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Trading: Part Science and Part Art

  • #1
  • First Post: Nov 20, 2007 10:02am Nov 20, 2007 10:02am
To varying degrees we use art and science in our trading decisions. I was reading a book on airplane landing phase techniques and came across the following. I thought it had some interesting parallels with trading.

Art – Doing it by feel. Humans are intrinsically lazy. Thus, by default we
try to do everything by feel. It’s easy and doesn’t require any
forethought. But it doesn’t always work so well, either. Science
frequently dictates the easiest and most efficient way to succeed at a
task. We simply have to invest the time to learn the proper technique.

Science – Doing it by the numbers. Certain parts of the flight envelope
are best controlled by specific settings, deduced by science. But other
parts are too complex or occur too quickly to allow rote responses. This
is where we must rely on our instincts and apply artistic solutions.

Zen – Achieving enlightenment through the most direct method
possible. Zen tells us to do art or science as needed. Our job is to learn
which one is preferable in a given situation.

(www.betterlandings.com)
  • #2
  • Nov 20, 2007 12:53pm Nov 20, 2007 12:53pm
JFK Jr. must have asked his Zen spirit which to use, and it said Art when it should have been Science.

Actually he shouldn't have been in the air so it was weather (which is some between Art and Science) that he should have listened to.

Right?
  • #3
  • Nov 20, 2007 8:23pm Nov 20, 2007 8:23pm
use art when win, use science when lose, use zen when nothing happened.
use zen again when don't know what to do, it is so natural
  • #4
  • Nov 21, 2007 4:22am Nov 21, 2007 4:22am
I definitley think there is a parallel with trading I use science i.e. technical analysis but also fly by the seat of my pants.

Is Zen the combination of the two...heck I don't know.

"A good landing is one you can walk away from."

i.e. sensible entry points, stops and good MM.
  • #5
  • Nov 21, 2007 6:33am Nov 21, 2007 6:33am
Quoting Wolf.
I definitley think there is a parallel with trading I use science i.e. technical analysis but also fly by the seat of my pants.

Is Zen the combination of the two...heck I don't know.

"A good landing is one you can walk away from."

i.e. sensible entry points, stops and good MM.
I think Zen is knowing when to use art and when to use science without having to give it much thought.

Wolf, you left off the second half of the quote: "A good landing is one you can walk away from. A great landing is one after which the airplane can be used again."
  • #6
  • Nov 21, 2007 7:03am Nov 21, 2007 7:03am
Quoting philmcgrew
I think Zen is knowing when to use art and when to use science without having to give it much thought.

Wolf, you left off the second half of the quote: "A good landing is one you can walk away from. A great landing is one after which the airplane can be used again."
Yeah I definitley agree with the second half of the quote!
  • #7
  • Edited 5:24pm Nov 21, 2007 8:31am | Edited 5:24pm


Well if I may, let me speak from some experience. There is a parallel between the Flying/landing an airplane and trading, but obviously only on a basic level. Let me delve further; Flying an airplane all starts with the science behind it. When we learn to fly we get taught the science behind Bernoulli's theory, we are given the basics of lift/weight/thrust/drag, and many more details of the theory of flight, navigation, and meteorology etc. Eventually you get to actually go and fly an airplane and at first it is very mechanical with the instructor talking you through your first landings. Over time as experienced is gained whether it be in small aircraft or large commercial aircraft as you get more and more experience, the science is all still there but the art or "feeling" of a smooth approach and landing becomes second nature. Some are better than others, but there is no way you could have done this just starting out, like most skills, it is acquired. Case in point, I can land my aircraft way smoother than when I let the auto land function do it.
The same goes with trading, as we gain experience, the basics are always still there, we aren't so mesmerized about technicals and how they work or what they mean, the word Fibonacci ratios swirl around our heads when we are not even at the computer. When we trade we think immediately of risk/reward, expectancy, reliability, position sizing, we think exits before entries etc...This once again is overwhelming for newbies, but as experienced is gained and the science is understood, the actual art of trading becomes realized.
The Zen part happens when we can do whatever we are doing with the ultimate efficiency and little thought to it. The optimum balance of Science and Art. When I am landing an aircraft I look for that "warm and fuzzy" feeling on the approach..If I don't have it, then something is not quite right and I rely on science and knowledge to figure it out. With trading, unfortunately for me the Zen is still rare, I have not reached that efficient level of consistency yet. Over time as my experience and level of knowledge of the science behind trading increases, then the art of trading will become second nature. We all learn at different rates and via different methods. It's the feeling of a "greaser" landing or a perfectly executed trade that gives us our little moments of brilliance. I think the Zen is realized when Science + Art are at their peak degree of experience and focus. Just my thoughts.

