Jul
29
The Science of Sprinting, from John Floyd
July 29, 2011 |
This is an interesting study on what makes a winning sprinter. I wonder if there are applications and lessons to trading? For example in the use of leverage and sizing as applies to the amount of force used? The volatility of markets in relation to leg speed? The size of the fund and alacrity that may be required in various markets do to sizing and visibility and physical characteristics of a sprinter?
Jeff Watson writes:
This reminds me of a thread on DailySpec last year about the golf swing problem that nobody could really give a correct answer to. The observers of the runner were correct in their methodology in measuring the underlying influences of a quick sprint. Separating and isolating all forces (seeing what forces are really influencing and in play) and solving them independently is the first lesson that they teach you in any physics 201 class.
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Let me throw this thought out for discussion. The one physical concept I took away from this column is acceleration. However you want to define it acceleration is one of the key variables to speed.
Now the analogy to stocks and probably commodities is acceleration. How does a stock get its acceleration? From its earnings. If a company increases its earnings at a robust pace it will be reflected in the pricing of the stock. This is observed most notably in a breakout after an earnings surprise.
Think of it this way, A stock is in the starting blocks, (before the opening bell). It has not been doing much of anything for a while reflective of its chart pattern of building a base. It has potential energy. It releases its earnings report above consensus. The bell rings (the starting gun fires) and the stock converts its potential energy to kinetic energy. The money starts to flow into the stock and it is off and running. The stock is in play and is moving down the tract. The finish line is the closing bell and this ends the session.
The same I am sure can be said about commodities. I will leave this discussion to the erudite ones who champion their cause in the “pits”.