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Pal,
Sorry, but I have to take the side of MarkF2 on this one. Yes, I agree, you
can prove anything you want with statistics, but only if you use it improperly,
which most people who have a vested interest in something or are not objective
in their analysis of an empirical observation do (understand, I am not accusing
you of anything; I'm just stating a fact). If you use inferential, parametric
statistics on data that are not even close to being normally distributed, you
can prove anything. But your proof is flawed because you have misused a basic
underlying assumption that the particular statistical test was designed to
indicate. You speak of proof being only in the realm of physical law or
mathematical theorem. Perhaps true if you speak of absolute proof. However, in
statistics, all 'proofs' are based on measurement error, and there is nothing on
this planet that can be measured error-free (except mathematical principles such
as the area of a triangle or the Pythagorean Theorem). In trading, the errors
are huge, sometimes infinite, because price behavior is so variable; so in order
to try to 'prove' anything statistically, you have to minimize that error as
much as possible. How does one minimize error when prices are determined by such
a huge universe of human beings, all with different outlooks on future behavior
and all biased to some degree by their own non-objective views? You can't. You
can only generate probabilities and confidence based on those probabilities, and
that is the heart of statistical analysis. So, statistics is not meaningless at
all and in fact is a very valuable tool in this complicated trading business of
ours. Use it properly, and you will be rewarded. Use in unwisely, and you will
lose big.
Al Venosa
<BLOCKQUOTE
>
----- Original Message -----
<DIV
>From:
palsanand
To: <A title=amibroker@xxxxxxxxxxxxxxx
href="">amibroker@xxxxxxxxxxxxxxx
Sent: Sunday, October 26, 2003 3:41
PM
Subject: [amibroker] Re: solving the
prediction problem
I do not dispute the usefulness of statistics, only in the
use of it to prove something, which anybody who has a good grasp of
statistics in this planet knows, which apparently you
don't.Regards,Pal--- In <A
href="">amibroker@xxxxxxxxxxxxxxx,
"MarkF2" <feierstein@x...>
wrote:> What planet are you from? Statistics *is* a branch of
applied> mathematics and, IMHO, the single most useful for
trading.> > "Each of us has been doing statistics all his life,
in the sense that> each of us has been busily reaching conclusions
based on empirical> observations ever since birth." -- William Kruskal
> > --- In amibroker@xxxxxxxxxxxxxxx, "palsanand"
<palsanand@xxxx> wrote:> > > Like I said earlier,
Statistics is meaningless in the context that > > you can come
out with statistics to disprove anything. Proof > > requires a
law or a theorem. Only Mathematics can prove or> disprove
> > and that is one reason it is the greatest of all
sciences.
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