Monday, September 20, 2010

Trading Systems and Aesthetics

In Mr. Koestler’s book, The Act of Creation, he discusses perceptions…

“when two independent matrices of perception or reasoning interact with each other the result is either a collision ending in laughter, or their fusion in a new intellectual synthesis, or their confrontation in an aesthetic experience.”

What I find interesting in the above quote is that he uses the word confrontation in regards to having an aesthetic experience. In most art forms, the build up of tension and confrontation, and the subsequent resolving of these, help create the aesthetic experience. There generally is a thesis, antithesis, and a synthesis in art. The same is true in building trading models. This is why trading is sometimes described as an art.

There is inherent tension in building trading models. The concepts and our perceptions of the market that underlie the model may seem illogical. Nonetheless, by bringing what may seem as illogical and discordant ideas into trading models increases the chances of creating a better trading model. Successful trading models really are a combination of both art and skill.

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