The hidden disorder of the market

Often, you read someone that has the key of the “hidden order” of the markets and is so kind and altruist to share such a knowledge with you. Can you trust? Can you believe?

In my opinion, after years of testing and developing the artificial intelligence model that powers this site, there is no hidden order of any kind around the market, but, on the other side, you do not need any (hidden or explicit) order to profit from markets. You need to be logical, to reduce risk by knowledge and to act with proper timing and then profits will come.

The inner disorder of the market is generated by the interaction of thousands and thousands of humans concurrently acting on the market, moved by many different passions, from different locations, with different habits and all with just one idea in mind: profit. Trying to reduce this mechanics to the oscillating move from fear to greed and back is simplistic, as many passions act at once in each one of the participants to the market.

This chaotic and never ending activity may be analyzed in terms of correlations and this can achieve great results: simple correlations can be managed by single humans, but complex correlations cannot, only computers can put everything together and try to follow the path of correlations. And correlations change in time, as everything else, and so even computers have hard times to complete such a task. Are rising rates bad for stock market? Maybe. And maybe not. So many factors contribute to our opinions, that our opinions are always weak. The great and, at the moment, irreplaceable feature of computers is that they remove passions (hidden or evident) from the analysis and they can correlate so many different inputs that no human can even imagine to do such a thing.

 

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r.Virgeel