01 December 2012

Trading Order

What would the objective be of hugging the market (trading tightly on it, in a non-algorithmic real time fashion). It is to strip away all that one uses to impose a template on the market, and hence expose oneself to this: that what one has done is temporally unsound. One notes by doing this, that there is a lack of determinism in this market, but not necessarily a lack of order.

One may note flash order, but one may also note sets of flash order, but not deterministic global temporally coherent order. So one may note that the places of past order have a significant issue in placing at the correct time, even if they place. So one gambles on that placing, that is the trading risk.

However one is in effect gambling on a future outcome, as one does not trade on a pattern that has already proved coherent. One must trade on partial coherence. In global determinism, one may trade on pattern matching of this determinism, based on the underlying order that gives it coherent structure over time, company growth and its context, economic growth and other factors on commodities and their context, for example.

One may note in commodities, that there is an element of temporal coherence, that is there is something between the underlying order and the valuations. This may be because the influencing factors are not coherent enough to generate valuations, but simply generate pointers to valuations, which must then be processed as future valuations.

Thus one obtains structure, but not reference. But this enables significant ranging. Reference though may make for oscillations.

There is a sense in this of reading something coherent though, across markets, but of course that lack of clear coherence enables vast sharp moves that one is nonetheless in considerable danger, thus, of reading incorrectly. This is the beauty of these markets, and their risk.

That continuity of global structure in equities, may make day trading a different experience, in that it may in effect reverse that perspective. However it may not generate structure building, in the sense that forex does, in terms of those collated sets giving precise reference.

However if equities are collating that structure we come back to that tempting idea of forex containing pointers to equities, pointers which may be more tuned to valuation at the time they collate, hence solving our problem of temporal coherence vis a vis valuation.

However to find that collation, one must hug the market, because in the absence of predictive indicators for trading, one must assume they are effectively random in appearance (temporally unsound), even if they may have a deterministic origin.

The idea here is not necessarily to trade in an algorithmic fashion, and not to let one effectively trade this way. But this raises the question of how does a trader ever not trade algorithmically, as the market may force the trader to do so. But even if not forced, does one ever approach something not algorithmically, at best.

However we are assuming that the mind has certain advantages to do with in fact collation of structure, over time and in short periods of time as well. But this requires something very important, freedom to think, express and act and indeed create, over time.