Boris Schlossberg Blog | Let Plato Design The Perfect Trading System for You | Talkmarkets - Page 2
Managing Director at BK Asset Management
Contributor's Links: BK Forex

Managing Partner of BKForex. Day Trader Extraordinaire. Master EA Developer. Author of Technical Analysis for the Forex Market. And a Pretty Damn Good Cook.

Let Plato Design The Perfect Trading System for You

Date: Sunday, July 1, 2018 9:09 AM EST

But what if we set aside all of our modern tools of computation and started thinking like a 2500-year-old philosopher? What if we applied Plato’s Theory of Forms to the very pedestrian idea of a trend? Granted, trend can come in many shapes and sizes. It could be jagged and rambling with massive choppiness within it. It could be steady and smooth with hardly a retrace in the move. Or it could be something in between.

However, the “trendiness” of trend just like the essential “dogness” of dog is marked by some general characteristics that make it identifiable. In case of trend the best “class” of trend is one marked by higher highs in an uptrend and lower lows in a downtrend.

Thinking about this “Platonic ideal of trend” has really helped me refine my latest trading system. It made me eliminate any element that is extraneous to the setup -- and because it forced me to create much stricter rules for entry, I make much fewer trades. On the face of it that may sound like a negative to a daytrader like me, but in reality, it made my trades much more accurate than before. And it gave me clarity of analysis that I’ve rarely had before.

In the modern world, so full of experimentation and empiricism, we are conditioned to stay away from deductive reasoning. But perhaps the truth is just the opposite. Perhaps instead of running endless backtests to torture the price data, we should just imagine the ideal version of our setup. Perhaps in trading what we need is a lot less data science and a lot more Platonic philosophy.

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