Archives of “Ontology” tag

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WSJ report – US-China Trade Talks Are Back on, but Obstacles Remain

  
  Analysis
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If you’ve been off the infosphere over the weekend, this is the much awaited news, coming as expected:

The Wall Street Journal note the truce agreed to by Xi and Trump but say, quite rightly,

  • an even tougher job lies ahead-appeasing hard-line factions within their own governments demanding they give no quarter.
For Xi
  • party leaders and executives of state-owned enterprises believe Washington is out to demolish the government-led economic model that is responsible for China’s emergence as a global power
For Trump
  • faces skepticism from some Republican and Democratic lawmakers who worry he will give up too much in any deal
  • wariness among some of his own political appointees
  • Heading into an election year, Mr. Trump must also contend with restiveness among his supporters in the business community and farm-belt states who have been hit by the tariffs imposed by both countries
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Yep. Truce is good but I don’t expect much substance if a “deal” is eventually patched together. 

What U Can Learn From Occam’s Razor About TRADING

  
  Education
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I have seen too many traders that randomly add condition after condition to their trading strategy, hoping that it will increase their hitrate. What they are trying to do is to add assumption after assumption to their hypothesis, until their hypothesis (“price will move in to this or that direction for this or that amount”) is hopefully correct more often than not.

Going this way usually ends in paralysis through analysis or in total chaos because there are so many conditions when entering a trade that it is impossible for a human brain to follow the system, thus inducing mistakes.

 Enter: Occam’s Razor

Occam was one of those scholastic philosophers, living around 1300 A.D. He developed a principle called Occam’s Razor which states that “among competing hypotheses that predict equally well, the one with the fewest assumptions should be selected. Other, more complicated solutions may ultimately prove to provide better predictions, but—in the absence of differences in predictive ability—the fewer assumptions that are made, the better.” But Occam was not the first, even Aristotle, who was living a mere 2000 years ago, theorized about this concept.

Now the thing is that of course when you add or remove certain conditions to your trading strategy, the predictive ability of your strategy will vary thus rendering Occam’s Razor seemingly invalid. Seemingly. Because trading is a game of incomplete information, we can never exactly know the predictive ability of a model.

Even after testing thoroughly, we will always only get an estimate (our winrate). Because of this fact you should base your trading strategy on as few assumptions as possible. (more…)

Some advice from Jeff Bezos

  
  Education
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During one of his answers, he shared an enlightened observation about people who are “right a lot”.

He said people who were right a lot of the time were people who often changed their minds. He doesn’t think consistency of thought is a particularly positive trait. It’s perfectly healthy — encouraged, even — to have an idea tomorrow that contradicted your idea today.

He’s observed that the smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking.

This doesn’t mean you shouldn’t have a well formed point of view, but it means you should consider your point of view as temporary.

What trait signified someone who was wrong a lot of the time? Someone obsessed with details that only support one point of view. If someone can’t climb out of the details, and see the bigger picture from multiple angles, they’re often wrong most of the time.

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