botany, it could be applied to the markets; the scientific basis provides reassurance and avoids the stigma of mysticism or pseudo-science.

“the issue of whether the concept is tradable...Can we "trade" it?”

From one of my earlier posts:

“I can accept quasi-mystical systems work for some people but I think this reveals more about the skill (familiarity, ‘in-tune’ with a system) of the user rather than the strengths of the system.”

If I may add a qualifier, here: I’ll accept it but for different reasons.

Again, we return to the point of credibility. Am I sufficiently qualified to judge a particular system? If not, how much trust can I place in the ‘expert’ pushing the system? Is he a former time-share salesman or ex-top prop-trader for a major institution?

Dcraig1’s example re quantum physics: in total ignorance of this field, I can’t seriously question any aspect
(although I do have difficulty with something which can be and not be simultaneously). Of course, there are crank physicists but a Ph.D from MIT has more authority compared to a new-age exponent of defying bourgeois/establishment/capitalist conventions.

Grant.

 

[alexander]

In a way, Van Tharpe throws a lifeline (and possibly false hope) to those of us struggling to create profitable systems with the reassurance that by adding proper money management things will be OK. Perhaps it ain't so.

You are obviously correct. How else he will sell his books to the 95% of traders who have no idea of how to program a system?

Timing is everything in the markets. One well-timed entry signal with so and so money management may worth as many as 10 bad-timed signals with superb money management applied.

There are those authors who sell tons of books by telling people what they want to hear. There are also those professional and pragmatic authors who try to tell people the truth and do not sell as much. I remember in a conference on Tradestation back in the summer of 2000 I attended a session by Michael Harris of Tradingpatterns.com who tried to explain to a large group of traders that if one must risk only 2% (or whatever percentage) of trading capital on each trade and the stop is $1,000 (or whatever amount) then on must have at least 1,000/.02 = 50,000 in the account or in general: account size = amount risked/risk percent, a trivial formula indeed.

Then Michael Harris made the comment that this simple formula is the reason many that start in futures or FX trading with $2,000 or $5,000 soon lose their starting capital simply because the risk per position is too high given the leverage and a streak of consecutive losers at the wrong time wipes them out.

Do you know the end result? Some brokers attending the conference complained loud to the organizing committee that Michael Harris was trying to scare traders away from futures or Forex trading. Of course they did that because they were afraid of losing their other doomed side. Michael Harris was so disappointed about that behavior that he declared he will never speak in another conference again. I spoke with another person next day during lunch and he told me that this industry is so full of people who misguide traders mainly unintentionally for the benefit of the few brokers that sponsor them.

Van Tharp sells because hope sells while reality does not.

Alex

 

[Patrik]

This is a mystery to me at least ( see chart). Perhaps there are numerology or geometry experts out there who can explain it