A different way of thinking about markets

Thorough testing of technical systems composed of indicators and patterns indicate that input variables need constant readjusting in order to optimize the profitability of the system.

Technical price patterns themselves can often be interpreted as both consolidation-continuation and reversal patterns.

From ordinary life we have learned that social matter doesn’t follow the normal cause-effect logic of natural matter. An example of social matter is the boy who realizes that his odds of getting a puppy are improved if he asks his dad over the weekend, when he is more relaxed, as opposed to in the week, when he might be more stressed. As an adult, that boy learns that to win the heart of a woman it might help to analyze her needs and wants in a constant interactive cycle before making his various moves. Alternatively, natural matter such as gravity will respond the same way to a falling stone every time.

As a manmade system, markets act more like social matter – for example, a simple moving average crossover system on a specific market might continue to be profitable until more and more traders detect it, at which point the system will start to become unprofitable, because their buy and sell decisions influence the market prices on which the system is based.

Therefore, it makes sense to analyze the reactions of various markets to the outcomes of market-influencing events in order to determine the probable outcome of markets instead of simply assuming that a specific outcome of event always has the same effect on a given market.