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I would like to continue my previous article by adding something more to it.
Unrealistic expectations on chart analysis:
Subjective traders, no matter what strategy they practice, they believe in their own efficiency in visual analysis of market charts. Price charts are trusted to be valid in detecting potential patterns in them; this is what the pioneers of technical analysis discovered and that’s what most of us use today. The human mind has the capacity and need to find order in what it experiences. We have the tendency to accept in an intuitive, non-scientific way impressions, but unfortunately in many cases what it seems at first sight may not be a valid thing.
Our brain is dependent on seeing shapes even if they are not real. Dr. John Elder, an authority in predictive modeling, calls this phenomena the “bunnies in the cloud” effect. Trends and patterns on market charts that appear real to the human eye may be just illusions created by the mind’s tendency to find order. Of course clear patterns and trends can be identified on charts and there are studies that shows that there are patterns which are valid predictive. However, only visual inspection of charts is not enough to g…
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9jakas avatar
9jakas 14 Aug.

The tip of the iceberg, beautiful

Ivory avatar
Ivory 14 Aug.

Thanks

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16/53
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Technical analysis can be divided in two major categories: objective and subjective. Subjective technical analysis is defined by methods and patterns that are not clear, and a conclusion from this type of method reflects the personal interpretations of the analyst. This creates the possibility that two analysts applying the same method to the same data can have different conclusions. Because they come from personal experience, these methods are not testable. Subjective technical analysis cannot be called wrong, this would have been in the case when it can be tested and rejected by evidence. Nevertheless, if you ask traders about it, many of them will strongly believe in their own subjective analysis. This is a consequence of the erroneous beliefs.
The human mind is built to look for and find patterns, even if they are just an illusion. Human nature is repulsed by the new, unpredictable and unexplained, so our mind tries to seek order and patterns. Acquiring knowledge can fail in the following ways: learning falsehood or failing to learn the truth. Of these two, the mind is more keen on adopting falsehood.
Cognitive phychology is concerned with how humans process information, draw …
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Agnessa26 avatar

Good job

Ivory avatar
Ivory 8 Aug.

Thanks for the feedback.

9jakas avatar
9jakas 8 Aug.

Good work

Ivory avatar
Ivory 8 Aug.

Thank you, good luck to you too.

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17/43
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1. Some thought about probability and the impact of free informationThe exact time of an extreme event, like e.g. a market crash or the apocalypse, cannot be foreseen. This is due to the fact that such events occur randomly. Statistical inference allows testing some hypothesis about data with random properties – like e.g. the apocalypse will be on the 21th December 2012 (null hypothesis). But even when the data fulfills all criteria for doing inference, it never tells us if it is a valid sample of the object of interest or not.If we use for example a 95% confidence interval, we always face the risk of getting inaccurate results on 5% of all samples. And inaccurate simply means that the confidence interval does not cover the true parameter. Hence, even when the searched value is in between the calculated level C confidence interval, we do not know the exact value of the searched parameter. This is, using random data, impossible. In a nutshell, there might be an apocalypse one day. But the due date will not be the 21th December 2012. There is a higher probability that you win millions with gambling in the casino – and you may be one of the lucky guys who know that the probability of …
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Nicco avatar
Nicco 17 Dec.

Very interesting...but, one may suppose that professional traders are persons with an IQ higher than a mean citizen, I know someone with phD in mathematics who is broker in Chicago, and many smart mathematicians are involved in many financial activities. Of course, these smart mathematiciens (and economists) are responsables with the beginning of actual crisis. I don't believe that a professional trader can consider this foullish thinking about December 21. But, you're right, the smart traders are speculators, not angels, and can initiate something like panics to scalp the nonsmart ones...

Deta avatar
Deta 18 Dec.

Richard Olsen, beautiful person. I didn't know about the book, thank you for sharing.

Deta avatar
Deta 18 Dec.

about the booklet sorry...

SpecialFX avatar
SpecialFX 18 Dec.

I would just like to add one thing regarding this end of the world madness, the Mayans never predicted anything regarding the end of the world, that is just the absurd interpretation that some people have made. Imagine you have a car that has reached 999.999km, if you drive one more km, it will show 000.000, simply because it only has 6 digits, so in order to continue adding kms it goes back to zero. Same thing with the Mayan calendar. Everything else is just insanity :) Wasnt the world supposed to have ended in the year 2000 anyway? ;) I predict that there will be another prediction soon

Nicco avatar
Nicco 19 Dec.

Man kind have many obsessions and one of them is the obsession of round numbers. And everytime man prove a great stupidity: one who can split the atom or a nuclear particle may believe he can forecast the apocalipse, or a lot of strange paranormal things. But he can't forecast the next EUR/USD price...

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