Trading: Art or Science

[Joe Ross]

I believe trading is far more an art than a science. For one thing, if trading were a science, then we should all be able to enter the same trade at the same time, and exit at the same time, getting identical results. We all know that just isn’t so. Yet if trading were scientific, we should be able to get identical results by doing the same thing. I believe such expectation describes the “scientific method.”

In addition, if trading were scientific, we should be able to come up with a “get rich” formula that would work all the time. We could then all retire and never have to work again. We all know this isn’t so either.

When we, as traders, make a trading decision, most of the time we do not fully know why we are making that decision.

You look at a market, you think about taking a trade in that market, and at some point you pull the trigger. You have thought of dozens of things in the time interval leading up to your entry. If I were to ask you, "Exactly why are you buying what you are, or why are you selling what you are?" you would probably not be able to give an accurate answer. You may be able to give a few reasons, but it will most likely not be the full answer. A lot of your decision to enter is subconscious. You do not really know why you entered, especially if you are day trading. To that extent it is more an art than a science, because you cannot fully demonstrate why you are doing what you are doing.

But you could say, "I fully know what I'm doing. I am taking the trade because I am following the signals of my method or system." Wonderful, you have just proved my point. When you are blindly trading signals from a method or system, you truly don't know why you are taking the trade. You are essentially acting like a robot, pre-programmed to follow signals whether or not they make sense.

I am not disparaging trading that way. If a method or system produces winning results, then what you are doing is following a statistically proven plan. All methods and all systems are based on statistics. The odds on any single trade are never more than 50% win or lose. However, the probability for a succession of trades is quite another story. If you are trading a method that wins seven out of ten times that you enter, and the method has produced a loser three or four times in a row, then the probability for a successful trade increases each time you enter the market. Sooner or later, over a series of trades, you are going to have the result of seven winners against 3 losers. That is statistically valid; however, it is not exactly rocket science. You will have proven that trading is an art — the art of following a statistically valid plan.

[TRex]

Successful, consistent trading is neither an art nor science. For me, it is applying a method proven over time that puts the probabilites of success in your favor, also known as an edge. Every time I make a trade--and I only daytrade--I know precisely why I do it. Subconscious or "feel" has no bearing on my decision. It is much the same as the casino whose edge works in its favor against the players in the long run.

[Dogpile]

Science is having a firm grasp of the statistical tendencies. The art is right-brain pattern recognition -- synthesizing patterns across timeframes in real-time.

Very similar to Poker in this regard. There is 1) the math 2) the betting pattern and 3) intuition. Some poker players are good and you don't know how they do it without the math -- but they do. Other players are brilliant mathematicians and get by because they are so good at that - even though they aren't even average at the intution. But most of the top players are very good because they understand the science and the art of the game.

[Reaver]

A good trader preys on predictabilty.....the name of the game is figure out what your opponents are going to do. A captain obvious is going to get eaten alive.

[Joe Ross]

Great points All. Thanks for your posts. I appreciate them. What it amounts to is that with all of our posts, we have proven that trading is not science.

[Soultrader]

It is very interesting how all of us seem to have a different way of viewing trading. As a purely discretionary trader, my trading is 100% an art off. Whether I enter purely through tape, "tests" of LOD/HOD, "test of previous day high/low, retracements, trendlines, breakouts, etc... all entry criteria boils down to my understanding of short term market direction at that moment in time. I dont follow a mechanical discretionary system. This keeps me flexible in taking a variety of trades based on market condition. Nor am I restricted to just a few setups. But the key here is to really understand the profile of the markets, momentum, relative strength vs weakness, internals, etc...

This is why trading is more of an art form for me. Almost every trade is a "feel"... whether it be through understanding of the tape or through concept trading. Which is why I do not think my style of trading can become automatic like TRex pointed out in applying proven methodologies over and over again without the "feel". Of course I know exactly why I placed the trade and why I would pass on particular trade.

I really think trading success is not dependant on what setup you take. (well... having a basic understanding of trading is enough) What matters the most is your own pyschological and emotional control.

[weiwei]

Science or Art, I think it depends on who you are. which one are you better at? Some one can feel the market market and trade with it, Like Soul on above post. And some can use scientific approach to collect numbers and do well with it.

Market acts in a many different forms, Some time it is in a linear form, which allow system traders to profit. Sometimes it act in non-linear form, so other can take money away from system traders.

If market can be programmed then making money with market will be too easy for those who can. But so far people are still search for Holy Grail, so I would conclude it is not possible yet.

