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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: MechanicalMethod who wrote (11472)	2/8/2001 5:43:34 PM
From: TechTrader42	Read Replies (1) \| Respond to of 12039

Inefficiency has the disturbing habit of being random, erratic. You'd have a hard time making inefficiency dependable, predictable. Ground it, dock its pay, suspend its privileges -- nothing will work. Clean it up, employ it, try to rely on it -- it'll disappear one day, and show up unexpectedly, in need of a handout. Inefficiency will always leave you at a loss, unless perchance you get a lucky break.

To: MechanicalMethod who wrote (11472)	2/8/2001 5:58:41 PM
From: TechTrader42	Read Replies (2) \| Respond to of 12039

Standard deviation? I used to filter out whipsaws in some systems with standard deviation. When it's low, price generally isn't changing much, and you get whipsaws. Maybe dramatic changes in price are in some respects inefficiency. Maybe it's the efficiency you'd want to remove from systems, and not inefficiency. That seems to be the essence of the problem: You need inefficiency to generate good profits, but ineffieciency is unpredictable, or volatile by nature. Standard deviation is a measure of volatility. When it's high, there are opportunities for profit, or for the opposite.