Foolish Thief:
It is obvious from your questions that you are a YALE STUDENT and the RAT will beat you.
Yale? A nice University, but I attended Berkeley and MIT.
You will not find what you are looking for in this thread.
Precisely, what, was I looking for in this thread?
"Look, for example, at this elegant little experiment.
The paragraph used was born of neither experiment, nor elegance [no fault of your own, as you were not the original author]. The reason is embedded within the paragraph itself:
"The placement of the food is randomly determined, but the dice is rigged:".
That is called a contradiction in terms, or a very poor example of sentence structure.
...A rat was put in a T-shaped maze with a few morsels of food placed on either the far right or left side of the enclosure.
Cruelty to animals serves what purpose for traders?
Behavioral comparative studies between non-corporeal and non-sentient beings, relative to fully corporeal and fully sentient human beings, have always been a great source of humor and entertainment for me in general. But, this one in specific, I find most amusing. :clap: I do have a sense of humor.
...The placement of the food is randomly determined, but the dice is rigged:
The author seems a bit confused, maybe?
...over the long run, the food was placed on the left side sixty per cent of the time.
Then by logical definition, the placement cannot also be
random. The author needs to clean this up and straighten things out for his/her readership.
In any event, contradictions in logic notwithstanding, the RAT does not have the capacity to ever derive the concept of a "fixed" game. So, what crime did the Rat have to commit to deserve such treatment and do you fully understand why this question is so valid, given the example you vouch for here?
The RAT has relatively no facility to conduct comparative and historical analysis on the resultant location of the cheese, with anywhere near the same degree that a fully sentient human being possesses. The Rat knows nothing of statistical symmetry, statistical harmonics, statistical variance and co-variance, cycles, cycle amplitude, cycle width; nor can the Rat conceive of structural anomalies as opposed to nominal structural features/conditions/factors. Thus, stupid is as stupid does, so the saying goes and the Rat is....well.... quite frankly, stupid.
...How did the rat respond?
Fatal flaw number one.
The implication here is that the Rat engaged in an intellectual cognitive process that approximates the same cognitive functioning of a human being -OR- that
could be relatively compared to the same. This is a serious flaw. Rat's do not "respond." They don't have the capacity for "response." Rat's
react, which is an entire universe removed from response and the reason why the statement is flawed for the purpose of explaining trader behavior relative to cognitive conditioning, which in turn is a well accepted human trait - mostly established by environment and rearing.
Exhibit A: The Get-Along Socially Conscious Rat.
In other words - instead of using just one Rat, use ten (10) at the same time. If Rats 1 through 9 make a left turn [not knowing they will run into cheese at the end], will that automatically suggest that Rat number 10 will make that same turn [again, not knowing it will run into cheese at the end]? Is Rat number 10 more or less likely to make the turn left, or does this Rat simple do what it needs to do in order to get-along with the other Rats - be socially acceptable, etc? Is this Rat doing what is in the best interest of its own survival, because it has "learned" the historical usefulness of following the crowd, or is this Rat following the crowd out of strict impulse? Be careful how you answer that.
Trader's engage in this kind of group-think behavior all day long in financially traded markets and worse than that is the fact that often times when traders do behave that way, they don't carry with them the same level of conviction about the ultimate outcome as the blind Rat! "I'm going Long because the rest of the group is doing it," is what many traders say to themselves each and every day. No rhyme, no reason - just GO LONG, because you see somebody else doing it. Does this very human behavioral trait make the Rat smarter than people? I guess the author would conclude the answer to be a resounding YES! But, the author would once again be dead WRONG - and for at least a billion different reasons.
...It quickly realized that the left side was more rewarding.
That's cute. The author never goes on to say how or why this was true, nor does the author bother to say why such a 'reactionary' profile is the worst kind of behavior that can be demonstrated by a trader. I notice that the author also fails to mention the logical nexus between the Left and Right sides of the T-shaped enclosure in juxtaposition the causation for the existence of cheese at either end, at any point in the future. In other words, the author acts like causation is non-existent and that every effect is a self-instantiated fait accompli.
So, according to the author, the Rat's 60% accuracy is non-causal of the Rat's own behavior, which is an illogical and irrational assumption on its face! How can the author conclude that 60% success comes from the Rat's own determination (causality) and then turn right around and imply that all is non-causal through the illogical gateway of proclaiming that the markets are
random? This is intellectual heresy at a minimum. One cannot absolutely exclude that which one then uses to establish his or her own underlying premise. That is the very definition of twisted logic. The author is now in serious trouble.
...As a result, it always went to the left, which resulted in a sixty percent success rate.
