Mar

12

TAWe often look at patterns — whether they be in the stars or the charts — and say, that triangle is a coincidence, or it is chance that the former support becomes the new resistance. And this seems especially moot in the case of an industry average. Reasoning behind some technical analysis often comes with hand-waving. But perhaps we need to look at the possibility of emergent behavior arising out of the individual actions of millions of traders to produce real patterns, which would lend credence to some patterns of technical analysis which look at the market en masse. The starlings do not deliberately set out to make striking geometric patterns as they fly, nor do termites consult a blueprint before constructing complex mounds. Has anyone applied the techniques of cellular automata to model trading? In theory, thousands of alternative definitions of automata could be run — like a Monte Carlo simulation of Monte Carlo simulations — and if certain patterns showed up irrespective of initial conditions it would be interesting.


Comments

Name

Email

Website

Speak your mind

Archives

Resources & Links

Search