It is the processes that matter. Not the things. Look for the relationships between things to identify processes at work. Sometimes the market will be noisy…….and sometimes the market will be coordinated. Explicate versus Implicate. Don’t predict it, just follow it. The table with the metronomes holds the key to the connection between them. Observe the entire experimental setup, as without it, you will start trying to make sense of the things and lose sight of the process. Just having this understanding empowers you to see opportunity and risk and then simply make better decisions.
The reason that this toy seems mystical is the way you have approached the problem. A table, a metronome, many metronomes. All “nouns” of convenient human categorisation that take form in our language and then become permanent ‘objects’ of your thoughts leaving us blind to the underlying process . All based on a limited understanding of a system forgetting the importance of the relationships between different emergent aspects of the system. You need to approach this problem using verbs to find the processes at work and eradicate those nouns of perceived bias.
In classical systems there is order in every system state. The physicist David Bohm coined the term ‘the Explicate versus the Implicate Order to wrestle with this notion. What changes is the nature of the state. In complexity lies deep simplicity. Very simple things that are configured in different arrangements.
The grander system state moves to different states through gradual transition but the impact of this transition is not linear throughout. What makes the fat tails is that you are only observing a small sub section of the entire state.
Observation of the processes is the key as opposed to small sample prediction of the things. If you first observe the greater system then you can choose the optimal path by going with the ‘flow of it all’.
Methods of prediction without knowledge of the entire processes at work can be disruptive to the system state. When you think you know it all from your sample statistics, then backtrack and think again as markets are adaptive and constantly changing. Don’t ever deal in certainties. For example, don’t think you now need to understand the ‘Reynolds Number’ in this example to use as a weapon to obtain predictive certainty….as it will take you away from the whole point of this discussion and lead you into the abyss of uncertainty.
Knowledge is an adaptive process that allows you to ‘keep up’, not a cup that is either empty or full. There is great value in using statistics. The problem however lies in it’s naive application.
Observe first before letting your biases take over. Understanding complexity lies in expanding your knowledge and understanding how to overcome your biases formed from a very limited data set of narrow opinion. Be the all powerful critical thinker not the fractured, weak and hostile imbecile.
Trade well and prosper