RE: Why are trading rules possible? Traders got exposed! Pure psychology!
Good article, one can see that you've put a lot of work in it! I cannot understand that it didn't get more views.
Well anyway, your article is really interesting; I had similar thoughts recently. There is this guy, a french sociologist, Michel Callon, who basically says that economic theory, in the beginning, didn't depict how the economy really works. But over time, economic reality started to adapt to economic theory; in sociologists slang, "economic theory is performative" (https://halshs.archives-ouvertes.fr/halshs-00091596/document).
I think technical analysis is a very good example of this. You basically say the same thing as Callon, but just in a much more understandable way, when you say that "the trader is actually not learning to read the chart he is actually learning how the people will react." It's this. Traders internalize technical analysis and they know that everyone else will react according to the theories of technical analysis. Therefore technical analysis works.
Thank you @pascalwitzig that you appreciate the work. I think that's always the problem with the small fishes, ;)
But It's even nice if some people like to read it.
Cool that you had similar thoughts and that you put your thoughts in the comment.
I will definitely check this sociologist Michel Callon out! Hopefully, it's not in French. :)
Hey looks like as if you've attracted a whale! Or where did that 11$ come from?! :D It's english, but don't mind reading the whole thing; basically you can say the whole thing in a sentence and the rest is just social science blabla ;)
Check today this dude out and his work! Really interesting stuff he researched!
I didn't read all of it just some peace but really nice! How did you found him?
I like this part:
"Everyone ends up aligning themselves to the model and everyone's expectations are fulfilled by everyone else's behaviors."
the Self-Fulfilling Prophecies. Maybe something I will write about in the future blogs. We will see.
Yes indeed, that field of research is really interesting; also because it challenges many hypothesis of the neoclassical economic theory. I've learned about Michel Callon in a course in university about economic sociology.
Would be interesting if you would pick up the topic of self-fulfilling prophecies in a separate post!
Hahah ok will check it out tomorrow.
Yeah, looks like good karma gave me an upvote! :)