Trading: Part Science and Part Art

No worries, I didn't take it personal at all. I think you took the term "art" much too literally and I suspect you know better. It turns out that there are a preponderance of trading professionals who do believe that "art" has a place in trading. To be perfectly clear "art" when used in the context of trading does not involve crayons.

Here are a few references to art and, in some cases science, in trading references. I can assure you there are many that I skipped over.



Encyclopedia of Chart Patterns page 559: What you do not want to do is invest near the end of a downtrend. Of course, trying to determine when a trend will end is something of an art.

Candlesticks, Fibonacci, and Chart Pattern Trading Tools page 116: However, finding the correct PHI-ellipse is an art. It takes skill, experience, patience, and trust…

Chart Your Way To Profits: The Online Trader’s Guide To Technical Analysis page 140: Drawing a trendline is very simple for most people….The art, however, is discerning when to redraw the trendline…

Candlestick and Pivot Point Trading Triggers: Setups for Stock, Forex, and Futures Markets page 259: Another consideration in the art of placing stops using a time element is the aid of a moving average.

Technical Analysis for Direct Access Trading: A Guide to Charts, Indicators, and Other Indispensable Market Analysis Tools page 19: Furthermore, technical analysis is more art than science. Two people using the same concepts and looking at the same data may arrive at completely different conclusions. The reason is that technical analysis contains a strong element of interpretation inherent to its application.

The Day Trader's Manual: Theory, Art, and Science of Profitable Short-Term Investing page 82: The art of trading different expiration series and different strike prices is a recently developed strategy.

Market Wizards: Interviews with Top Traders page 365: These subjects, however, did not provide any insights into the art of trading.

Stock Market Wizards: Interviews with America's Top Stock Traders Page 51: Picking stocks is as much an art as a science.

Page 163: You have all these people trying to come up with formulas to beat the market. The market is not a science. The science may help increase the probabilities, but to excel you need to master the art of trading.

The New Market Wizards page 104: Eckhardt brings many strengths to the art of system design…….

Page 181: Is technical analysis an art or a scienece? It’s both an art and a science. It’s an art in the sense that if you asked ten different traders to define a head and shoulders pattern, you’d come up with ten different answers. However, for any individual traer, the definition can be mathematically precise.

Page 221: It’s not purely deterministic; there’s an element of art involved. Ultimately, you have to balance your underlying faith in the company with the price action

Page 248: Trading is probably more of an art than most people want to believe.

Point & Figure Charting: The Essential Application for Forecasting and Tracking Market Prices page 42: But above all, remember this is an art not a science.

Page 74: As much as people try to make investing a science, it remains an art.

BLAST......hahahaha, Phil -

you've put me in my corner....especially with the crayon part.

I know many of the citings you referred to and frankly it sounds to me as ever when people are stuck for a reasonable (or scientific for that matter) explanation for something in trading, they use the term "art" like a fly swat.

That's precisely what I dislike about it. I do see your point though.

Nevertheless, when am reading books/articles/etc. like Market Wizards, that part mentioning art is where the trader doesn't know. I mean he really does not know - he takes (like we all do) a "best guess" where to put the stop for example. Because nobody knows where the market will go.

If the guy has traded cable all his life, his guess will most likely be more accurate than the early guess of a novice who may put on the same trade with the stop too tight.

If one defines "playing the odds right" as art, than I am beaten here and I admit it. Art=Luck?? I don't know, Phil - maybe because I trade almost 100% mechanical, I have difficulties seeing anything artistic in it, thats all.

Great discussion though, your spark -

regards
daytrading

I can't define it either but I don't think you can deny that it exists. Some traders have an uncanny ability to see things that others do not and it often increases with experience. Some can quantify that art and make it part of their strategy. Maybe art is simply that which is not science.

Phil, I agree -

...it is subjective and definitions can vary accordingly.

That is why I said in my first reply that I think your thread is valid.