Cheers,
NP
  • #8
  • Nov 21, 2007 10:02am Nov 21, 2007 10:02am
Trading: Part Science and Part Art

This is a significant truth, Phil.

Gwan summed it up nicely and Northpro did a great job of illustrating it.

We go through stages in trading and any endeavor. We may go through them in different sequences.

If I had it to do over Science would come first. Lots of Science.
Then Art. Whether we are aware of it or not, Art will be applied to Science. We can't unlearn our Science.

The more Science we know, the more confident we can be while applying Art; if our gut feelings and instincts begin to fail us, we can revert to what we know as fact. However, trading facts are mostly facts of probability. So Probability Theory should be a Significant part of our Science.

Science and Art: To what measure do we excercise each? I believe if our Science is sound, art can be applied more liberally.

Zen will quickly guide us between the two if we understand them well enough.
  • #9
  • Nov 21, 2007 10:56am Nov 21, 2007 10:56am
Thanks for all of the replies. I think NorthPro stated it much more clearly than I could have.

I definitely think science comes first. You need a solid foundation upon which to make additional decisions. I very much understood the science of flying but I can tell you my first few landings were hard and involved hard bounces. There's no solution to Bernoulli's Equation that can fix a few good bounces down the runway.

Art comes from having a feel about how things are going. It comes with experience. There is a funny saying about experience:

Experince is having the ability to recognize that you've made the same mistake twice.

I think Zen comes and goes. No one is in the zone forever. It takes a lot of the art and science part before zen comes along and even then it can be elusive. It is fascinating to study though.
  • #10
  • Nov 21, 2007 1:09pm Nov 21, 2007 1:09pm
I don't know that I would agree that more Science is needed and early on especially.

Analysis Paralysis comes to mind.

Soros using his gut feelings also.

Having said I use almost 100% TA to trade with.
  • #11
  • Nov 21, 2007 5:05pm Nov 21, 2007 5:05pm
Quoting SunTrader
I don't know that I would agree that more Science is needed and early on especially.

Analysis Paralysis comes to mind.

Certainly not in every case. Speaking for myself, I definitely needed more Science early on. It depends on where we're starting from.

But I also know of a few people suffering from Analysis Paralysis. The same knowledge that should give them an edge is crippling them instead. They can't get past looking for absolutes instead of probabilities.

On another note, there are probably some careers where little Art is allowed. I doubt Phil had much room for artistic interpretation during his career as a Nuclear Reactor Operator.
As far as flying--lots of science early on for anyone piloting me. And a load of gut instinct to boot. I never want to step up to get out of an airplane.
  • #12
  • Edited Nov 22, 2007 3:35am Nov 21, 2007 7:51pm | Edited Nov 22, 2007 3:35am
i won't give myself to art and zen any more when loosing, margin call just because an internet broke down is a bad surprise in the morning

edit: oh hey, happy thanks giving to all, to the market too (maybe)
  • #13
  • Nov 23, 2007 1:24pm Nov 23, 2007 1:24pm
Quoting philmcgrew
Experince is having the ability to recognize that you've made the same mistake twice.
amen!! unfortunately, i have found no substitute for experience

regarding art and science, ive always felt that art was science that we couldnt yet quantify. sorry, i have no data to back up my claim LOL.

great thread btw phil, its amazing how many parallels one can draw from trading to other games, sports, and sometimes just general life. i cant even play a game of chess without getting distracted with thoughts of the financial markets!
Relax and be happy.
  • #14
  • Nov 23, 2007 1:37pm Nov 23, 2007 1:37pm
Quoting merlin
regarding art and science, ive always felt that art was science that we couldnt yet quantify. sorry, i have no data to back up my claim LOL.
Well stated. I never thought of it that way but it makes perfect sense. I do maintain that most of us started out on the science side rather than the art side. Art gives us the liberty to overrule or interpret science which may or may not be to our detriment.