That's rich. Here's a trickier question for the author:
Was the Rat's 60% success rate a statistical mandate born of cause always preceding effect, or born of a random probability density function? Let the author chew on that for a while because the author keeps contradicting himself. Either the higher probabilities for success do exist, in which case causality precedes the net effect and thus markets [and T-enclosures] are NOT random - or - the Rat fails to achieve 60% success, given the 50/50 function born out of an enclosed dual outcome system.
Once again, the author has a serious problem reconciling this either way he/she spins it and here's why:
...The placement of the food is randomly determined, but the dice is rigged:
Followed by:
...over the long run, the food was placed on the left side sixty per cent of the time.
Now, I'm no Yale graduate (obviously), but even I can see that there is something suspiciously wrong with that set-up and the trailing logic that MUST ensue to a likewise logical conclusion. Surely, the author would have to admit at least as much.
...The rat didn't strive for perfection.
How was this conclusion determined?
Who was able to communicate with the Rat in such a way as to yield this ripe bounty of information? Here's an even better question:
How do we know the Rat was not a Rhodes Scholar who attended Oxford University, graduating and henceforth seeking perfection in everything it does? How does the author know whether or not the Rat exhibits a sort of rodent Type-A psychological profile? Has the author lived with Rats long enough to be able to peer into their less than outwardly displayed intentions and motives? Is the author engaging in a form of Rat Viewing or Rat Telepathy ? :cheesy: Inquiring minds wanna know this kind of stuff. 
Especially, those of us not bright enough to get into Yale.
Why do we constantly look to lower lifeforms, those things we have dominion over, in order to justify our own failures or amplify our successes? Opening up Pandora's Treasure chest of wonders? I have a sense of humor, you know.
...It didn't search for a Unified Theory of the T-shaped maze, or try to decipher the disorder.
Really? The Rat contemplated no such theory? The Rat never attempted to 'decipher' and/or 'decode' the reality that cheese simply shows up on the left side 60% of the time - WHENEVER HE JUST HAPPENS TO BE INSIDE THE T-ENCLOSURE? Is the author absolutely certain of his conclusion about the Rat's psychological disposition and/or behavioral proclivity?
Was the author taking the Rat to "test" or was the Rat taking the author to test? Somebody better think about that one before responding! :smart:
...Instead, it accepted the inherent uncertainty of the reward and learned to settle for the best possible alternative.
Oh, so that's it! The Rat, incapable of rational decision making [because it is merely a stupid Rat], simply put on a wonderful display of 'acceptance' both in a quantitative and qualitative fashion, of something the author on the one hand claims is 'uncertain' while on the other hand stipulates as being "fixed."
Huh?
...The experiment was then repeated with Yale undergraduates.
How unfortunate for them! :smart: Personally, I would have never allowed the author within 1,000 nautical miles of the campus, if I were the Chancellor.
...Unlike the rat, their swollen brains...
Sure, go ahead and slam the human capacity for reason and for making sense out of the Universe in which they reside. Dumb us all down. Heck, why not. Big Government does it. Big Media does it [really well]. Big business does it. Does the author subscribe to the notion that the dumber we get, the richer we become trading the currency markets?
...stubbornly searched for the elusive pattern that determined the placement of the reward.
Elusive pattern? Define the word: Pattern. The word itself denotes design and design denotes intent and purpose. Both intent and purpose denote a causality and cause always precedes effect.
When you define the word 'Pattern' you will undoubtedly note that the Rat did exactly what the author claims was not done. The Rat sensed (a proper descriptor of rodent reflexive behavior) the externally "fixed" reality that was beyond its control and at a very rudimentary level, recognized the so-called "elusive pattern" that ultimately lead to its 60% success rate. So, if the Rat was able to detect lower level rudimentary patterns in its T-enclave, then why can't Yale students detect higher level patterns in the same T-enclave, when they possess a universally larger capacity for cognitively derived solutions?
Were these Yale students or Failed students. Sounds the same phonetically, but spelled differently. I can't see true Yale students being so perpendicular to better reason.
The author can't have it both ways. The author can't have its Rat and eat it too. Either the set-up is fully random, or it is fully fixed - there is no middle ground. Either the Rat is a Rhodes Scholar or just a Rodent Scholar with not much intellectual horsepower (pardon the pun). Either the cheese was deliberately placed into a 60/40 sided-ratio, or it was not. It would seem to me that the author has some explaining to do, one way or another.
Didn't the people at Yale, who allowed this seriously flawed pseudo scientific experiment behind the four walls of their campus, figure out the problems with this comparative 'study' before going along with it? A bit oddly overlooked - ya think?
