camron.systems.australia section 3 of 26source: B.F. Skinner's Science And Human Behaviour - 1999 by Alistair Knock
"To understand the term "science of human behaviour", one must first establish the definition of the two constituent parts of the phrase. Most would agree that "science" is based around a systematic and lawful study of the object in question, with the object being "human behaviour" - which one might argue relates to the mental function and reasoning of one person, and particularly the interaction between more than one humans. A science of human behaviour, thus, implies that mental function (the relevant science being psychology) and social interaction (or sociology) can be explained in terms of previously defined patterns or laws. In essence, this suggests that, given a set of conditions, A and B, and that as a result of these conditions, C occurs, it would be logical to presume that C will happen again and again whenever A and B exist. The argument made is that not only can a science of human behaviour explain previous events lawfully, but predict future events based on these laws".
See also Science in Action by Bruno Latour.
Wolfram van Eschenbach's Parzival
source:Parzival : Quest Of The Grail Knight as retold by Katherine Paterson
Parzival leaves the castle, to begin his quest ... to begin trading ??
"The gate was open and the drawbridge down. He galloped across, but when he got to the end of the drawbridge, someone yanked the cable so abruptly that Parzival was nearly thrown, horse and all, into the moat. Parzival turned back to see who had done this to him. There standing in the open gateway was the page who had pulled the cable, shaking his fist at Parzival. "May God damn the light that falls upon your path!" the boy cried. "You fool! You wretched fool! Why didn't you ask the question?.
What do you mean? .. Question? Parzival shouted back at the page. What question?"
A black box system, as applied to trading systems, is commonly described as any system where the user is presented with the results of a process and asked to accept the results without access to the formulae that give rise to the conclusions. The inner components are known, but only by the author.
Bruno Latour in his book Science in Action, described black box theory as a box containing a number of smaller boxes. The observer, not understanding the function of the outer box opens it and examines the collection of inner boxes. If there is understanding of all of the inner boxes except one, then the observer opens that one. Inside they find another collection of boxes. They examine this collection, and not understanding one of the boxes, open it and so on. This process of drilling down until understanding is finally obtained, is a way of establishing the building blocks to understanding. The process is then reversed, re-examining each box on the way out until one fails. Then the drill down process is repeated again, this time going down a different path.
Latour's work is a recognised university text. It clearly establishes that evidence of an established/accepted theory is, the absence of controversy, and the acceptance of a single, final authority. ie Einsteins Law of Relativity, Watson and Crick's Double Helix DNA. He argues the mere existence of controversy and competing theories is evidence the jury is still out, and yet to be accepted. Which defines the current state of Technical Analysis.
why sight, visual perception, and memory, are important in Futures Trading.
Trading is a visual, and, memory intensive activity. Live trading screens deliver large volumes of information.
Trading depends on visual perception, therefore it is necessary to understand how it works.
The task is how to take it all on board, absorb it as it happens, and remember it.
Mistakes occur when we do not see what is happening.
They are important because mechanical systems do not work.
We learn how to see. We see things and that's how we know they are real.
The physiology of sight is about light and colour, our nerves and brain chemistry, and how light waves reach our brain and are interpreted. (From Peter K. Kaiser at http://www.yorku.ca/eye/thejoy.htm)
There are three phases to sight.
1. physical, optical process that receives light and colour impulses on to the retina at the back of the eye.
2. electro-chemical process responds to and transmits light and colour impulses from the retina to the brain.
3. neurological process where the brain receives and interprets those impulses.
Here we are concerned with phase 3 where sight is a psychological process, and therefore interpretive. A learned mental process that we call perception. ie. the ability to become aware of through the senses, to get knowledge of by the mind, to see, to understand. Mistakes are made when what is seen is interpreted incorrectly.
How is it possible for two people receiving the same light waves to interpret them differently? Two people may see the same things but interpret them quite differently. Plato (427-347 BC) Things are, for each person, the way "he" perceives them.
Take the primary colours Red, Blue and Yellow.
Links on accelerated learning
lozanov = http://www.context.org/ICLIB/IC27/Labiosa.htm
http://www.learningstrategies.com/Paraliminal/Article2.html
http://www.gu.edu.au/school/lal/japanesemain/private.kaz.suggestopedia.html
"Enhancing Human Performance: Issues, Theories, and Techniques (1988)" Druckman & Swets
http://books.nap.edu/books/0309037921/html/R1.html#pagetop
There are a few important things to note:
Left and right brain
The left brain is short term memory and logic.
The right brain is long term memory and creativity.
Both the left and right brain are stimulated for both analytical and analogical thinking - that is, taking things apart and putting them back together again.
Transfer of information from left to right brain, short term to long term, occurs at night during sleep.
During this process of information transfer the brain impulses oscillate at 7.5 MHz.
Only when both hemispheres of the brain interact is the oscillation rate 7.5 MHz.
The brain operates naturally under its own steam at 7.5 MHz only during sleep.
