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People actually fall for this

  #8 (permalink)

North Carolina
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
Posts: 644 since Nov 2011

Let me add some nuanced perspective on this issue. First, when I started predicting the markets, I made it critically important that my predictions would be falsifiable. Every prediction I made was a real falsifiable prediction. I was influenced by Quantitative Technical Analysis. However, I was unconvinced that all non falsifiable statements didn't contain any information. As an aside, when you convert an open ended/generalized prediction into a specific form then you introduce randomness in the form of arbitrary decisions unless you diversify your prediction across all arbitrary possibilities which is theoretically possible but practically unfeasible.

As an aside, I do generally think this example is ridiculous. But, I have found some value in laying out different probabilities and possibilities in my own trading. I have also seen successful traders try to keep an open mind. Back to the point, what is the real information contained in this outlook?

The real information or prediction is that volatility is set to increase. So, that's basically what the chart shows: an increase in volatility. There is also the suggestion that path the market takes, whether it goes up or down, won't return to the range. So, there is a directional component.

In this case, what looks like a non informational infographic can actually be tested. If prices enters either of the red boxes then it should not return to the prior range before making a much bigger move up or down first. I haven't looked to see what actually happened. There is an implicit suggestion that the price entering the red box will tend to make a much bigger move up or down to offset the losses of when it returns to the prior range.

In this case though a very astute technician can infer that the price will most likely enter the higher red box and continue, regardless. For one thing, the price is already much closer to the higher red box making it far more likely and there are some other hints as well. Notice, I haven't looked yet to see if that is what happened.

Last edited by tpredictor; March 8th, 2018 at 02:17 PM.
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