I've got a good idea. How about the author bring a righteously constructed "experiment" to MIT. All put my money on the MIT students over the Rats any day of the week. :smart:
...They made predictions and then tried to learn from their prediction errors.
What a revelation! Learning from error, gasp aloud! Proclaim it from the hilltops. Victory must be near thee Titus, else surely age old cheese shall follow us all the days of our miserable lives, oh mighty one.
...The problem was that there was nothing to predict: the randomness was real.
The author's premise incorrectly states otherwise: "Random" and "Fixed." The author is attempting to have his/her cake, rat and cheese, all at the same time.
...Because the students refused to settle for a 60 percent success rate, they ended up with a 52 percent success rate. Although most of the students were convinced they were making progress towards identifying the underlying algorithm, they were actually being outsmarted by a rat."
Were the students outsmarted by the Rat, or outsmarted by the test giver?
The book the author needs to read is called: Control Theory, A New Explanation of How We Control our Lives. I would encourage the author in this direction, for what it is worth.
The author's experiment, as I have pointed out here, contradicts itself three (3) times in its fundamental premise. Thus, the outcomes cannot be sanctioned by any serious minded psychologist(s), scholars or any layman interested in how and why human beings circumvent success and arrive at failure in times when they least expect it or want it. Control Theory, helps to put all of this into much better focus then I can or would here, so I won't digress.
Secondarily, the underlying premise assumes that all things within the context of the quasi experiment were defined as purely random and without causality. This is fatal flaw number two (2) that shows up in the results themselves! If the randomness in the quasi experiment were "real," then so too would be the ultimate result set - thus, eliminating 60% accuracy as being within the range of random probabilistic distribution of a solely dual outcome system. This further suggests that the author failed to set-up the "experiment" properly.
Notwithstanding, the author exhibits a horrible failure to understand the reality built into financially traded markets - that markets do exhibit a wonderfully balanced symmetry and synergy, even in the midst of what appears to be random chaos on the surface. This notion is born of the fact [not the idea or theory] that for every action, there MUST be an equal and opposite re-action. And, that, for every cause there MUST be an effect. The Universe itself demands that such truth be born out in all of its components, including [and especially] the Financial Markets. So, the false assumptive, that price action can be nothing outside of random, is just that - false. Price is not random, it is re-occurring and history demonstrates this truism.
What the Rat was given in the quasi-experiment, was nothing even remotely resembling what happens each day in the currency markets and thus, the Yale students were pawns in a scheme that proves, nor demonstrates nothing of material relevance. If it were possible to give the Yale students, relative and historically accurate sub-straight data about the overlying market, then those same students could dramatically improve their overall success rate - if - they properly applied what they had learned.
If one concludes that the financial markets are not governed by 'laws' the same way the Universe is govern by physical laws, then one would be making a colossal error in their analysis of what really makes a market to begin with. This is why I asked my original question: What makes one pair any different then any other pair for the purposes of your method.
If every outcome in the market were purely random and NOT born of a causality leading to an eventual and predictable outcome or effect, then your RAT would virtually starve to death in any enclosed system and there would be no successful traders anywhere on planet earth, thus - there would be no financially traded market to begin with and neither this thread nor this forum would have ever come into existence. That's called cause and effect. In order for one 'thing' to lead to 'another' there must be an historical record left behind at the point of causality. It is that causality which can be studied to determine the highest probable future-effect of any future causalities themselves.
If there were no historical significance to the bottom wick of GBPUSD in your own analysis being at least 20 pips deep, then your entire method would collapse under the weight of pure random chance. Yet, you use the random exposures of a Rat and Yale students to contradict the very mechanics that make your underlying 20 pip wick on GBPUSD to be non-randomly occurring. This is not to be confused with the randomness of the appearance of the bottom wick itself, but the non-random nature of the value 20, which you stipulate occurs X percent of the time in the time-series of 1,000 days.
So, then, within the apparent surface level randomness of the bottom wick, you have discovered a normalized region of data that contains a 20 pip wick, within the random domain. That's NOT random! That's cause leading effect. That's statistically sound evidence that destroys any momentary lapse of better judgment when one erroneously concludes that markets don't have inherent meaning and cannot therefore be predicted within a usable/useful margin of error.
So, while the Yale students may indeed need their heads examined for not asking better questions of the one administering the "experiment" (and for not attending Oxford) and before being counted as foolish pawns in a game of no-card-monte, they are indeed far superior in intellect relative to the Rat. With proper knowledge and motivation, they should be able to eat the Rat's breakfast, lunch and dinner - including all cheese hors d'oeuvres.
Yale students 1. Rats 0.