Finding a style that fits you is what is important, In science or art from.

[feb2865]

When I started I use a scientific approach on my trading. The market proved to me otherwise. Markets are so dynamic that it's impossible to mold it or cast it into any shape, size or form. But I guess this is something you must learn by experience. Just look at he the floor. Who the hell is gonna make money there when you have so many people pushing themselves around screaming at the top of the lungs? What "Scientific approach" you will use??? none

I tell you me and my "scientific approach" got crushed the first 1/2 hour I started on the pit back in the day.

[Reaver]

	Quote:	feb2865
	When I started I use a scientific approach on my trading. The market proved to me otherwise. Markets are so dynamic that it's impossible to mold it or cast it into any shape, size or form. But I guess this is something you must learn by experience. Just look at he the floor. Who the hell is gonna make money there when you have so many people pushing themselves around screaming at the top of the lungs? What "Scientific approach" you will use??? none I tell you me and my "scientific approach" got crushed the first 1/2 hour I started on the pit back in the day.

Exactly...the way I see it...in science, a computer has the indisputable edge. Period. There is no one that can consistently out calculate a computer. Therefore the only logical thing to do in order to obtain an edge for yourself, is to rely on characteristics a computer does not and cannot have- discretion, art, perception, and intuition. Only play ball on your court, by your rules.

[mea]

Plesase refer to answers sections.

	Quote:	Joe Ross
	I believe trading is far more an art than a science. Answer: I disagree. For one thing, if trading were a science, then we should all be able to enter the same trade at the same time, and exit at the same time, getting identical results. Answer: Correct We all know that just isn’t so. Answer: Incorrect Yet if trading were scientific, we should be able to get identical results by doing the same thing. Answer: Correct I believe such expectation describes the “scientific method.” Answer: Correct In addition, if trading were scientific, we should be able to come up with a “get rich” formula that would work all the time. Answer: Both correct and incorrect We could then all retire and never have to work again. Answer: possible We all know this isn’t so either. Answer: you mean, you believe it isn't so. When we, as traders, make a trading decision, most of the time we do not fully know why we are making that decision. Answer: Incorrect You look at a market, you think about taking a trade in that market, and at some point you pull the trigger. You have thought of dozens of things in the time interval leading up to your entry. If I were to ask you, "Exactly why are you buying what you are, or why are you selling what you are?" you would probably not be able to give an accurate answer. Answer: Incorrect You may be able to give a few reasons, but it will most likely not be the full answer. Answer: Incorrect A lot of your decision to enter is subconscious. Answer: Incorrect You do not really know why you entered, especially if you are day trading. To that extent it is more an art than a science, because you cannot fully demonstrate why you are doing what you are doing. Answer: Incorrect But you could say, "I fully know what I'm doing. I am taking the trade because I am following the signals of my method or system." Answer: Correct Wonderful, you have just proved my point. Answer: Incorrect When you are blindly trading signals from a method or system, you truly don't know why you are taking the trade. Answer: Incorrect You are essentially acting like a robot, Answer: correct pre-programmed to follow signals whether or not they make sense. Answer: Science has proven them to "make sense" or be successful at least 85-90%. I am not disparaging trading that way. Answer: Yes, you are. Since you cannot figure it out, you try and find ways in your brain to prove it incorrect. If a method or system produces winning results, then what you are doing is following a statistically proven plan. Answer: Correct All methods and all systems are based on statistics. Answer: Correct. The odds on any single trade are never more than 50% win or lose. Answer: Incorrect However, the probability for a succession of trades is quite another story. Answer: ok, what's your point? If you are trading a method that wins seven out of ten times that you enter, and the method has produced a loser three or four times in a row, then the probability for a successful trade increases each time you enter the market. Answer: Incorrect Sooner or later, over a series of trades, you are going to have the result of seven winners against 3 losers. Answer: Incorrect, science has proven a system to more profitable than not, regardless of number of trades or any particular ratio you intend to use. That is statistically valid; however, it is not exactly rocket science. Answer: Incorrect, it is scientifically proven. You will have proven that trading is an art — the art of following a statistically valid plan.

Answer: Incorrect, science has proven trading can and should be scientific.

In conclusion, art as a method of trading, is guessing and gambling. I don't do either. Thus, I never gamble at casinos. As the odds are in the houses favor, unless your a professional gambler with a scientifically proven "edge" or advantage over them. Hence, the reason a choose to trade, as I'm the house, and the odds are in my favor which were proven scientifically.