Lozanov discovered that Baroque music at 60 beats per minute stimulates the brain to function at 7.5 MHz, during waking hours, with phenomenal results. You can read the literature yourself.
A simple experiment (from Lozanov)
Take a deck of 52 cards. Shuffle.
Lay 6 cards out face up on the table in a line.
Examine them for 30 seconds.
Gather them up.
Wait 30 seconds.
Now recall the face value and suit of each card in the order they were laid out.
If sucessful, increase the number of cards by 1 and repeat until you fail or struggle.
Wait for half an hour and repeat the exercise with baroque music playing.
You must state the card values, either verbally or silently, as you lay them out.
The results will surprise you!
The same exercise can be performed with phone numbers, and so on.
Tip : while trading - play baroque music. for channel capacity, observation, and memory enhancement.
perception test hint.
examine the first example of perception closely. The answer is there.
still not sure.
add an extra line to the figure in the "proximity" segment at the end of the software topic.
and turn it into one of the figures in the first example.
related topic
Channel Capacity and The Limits on Our Capacity to Process Information
http://www.ecs.soton.ac.uk/~harnad/Hypermail/Thinking.Psychologically98/0032.html
extracts from www.pantone.com on psychology of colour
with implications for chart graphics ... is it an illusion .. personal and cultural associations affect experience of color. Colors are seen as warm or cool mainly because of long-held (and often universal) associations. ... The illusions discussed below show that (some) color combinations can deceive the viewer, sometimes in ways that are advantageous. Color illusion can also cause unfortunate graphical effects ... Colors can affect each other in unexpected ways. Most colors, when placed next to their complements, produce vibrating, electric effects. Other colors, in the right combinations, seem quite different from the expected. ... The most striking color illusions are those where identical colors, when surrounded by different backgrounds, appear to be different from each other. In a related effect, different colors can appear to be the same color when surrounded by certain backgrounds. ... When a colored object is observed, the brain determines its color in the context of its surroundings ...
Probability and the stock market
If the Dow Jones index goes up overnight, there is a high degree of probability the ASX200 index will go up during our day session. Equally, if the Dow Jones index goes down overnight, there is a high degree of probability the ASX200 index will go down during our day session.
However...
The top 10 ASX stocks comprise 60% of the ASX200 index; the remaining 190 stocks comprise 40% of the index. The five retail banks are contained within the top 10 stocks, comprise 25% of the ASX200 index. US Banks comprising 20% of the DOW are merchant banks. The NAB, ANZ and Westpac all trade on the NYSE, together with NewsCorp, BHP, RIO, WMC, TLS. So if the the DOW goes up strongly but the six Australian stocks (NAB,ANZ,BHP,NWS,RTP,WBK) do not trade up strongly in New York, it is highly probable the ASX200 will not go up strongly. Should the six stocks go down, it is highly probable the ASX200 will go down against the DOW going up. As the night SPI tracks Globex, mispricing often results. The 5 banks are 50% of the ASX top 10 and 25% of the ASX200. By comparison the US auto industry, comprises 20% of total US consumption. source. yahoo finance 040804.
However...
Behavioural probability suggests there is a strong possibility the SPI would have gone up intra-night, (in lockstep with Globex) and will open the day session high and then lose the mispricing by coming back to the ASX200 by 1015am.
this topic examines the concept of favourability, where it is unfavourable to enter short while commercials are hitting to the upside, and unfavourable to enter long while commercials are hitting to the downside.
Blackjack is continuous real-time probability in action.
If you have read most of the usual literature like Market Wizards and New Market Wizards, you may have noticed that a disproportionate number of interviewees were, or had been, professional gàïñßlërs. That is not a coincidence. Most successful professionals have what is known as gàïñblër's instinct. A significant number were blackjack players. So what is it about blackjack that lends itself to trading?
The professional rules of playing the game to win are identical to the rules of trading futures.
Casino blackjack is the cheapest training course you will find. The "how to play" rules are simple and "basic strategy" can be learnt in about a day. Mastery of the game will take about a month to acquire, subconcious mastery probably longer.The two most important rules are:
High value cards (8 and higher) are favourable to the player and unfavourable to the dealer.
Low value cards (6 and below) are favourable to the dealer and unfavourable to the player.
There are 12 picture cards and 4 ten cards in a deck of 52. That's 16 cards that have a face value of 10 in blackjack. So 1 in every 3.25 cards is a ten. In a perfectly distributed deck, every 4th card out should be a ten card. Perfect distribution rarely happens, and clumping occurs, where high cards are grouped together. For a period of time the deck will be favourable and for an equal period of time, unfavourable.
If the first two cards out are low cards, then the unplayed remainder of the deck is rich in ten cards and the probability of the next card out being a ten increases. If the first two cards out are ten cards, then the unplayed remainder of the deck is deficient in ten cards and the probability of the next card out being a ten decreases. So you would only play when the deck is rich in ten cards. Stay out when it's deficient, or even neutral.
