Oversimplification (not only in trading e-mini futures)
I like reading, and I don't mean only the Internet stuff, that I spend probably too much time on, but books as well. The books I read are mostly non-fiction, including popular science and math books, rarely fiction.
Sometimes I happen to come across a great sounding piece that I cannot help but relate to trading and trading emini futures in particular. Such was the piece that I used in another article in this section.
The piece I want to share with you this time comes from the book by Philip J. Davis and Reuben Hersh entitled "The Mathematical Experience," although this particular fragment was written by a well-known mathematician, Gian-Carlo Rota, as a part of the book's introduction. The book was written in the 20th century.
Here it is, the very first two paragraphs of Introduction, in its original typeset.
AT THE TURN OF THE CENTURY, the Swiss historian Jakob Burckhardt,
who, unlike most historians, was fond of guessing the future, once
confided to his friend Friedrich Nietzsche the prediction that the
Twentieth Century would be "the age of oversimplification".
Burckhardt's prediction has proved frighteningly
accurate. Dictators and demagogues of all colors have captured
the trust of the masses by promising a life of bread and
bliss, to come right after the war to end all wars.
Philosophers have proposed daring reductions of the complexity
of existence to the mechanics of elastic billiard balls;
others, more sophisticated, have held that life is language,
and that language is in turn nothing but strings of
marblelike units held together by the catchy connectives of Fre-
gean logic. Artists who dished out in all seriousness
checkerboard patterns in red, white, and blue are now fetching
the highest bids at Sotheby's. The use of such words as
"mechanically" "automatically" and "immediately" is now
accepted by the wizards of Madison Avenue as the first law
of advertising.
I cannot help but notice that the same disease, if you will, of oversimplification has affected trading and the idea of simplifying trading as the foundation of one's trading success has held a great appeal among many traders, the appeal that is, in my opinion, somewhat misguided, as some wannabe traders might have found out the hard way by putting too much trust into one of those Forex or stock trading robots. Things should be made as simple as possible, but not simpler, to use Einstein's famous words.
I think one of the reasons why KING is such an effective trading tool is that it does not shy from the inherent complexity of the financial markets and tries to tackle it head on. I write about it somewhere else at a greater length.
And here is what I said in an email to one David from September 12th, 2011, that I mention here.
"Many traders try to reduce the complexity of the market in order to be able to make money. I think that's a wrong approach. I have no problem with complexity. I like it and I know how to handle it and how to exploit it, which gives me quite a bit of edge as almost everyone is trying to avoid what I am doing. Funny, isn't it?"
There is more than one way to skin a cat, but following the less beaten paths makes more sense in trading, not to mention that trading is really not a business for people who seek the company of others, although the Twitter trading gurus with thousands of followers would probably want you to believe otherwise.