Fallacies, Part 2. Statistics Is a Pseudo-Science, or a Chronicle of Nosediving Bread And Butter
Numerous attempts to apply statistical methods to the objective reality, i.e. to financial series, crash when met with the nonstationarity of processes, "fat tails" of accompanying probability distributions, and insufficient volume of financial data.
In this publication I will try to refer not to the financial series as such, but to their subjective presentation - in this case, to the way a trader tries to halter the series, i.e. to the trading system. The eduction of statistical regularities of the trading results process is a rather enthralling task. In some cases quite true conclusions about the model of this process can be made, and these can be applied to the trading system.