I can also imagine that (trying to think outside the box here) some exceptional traders' minds could "work" similarly to those of exceptional artists (whatever the art) - without the ability to really pinpoint how they "work".

I say that on the basis of interviews I've seen and heard where people with exceptional skills (or exceptional artists for that matter) were asked how they "did it" - and the answer was never any more revealing than discipline and practice; as if they couldn't really tell themselves....didn't know themselves.

How to define talent....the turtle experiment springs to mind, is it inherent or is it simply the strict adherence to discipline?

regards
daytrading

I define it as pattern classification on the charts. All that Zen stuff generally ends up being a combination of conscious and unconscious reasoning based on experience of what happens in situation X given factors <x1, x2, x3> ..etc. Nothing magical about it, although our learning (defined as increase in performance over time) is indeed a complex matter.

From what I have read George Soros uses predominently what would be considered Art (intuition, gut instinct etc) and very little of what some might consider Science (fundamental news, charts, COT reports).

+ + +

Here is a neat quote:

"He who knows much about others may be learned, but he who understands himself is more intelligent. He who controls others may be more powerful, but he who has mastered himself is mightier still."

Lao-Tse, Chinese Philospher

Sun,

I like that quote very much.

Sometimes I compare trading with a relationship between two people.

No relationship between 2 people is alway perfect - inevitably there will be arguments.

No trader is always perfect - inevitable there will be losses.

If the relationship is solid and build on positive foundations, it will weather the bad times.

If the approach (method) is consitent and disciplined, it will weather the drawdown periods.

Like in a good relationship, working on yourself can make a big difference.

Like in good trading, its yourself (only) who can make a big difference.


...anyway, its a little off topic but I thought its worth sharing.

regards
daytrading

Daytrader,
I hope u wrote all those words to phill during the day.... or were u rushing 4 a trade?
Compare ur statesments with how u feel when your bank accont grows.
Secondly, did the bank acc just grow without applying some special skill....with the intension of some desired results....using scientific tools(indicators)?
Trading strategies depends not on the scientific tools but by carefully recognizing some "regular patterns" of human thoughts which can be represented as candlesticks etc.
If the patterns are permanent then it becomes more of scientific or just scientific. But since a system would behave different not only on other pairs but even on the pair u observed to be obeying your law most of the time, we have every right to conclude that trading is an art. WHY? U NEED TO BE CREATIVE. Patience plays a vital role here which every artist(not a trader now) would testify.
The topic of art and beauty are closely related and u need to know the views of Aristotle and Plato on this topics. U need to also know about the views of Analitic theorist like Hogarth. It would be easy 4 u to fully comprehend what i mean. BUT if art or beauty have no influence on human senses(like both winning or losing a trade by skillfully drawing out the patterns of thouhgts), then my post has no any maening.
You just draw out the lines of thoughts and the money will flow just as the common artist will act or sing or draw and ......the money will flow!!!

Daytrader,
I hope u wrote all those words to phill during the day.... or were u rushing 4 a trade?
Compare ur statesments with how u feel when your bank accont grows.
Secondly, did the bank acc just grow without applying some special skill....with the intension of some desired results....using scientific tools(indicators)?
Trading strategies depends not on the scientific tools but by carefully recognizing some "regular patterns" of human thoughts which can be represented as candlesticks etc.
If the patterns are permanent then it becomes more of scientific or just scientific. But since a system would behave different not only on other pairs but even on the pair u observed to be obeying your law most of the time, we have every right to conclude that trading is an art. WHY? U NEED TO BE CREATIVE. Patience plays a vital role here which every artist(not a trader now) would testify.
The topic of art and beauty are closely related and u need to know the views of Aristotle and Plato on this topics. U need to also know about the views of Analitic theorist like Hogarth. It would be easy 4 u to fully comprehend what i mean. BUT if art or beauty have no influence on human senses(like both winning or losing a trade by skillfully drawing out the patterns of thouhgts), then my post has no any maening.
You just draw out the lines of thoughts and the money will flow just as the common artist will act or sing or draw and ......the money will flow!!!