I Would Urge All Electronic Experts, from Victor Niederhoffer

January 29, 2015 |

I would urge all the electronics experts on this site, old and new, to treat the market as an electric circuit with the inputs tied to an op amp with a negative multiplier attenuated—ultimately with histeresis. Almost all the market moves can be quantified with an output statistically significantly related to the inputs. It's much better than looking at technical indicators which are mumbo. At least this is something you know about and can test.

anonymous writes:

Interesting…Is this the type of circuit you're suggesting to take a gander at?

Victor Niederhoffer replies:

Yes. The circuit can be connected to all sorts of components. An input could be the open. It's a start. A good book with all sorts of op amp circuits is Exploring Electronics by Michael Merchant and many paths and outputs seem market related.

anonymous writes:

Here is something good about Op Amp basics you can read online.

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1 Comment so far

1. douglas roberts dimick on February 1, 2015 3:12 am

Half to One-Third

Victor is correct as to the price action correlation to energy a la e=mc^2.

The limitation of such, though, is that direction of energy is 1/2 to 1/3 of the analogous market process to control (or manage) risk. For it is time that such systems attempt to manipulate via force and momentum related calculations. Thus…

If you think of price action as mass, it is only 1/2 the equation; time then becomes determinant. Yet time relative to mass for determining energy presents a matter of consilience, that of velocity.

How can rate of change of displacement be physically squared — such as during an electronic market exchange?

One must then query: does time represent half or a third of the remaining formulation to manage risk as found in (non)directional price action during a given period of time?

Doc E faced a similar issue of sorts with mechanical versus mathematical curiosities about relativity. When considering market ecologies, corresponding issues no longer become concerned with mathematics; they are rules-based inquiries. Accordingly, simple flow charting will not allow one to correlate the implied circuitry of price action within segments of time…

Right, not polynomial. Metacircularity does not distinguish between such formulations due to independent dimensions of multi-(non)directional convergences.

Look at a given time period of price action plotted as for instance 100 ticks as well as with units of 1 minute. Think of Doc E’s train scenario.

Yes, like the train on a predetermined track, price action regardless of unitizing begins and ends at coordinate locations. However, depending on the relativity of vantage point, how does both buyer and seller witness then measure a given divergence in price action as does a bystander viewing a lightening strike within the same time frame of a moving train so to moving within that same fractal?

Note this conditional statement based on time (frame) not (non)direction of mass (price or train). Why?

One cannot project the actual measurement of velocity as within a space or merely by time intervals with a determination first declaring a set of rules that defines how such energy is dependent or independent of both, time and mass (or displacement). Hysteresis, specifically a hysteresis loop, is instructive here…

http://en.wikipedia.org/wiki/Hysteresis

Either the history or internal state must be known to generate outputs of future exchange(s) occurring within a given field of energy: speculation, as Victor may likely characterize.

But that construct of an electrical displacement field still implies risk when we speak of constructing circuitry based on a closed/open loop series of artificial processing such as with economics — also found in nature, specifically biology. For the lag time between input and output can be rate-dependent or rate-independent due to the relativity of displacement…

For measuring risk of change in price action, that rate and its type can be measured by what I term as the Theory of Quantitative Relativity. Therefore, control systems that may process such risk management considerations must be dynamic not merely a (flow chart) configuration of circuitry.

dr