While I am now a retail trader navigating my way through these complex markets, I have spent a lot of my misspent youth with my head deep in understanding physical systems …..so deep that sometimes I thought that I was drowning in the quick-sand of it all. Walking that fine line between sanity and madness and occasionally miss-stepping and desperately clutching out for the empiricists branch to bring me back to the firmer ground of sanity.

It has shaken and smashed my brittle mind again and again trying to make sense of it all, but with each slip into that dreaded abyss of madness, that beautiful malleable organ in my skull has added this exotic content , remoulded the mind, reconnected the dots and given me a far wider viewpoint of what is possible, and what is not.

Where I originally thought I was being saved from madness and returning back to a sane path, I realised that I was never actually returning back to that same narrow worldview but rather I was widening my understanding of how systems actually behaved. I just had to accept that my prior world view was just too narrow in extent. 

In widening my world view, but keeping hold of empiricism, I can now see so much further and wider than I ever could in my past very restricted perspective.

This story is common to many of us seeking answers to complex adaptive systems. Those who have ventured down this path find that knowledge is an ever-expanding domain that stretches into new frontiers through this learning process. 

Learning is rarely a continuous progressive process. It is a leap frog process that occurs in fits and starts…where past biases and roadblocks are suddenly shattered in an epiphany. Like a phoenix rising, a new mind emerges from the ashes.

For those addicted to knowledge, they could probably appreciate that it is an exceptionally powerful drug that can take you to more exotic places and reach far higher highs than what any synthetic drug can achieve.

But how do we know what is knowledge and what is mere madness?

I refer to my number one rule in life….Stretch your mind far and wide but always make sure you can reach out and grasp the empiricists branch.

In this quest for understanding, I have come into contact with many more minds, so many of which have been written off by those with a narrow viewpoint….such as the minds of the poets, philosophers, leading theoretical physicists and mad scientists.

They are not so written off as many would like to believe and it is impossible for me to conclude that any of them have wandered too far off the ‘beaten path’ of reality …..however,  in my quest for understanding, I will follow these ‘radical’ minds to make me more knowledgeable…but I will never allow them to steer me too far away from the safety of the empiricists branch.

You see, I can see the beauty of where each of these minds are going, but there is a difference between the virtual world and the real world.

This does not say that the virtual world is worse, as for many, it certainly can be more hospitable than what any real world can muster. You can revel in a virtual reality and even achieve in it. You can do whatever your aspiring mind can do within this illusory realm….but inevitably the bills have to be paid and the family nurtured and kept safe which is why it is so important to always stay connected to reality…..but it truly is a joy to travel into these exotic virtual realms. You should not be threatened by it, provided that you hold on firmly to the empiricists branch, as it can give you a sense of purpose, make you a better person, appreciate the different viewpoints of others and be simply awe inspired by a creative mind. 

So now that we are hopefully all on the same page……..I will offer an ode inspired by a retail trader coming to grips with this complex adaptive system we call the financial markets ‘where electrons have feelings’.

I hope you see the sanity as opposed to the madness in it all.

ODE TO EMPIRICISM

There is one universe in which resides ALL there is ….which scopes the totality of the pre-requisite information needed for us to be able to solve this universal riddle of “how come?”. 

To the scientist and to the empirical trader whose philosophy is predicated on the search for ‘signals in the noise’ ….that’s all we have to work with folks………and in that universe the ALL creates conservation laws and associated symmetries…such as the Laws of conservation of information, conservation of energy, conservation of the speed of light in vacuo etc., etc. etc….. 

Every complex system within this universal context is a ‘nested sub-system’ of a greater system whole in which there are no laws. As separate as these nested subsystems appear to be….they are all ultimately intricately connected. We see this in the way every system, no matter how apparently different, must obey the physical laws of this universe. 

These nested hierarchies just need to obey the higher conservation laws of the universal system. This is fortunate as it gives us confidence that there are no ‘perpetual motion machines’ which many brokers, spruikers and charlatans in this Retail world of trading would have you believe.

While only governed by one master, these sub-systems possess a degree of self-regulation by forever moving goal posts of emergent structures built on fickle and temporary constraints that are transitioning towards this universal end-state. All sub systems move between states of false equilibria and have dynamic and non-stationery ‘moving’ conditions. 

There is only one closed system, being this universe, with all the other system subsets being ultimately open systems no matter how hard they try to close….and none more so Machiavellian in character than the financial markets. The agents in this system are not all the same like electrons and quarks. Rather the agents in this system are the human minds who continuously adapt as their knowledge base expands.

While each sub-system appears to beat its own unique rhythm, the universal laws of the universe flow through all these nested systems ensuring there is a coordinated rhythm throughout the nested hierarchical structure of system within system. While we may be tricked into thinking that a sub-system has Laws…. no such discreet laws exist. You need empiricism to reveal this trickery.

The only laws applicable to each sub system is that they must obey the universal laws of the universe…..this ensures consistency or ‘covariance throughout’. This is what makes this universe sensical and is what gives rise to cause and effect. 

Impossible is not a word that is applicable to this realm as there are golden rules applied by this universe to prescribe what can be achieved and what can’t be achieved. Don’t listen to the fruit-loops who believe in impossibility. We are all limited to only the possibilities that empiricism demands.

Our maths can model different universes that seem impossible to this universe….but that is not the reality of a conscious observer from this universe. Leave that to the insane, or the philosophers and the mathematicians who stretch beyond empiricism into abstract mind or mathematical models. 

Leave the reality of our particular universe to the scientific method and the very sane.

Everything is already in this universe including the ‘state of our minds’…but we are progressively absorbing all the useful content. Our minds are absorbing from outside in but growing from inside out and our hubble volumes are stretching as the universal entropic clock winds down.

Have faith in empiricism for as long as it lasts. I will follow empiricism to the ends of this universe…..for this will keep me sane for this very short time we are around to cherish sanity. 

Trade well and prosper

Rich B