Mathematical advantage in approach to trading

mathematical advantage
Q: Is there any mathematical advantage you have with your approach to trading?
A: Mathematics is a system of logic. It is not possible to arrive at a valid conclusion if you use fallacious logic. Additionally, your conclusion may be valid, in that it follows from the premises stated, but never the less false because the premises include errors of fact. Then there is the issue of asking the right question. Learning how properly to apply critical thinking to market trading is not easy and requires the real life experience of doing.

Q: What do you think of Gerald Celente’s “Current events make future trends” statement?
A: I agree. I use the same approach.

Q: What is the advantage of using this approach?
A: It is not possible to cross a bridge until you get to it. You do not need to know that 149 days from now will be the low. It is enough to know on the 149th day that today is the low. As a practical matter there is no need to predict the future. All you need to do is apply economic law properly to the facts at hand. If you do that, then it is not any longer a prediction. It is a valid and truthful conclusion. The truth is not optional. A thing cannot, at the same time, both be and not be. It either is or it is not. That is the first rule of logic. Similarly, economic law is not optional. In a fundamental sense, it should be viewed as part of what is: a fact.

Q: Could you set out an example?
A: If you are asked the question: is today the low in the gold market for this year; then, as a mathematical matter, you have a 50% possibility, not taking into consideration any special talent, of being correct. If you are asked what date over the next 12 months will see the lowest gold price then you have 364 possible days out of 365 to be wrong and only one chance in 365 to be right. I like the odds of one in two better than one in 365.

Q: Interesting math but I do not see the advantage since you have 364 chances to be wrong in answering true or false.
A: Very good point. In order to get a meaningful answer you must ask the right question. Logic by itself is not enough. The proper math to apply in this case is division. The subject matter of the math should be attention or consciousness. Divide your attention by 365 days and you have only one 365th of your attention on each day. Compare that to applying all of your attention on today’s true or false question: is today the low. To the extent that the amount of your attention devoted to the issue at hand has any effect on the quality of the answer then Gerald Celente’s approach may give you a 365 times better result.

So yes, there is a mathematical advantage in my and Celente’s approach. Leave the predicting to stock promoters, politicians and mainstream economists. And always keep in ming:the truth is not optional. You are capable of ignoring it but not the consequence of ignoring it.

by Arthur Fixed

The Art of Speculation during Civil War
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[box type=”info” style=”rounded” border=”full”]Commentary from Arthur Fixed the author of the Art of Speculation during Civil War – Sun Tzu Meets Jesse Livermore is a private manuscript copyrighted 2012 by Art Fixed.[/box]

Photo credit: Southernpixel – Alby Headrick via Visual Hunt / CC BY-NC-ND


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