If you are at a casino, watch a table. Judge the favourability of the table and observe the behaviour of the players at the table as the favourability of the game changes. Think about how you would behave. Think about the predictability of the behaviour of the other players. One of the advantages of the casino as a training ground is that if one table is unfavourable, you can move to another table, or another. There are plenty of tables. That's good training in mental discipline.
With the SFE there is only the one table. You can't go to another table. If conditions are unfavourable you can only get out or stay out. So you need a very clear ability to sense the condition of the market, its favourability, and whether to trade or not. I can only repeat that the two most important rules out of 20 are those stated above.
You dont need to visit the casino. There are a number of blackjack software games available, the best of which is from Sage Software in the USA. This software has a card counting simulator. It takes a day to learn how to card count, a week to become proficient.
Suppose you learnt how to play the game first, then went to the casino with a bank of $200 and played until you were either up $100 or down $100. In the event you lost on each trip, by the time you had lost $1000 you would have learnt more about yourself - realtime rapid decision making, realtime money management, how you handle stress - than you would ever learn on a single weekend at a $3000 technical analysis course.
Card counting is equivalent to tape reading by Jesse Livermore in Edwin LeFevre's book Reminiscences of a Stock Operator. See Linda Bradford Raschke's article on Tape Reading.
Blackjack is the best realtime mental training exercise in probability, game (market) condition assessment and money management I have come across.
What are the advantages?
Blackjack demonstrates probability in action.
Repetition is one of the most important methods of learning. When trading futures, you will probably do, say, four trades on a good day. As a decision making training environment, that is not a lot. On a $10 blackjack table, you put out your $10 if it's favourable and the hand is played. A result is known immediately - you win or lose. Your total risk was $10. If you stay at the table and play every hand, you will play approximately 60 hands in an hour. That's 60 decisions, under pressure, watching the play of the cards, making constant re-evaluations of favourability, interference from other players, loud music, noise, drinks waiters...
The ratio of probability in blackjack are 51% to the house and 49% to the player. You should win 49 hands out of 100. Because blackjack does not have unlimited exposure, it will assist you to become desensitised to winning and losing.
similar futures trading sites with same observations
http://www.blackjacktrader.com
http://www.turtletrader.com/blackjack.html
see Training activities - repetition
Software comprises two parts: design and functionality. This discussion will focus on the design aspects. Most software contains the functionality claimed of it.
There are two type of software: graphics-based charting packages, and numerics-based quote screens. The aspect focused on here is how we see and process the information in front of us. The subject of sight and seeing is covered elsewhere.
The beauty of a chart is it's visually seductive. see seduction of fibonnaci chart sequence. The strength of a chart is it's easy to read. It conveys a clear picture. It conveys the truth of what has happened to price. Most people are visual, in that they learn and take information in by seeing. A chart is one-dimensional in that it shows the behaviour of price only. Charting (technical analysis) has taken on a life of its own. Many of the popular charting software packages evolved in America during the 1980s at a time when volume was not available in a lot of the data feeds. Consequently, an entire technical analysis industry has matured around price, and price alone.
Indicators are an important add-on to charts. An indicator merely adds one level of indirection to a one-dimensional picture. Additional indicators add further levels of indirection. A level of indirection is a one-level move away from the raw data it is based upon. An indicator behaves as a black box. If it is not understood or doesn't work all the time, the trader is unable to dissect it, or understand the reasons it doesn't work.
While volume is now available, the "industry" has not embraced it. When US markets become busy and trading volumes soar, broker services and data vendors drop volume from data transmissions. Some charting packages have added time as a second dimension. The danger of indicators is they are easy to see. Charting so dominates the industry it predisposes all newcomers to adopt it as their medium of choice. Rarely are alternatives considered. Do any technical analysis courses offer instruction on black box theory ?
Quote screens contain important information essential to making valid trading decisions. Quote screens are not easy to see. Because of this, the design of the screen is critical. Information should be presented in such a way that the brain can absorb, understand, and act on it. All related items that impact on one another should be presented as close together as possible, and in a way the brain can "see" the interaction. A close examination of the few quote screens available will show this doesn't happen.
Jan 2006. The above commentary, first published in 2003, when net-based trading systems were appearing and independant software suppliers disappearing. In the space of 3 years, technology has transformed the trading landscape into a commodity. With dramatic effects on availability and choice of software. Charting is stuck in the 1990's. Quote screens non-existent. see globalisation
Trading platforms perform three functions. (a) connectivity from user to broker/exchange (b) transmit data from exchange to user (c) visual tools at the user end.
Technological advances in (a) and (b) have been extensive. The advances in (c) have been minimal. Old technology that has not advanced.
Camron analysis screens incorporate the principles of psychology of sight and how we see. An important design factor is the presentation of key information in an easy-to-absorb manner. Winquotes is windows based while quotes84 is DOS based and runs in a dos window on all windows platforms. (Win95/98/2000/XP). DOS based screens have been found to be the most effective visually because the information is easier to absorb, and the colour displays are more intuitive.Try it. You will find it contains the critical information discussed here. free action replay download
compare visual effects of CBOE exchange quote screen. Intentionally located elsewhere.
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