I would make golfing parallels if I didn't suck so badly.
  • #15
  • Nov 24, 2007 1:35pm Nov 24, 2007 1:35pm
Quoting philmcgrew
To varying degrees we use art and science in our trading decisions. I was reading a book on airplane landing phase techniques and came across the following. I thought it had some interesting parallels with trading.

Art – Doing it by feel. Humans are intrinsically lazy. Thus, by default we
try to do everything by feel. It’s easy and doesn’t require any
forethought. But it doesn’t always work so well, either. Science
frequently dictates the easiest and most efficient way to succeed at a
task. We simply have to invest the time to learn the proper technique.

Science – Doing it by the numbers. Certain parts of the flight envelope
are best controlled by specific settings, deduced by science. But other
parts are too complex or occur too quickly to allow rote responses. This
is where we must rely on our instincts and apply artistic solutions.

Zen – Achieving enlightenment through the most direct method
possible. Zen tells us to do art or science as needed. Our job is to learn
which one is preferable in a given situation.

(www.betterlandings.com)
Hi Phil,

The definition of ART as far as it can be defined - objectively or philosphically:

Generally art is a (product of) human activity, made with the intention of stimulating the human senses as well as the human mind; by transmitting emotions and/or ideas. Beyond this description, there is no general agreed-upon definition of art, since defining the boundaries of "art" is subjective.

The most common usage of the word "art," which rose to prominence after 1750, is understood to denote skill used to produce an aesthetic result. [8] Britannica Online defines it as "the use of skill and imagination in the creation of aesthetic objects, environments, or experiences that can be shared with others."[9] By any of these definitions of the word, artistic works have existed for almost as long as humankind: from early pre-historic art to contemporary art.

According to the above, I find that using the term art in association with trading out of context.

However great or average the results of any trader might be, I cannot see how they produce anything remotely aesthetic (specifically for an audience to share it with).

My view is this: every artist is also skillfull but a person with a skill (exceptional or not) is NOT automatically an artist.

Of course, the term art can be stretched and that makes the thread valid.

Maybe you are correct by saying that humans are intrinsically lazy but I would not go as far as making a general comment which describes artists as lazy. I certainly wouldn't be as bold to say that artists don't have any forethought when and while they are working on their "art".

I rather think what you have labelled as art in this context is better known as your subconscious. Skill learned and practised almost to perfection, that your are one with and that triggers the right actions without having to think about it - some people call it gut-feel.

Yes, an artist exhibits all these traits as well but he/she does something more: his result is ment to make a statement in some way - a great musician plays for the audience, the painter paints a picture that stimulates, etc.

I don't think that my trading results are ment to do any of the above. They are intended to increase my bank balance and I need skill for that...but I don't have to be an artist to be a great trader.

regards
daytrading
Enter Signature
  • #16
  • Nov 24, 2007 2:34pm Nov 24, 2007 2:34pm
How you interpreted a simple trading analogy into me calling all cavemen lazy I will never know. My apologies to all of the troglodytes out there if I've offended you.
  • #17
  • Nov 24, 2007 2:47pm Nov 24, 2007 2:47pm
Quoting philmcgrew
How you interpreted a simple trading analogy into me calling all cavemen lazy I will never know. My apologies to all of the troglodytes out there if I've offended you.

I hope those idiots from the Geico commercial don't find out.
  • #18
  • Nov 26, 2007 3:07am Nov 26, 2007 3:07am
Quoting philmcgrew
How you interpreted a simple trading analogy into me calling all cavemen lazy I will never know. My apologies to all of the troglodytes out there if I've offended you.
Hi Phil,

the author of the book you were citing from is not available for comment and it is your thread - so I directed the contents of my post at you. (as usual without intending to offend anyone in here)

I hoped you had opened the thread to invite all kinds of opinions.

You stated that you find the what the author wrote on the subject of aircraft landing has interesting parallels to trading. I really do not care whether you agree with his words.

It seems to me though that your answer is away from the subject.

In a nutshell, I don't think that art has anything to do with trading and I have stated my views and reasons. I believe we can agree to disagree without taking it personal.

regards
daytrading
Enter Signature
  • #19
  • Nov 26, 2007 4:40am Nov 26, 2007 4:40am
Switch the "art" part of the equation for "psychology" and I buy into it.
  • #20
  • Nov 26, 2007 7:13am Nov 26, 2007 7:13am
now that i think of it,,,, how can i not call this market as an art, because when i think i understand it, there is always something else between the line
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