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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (28470)	9/20/1998 9:58:00 PM
From: Joseph G.	Read Replies (1) \| Respond to of 94695

Yes, I just tried to teach some simple math (not you), but in vain. It is well established that the "rare" market events, which fall outside of what is expected from a log-normal distribution of outcomes (on which assumption all stochastics, Bolinger bands, etc. indicators are based) make and break mechanical trading systems. In other words, "unexpectable" does happen much more often than is assumed by market participants, and leads to large losses or total whipeouts.

To: yard_man who wrote (28470)	9/21/1998 12:41:00 AM
From: Moominoid	Read Replies (2) \| Respond to of 94695

Clearly, the whole market, if it is thought of as one big dynamical system, is highly nonlinear. Cycles, waves, stick figures, whatever description one could employ to describe the markets -- the worst in my book is a straight line. Any of these behaviors can be produced by a linear statistical model. You don't need non-linearity necessarily to describe much of what is seen in the market. Just like you don't need conscious manipulation.... That's not to say that there isn't some non-linearity and some manipulation.