{"id":97561,"date":"2016-10-31T13:36:49","date_gmt":"2016-10-31T17:36:49","guid":{"rendered":"http:\/\/countingpips.com\/?p=97561"},"modified":"2016-10-31T13:36:49","modified_gmt":"2016-10-31T17:36:49","slug":"is-trading-an-art-or-a-science","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/10\/is-trading-an-art-or-a-science\/","title":{"rendered":"Is Trading an Art or a Science?"},"content":{"rendered":"
October 31, 2016<\/div>
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By\u00a0Yael Warman<\/strong><\/p>\n

Are you more of a Picasso or an Einstein, an Edison or a Dylan? Probably you answered none of the above, but in some ways your trading style takes something from both the arts and the sciences, and is all the better for it.<\/p>\n

Scientific trading<\/strong><\/p>\n

\u201cScience<\/strong> is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe.\u201d Science begins with a theory, based on observation and then sets out to prove or disprove it. Much in the same way, traders begin with some time spent in the market, looking, reading, and discovering what has been done before them. They begin to develop theories and test them out. They review the data to see if their theories work and discard it as false if they do not. They analyze the outcomes and apply further testing, to weed out the best outcome. Every time a trader learns a new element and tests a system for themselves on a demo account, or puts in an algorithm to back test, that trader is applying scientific principles to test their theory and determine if it is trading fact.<\/p>\n

Science seeks to understand the principles that govern the seeming chaos. When stripped back to first principles, the forex market is simple, people are either buying or selling. When more people want to buy than sell, the value increases. Some traders analyze volume, buying trends, sentiment indicators, etc to allow them to determine the price movement.<\/p>\n

But science can also recognize complexity. Volume is certainly simple, and works very well in a vacuum of supply and demand, and in forex trading, over relatively short timeframes. But sentiment, the psychological drive which underpins the desire to purchase or sell, is not simple.<\/p>

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One look at the complex mathematical proofs underlying game theory shows clearly that market activities are not only governed by simple supply and demand, but that other factors impact the equation. Simple science now requires a bit of creativity. A bit of art.<\/p>\n

Art for profit\u2019s sake<\/strong><\/p>\n

Art is defined by the creative drive, the sweeping, original act of creative expression to transcend the seeming limitations of what came before and opening vistas never before imagined or seen. Or we can use right brain creativity to see a way through the many indicators to create something better than art, personal profit.<\/p>\n

What is trading as an art form? Generally it is the conviction that precise mathematically-driven decisions on stop losses and price movements are fallacious, based on the belief that the seeming chaos of the markets indicate a lack of rules. Adherents generally trade methods that do not require such a degree of exactitude, whilst still respecting general principles of trading like trends, etc.<\/p>\n

Let us propose a different theory about the nature of art in forex trading. Let\u2019s say that there are rules, but that they are numerous and complex and often times in competition with each other. The art of trading is to understand the complexity and use your creative instincts to identify which rules are at play and which are not. This does not eschew indicators or “science”, it embraces both and uses them to create the art of trading.<\/p>\n

Trading is neither art nor science, it is both. It is the beauty of music with the science of musical structure. When used together, the artistic ability will allow you to adapt your principles to the realities of science.<\/p>\n

How to achieve this dualism is the process of finding your art …. and your profit.<\/p>\n

About the Author:<\/em><\/strong><\/p>\n

Yael Warman is a creative writer with a strong background in marketing and advertising. Yael has been a writer for over 10 years and has worked for clients in various industries as well as her own companies and is currently the Content Manager at Leverate<\/a>.<\/p>\n

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By\u00a0Yael Warman Are you more of a Picasso or an Einstein, an Edison or a Dylan? Probably you answered none of the above, but in some ways your trading style takes something from both the arts and the sciences, and is all the better for it. Scientific trading \u201cScience is a systematic enterprise that builds […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-97561","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/97561","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=97561"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/97561\/revisions"}],"predecessor-version":[{"id":97564,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/97561\/revisions\/97564"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=97561"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=97561"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=97561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}