stuff

["Walter Lake" <wlake@xxxxxxxxx>]

Thanks for your emails.

The basic difference is the addition of "e" or epsilon.

Most formulas are written as "exact" or "deterministic" formulas, e.g., F =
f(P) or Fat is a function of eating Pizza.

This style usually comes out in Metastock and Technical Analysis as $ = (MA
Cross) or Successful Trades = MA cross system.

Since most of us learn that things are more complicated than this we end up
adding stuff to the formulas or system tests. i.e., $ = (MA Cross) and
(RSI>30) etc.

Econometrics adds the "e" to the formula i.e., F =f(P) + "e" to account for
the error or disturbance or the complications. The formula is now a
stochastic formula, i.e., it measures the distance of the errors or distance
from the target.

You can now begin to investigate  the "e" rather than adding more stuff.

Hope that helps.

Best regards

Walter