Reflections on Truth and Its Implications for Trading Logic

This piece primarily discusses the following three questions:

1. Does truth exist? If so, what is it?

2. How can one determine if their speculative logic is viable?

3. How should one address gaps in their trading logic?

Truth, the eternal and unchanging principle, can be divided into absolute truth and relative truth. Absolute truth is universally applicable without any limitations, while relative truth holds under specific conditions with certain limitations.

Truth is the ultimate "one," and everything else is a differentiation of this "one." Science pursues the singular truth, which is the driving force behind its development.

When we only knew Newtonian mechanics, we thought it was the truth until we discovered its limitations in the realm of light matter and slow speeds. These limitations define the specific conditions under which Newtonian mechanics is applicable.

When we only knew relativity, we thought it was the truth. It could explain the behavior of massive objects and extreme speeds while being compatible with Newtonian mechanics. Evidently, relativity has a broader range of applicability and fewer limitations compared to traditional mechanics. However, it is not the ultimate truth because it fails at the Planck scale, where God plays dice with the universe.

Quantum theory and quantum field theory emerged to describe the behavior of matter at the Planck scale, but they are not the truth either, as they are only valid under specific conditions.

The pursuit of a grand unified theory seeks the truth without limitations, which remains a distant dream.

Now, the question arises: how can we determine which cognition or logic is superior or closer to the ultimate truth?

There is a closed loop dilemma here. Losers are losers because their cognition has serious flaws, and they don't know what kind of cognition is closer to the market's truth, like a headless fly.

If they knew what kind of understanding was closer to the truth, they would not have lost so easily. This might be a bit confusing, but I hope I've made it clear.

This explains why, despite the advancements in technology and communication, and the theories and methods learned by the public through various channels, the results remain unchanged.

It's not that true winners don't sell books, livestream, or make public appearances. Although most winners may indeed keep a low profile, there are always some who are willing to teach.

The "principles" that one finds reasonable are only reasonable within the scope of their own cognition.

This also explains why, generally speaking, the more popular a livestream is, the more likely it is that the principles it advocates are wrong. As losers are the vast majority, the theories and authors they accept and find reasonable will have higher popularity.

The popular intelligent recommendation and traffic distribution mechanisms further amplify this difference.

"True teachings are in one sentence; false teachings fill thousands of books." This can be understood in two ways:

1. The great truth is simple. This is the common understanding.

2. True teachings are scarce in the market, while false teachings are prevalent and mainstream.

Recently, I read Chen Jiaying's "Moving Beyond the View of Unique Truth," which expresses the non-uniqueness of truth. Even if truth is not unique, referring to the earlier distinction between absolute truth and relative truth, we can understand that a more universal truth is closer to the essence of reality than a more limited truth.

There may not be a final answer to what truth is, but I propose this most easily acceptable criterion for judgment, allowing everyone to decide for themselves.

Returning to the topic of trading, how can we judge the superiority or inferiority of our trading logic?

The evaluation criteria should be clear now:

1. The universality of the logic, i.e., in how many different situations it can be applied.

2. The limitations of the logic, i.e., how many special conditions need to be set for it to remain valid.

For example, going long and short are two sides of the same coin within the same system.

If a specific "technique" or rule derived from a certain logic is only applicable to going long, its limitations directly reach 50%.

Another example: if a "technique" derived from a certain logic is only applicable to the stock market and not to others, or only to futures and not to options or other products, its limitations directly exceed 50%.

Similarly, in the futures market, if a "technique" derived from a certain logic is only applicable to agricultural products and not to metals or industrial products, its limitations are also far greater than 50%.

I sincerely recommend that everyone remember this point: the more universally applicable a truth is, the closer it is to the absolute truth and the essence of things. This applies to truth in philosophical concepts, scientific fields, and trading contexts without exception.

This standard applies to both discretionary and quantitative mechanical styles.

Therefore, when someone tries to sell you some so-called invincible techniques or strategies, you should first understand whether they can only be applied in one direction, one major category, or even only to a specific product. The more conditions a system requires, the further it is from the true underlying logic.

Some may question whether the specific rules for different things are simply the rules of the trading platform and do not belong to the scope of discussion of trading logic.

The criterion for judgment is undoubtedly correct, and specific explanations can be discussed later.

Since the absolute truth is elusive and no one is absolutely correct, what is the point of the pot calling the kettle black?

Its significance lies in urging you to clarify the effective boundaries of the theory and minimize logical loopholes to achieve coherence.

Self-consistency does not imply safety and perfection, but it is the minimum requirement for implementation.

For example, buying more as the price falls is clearly flawed. However, by adding a few limiting conditions, the effect can be greatly improved:

1. Do not use leverage.

2. Choose specific markets and targets. (Some believe that Bitcoin will not disappear, so buying more as the price falls has some justification; others believe that the domestic economy will not collapse and has good prospects, so buying more as the index falls also has meaning)

3. It is best to use money that is not urgently needed.

These strategies, which originally had obvious loopholes, have greatly increased their feasibility by targeting their loopholes and setting specific usage scopes and conditions.

However, on the other hand, the more special conditions a system requires, the greater the possibility of these conditions being broken, and the greater the probability of encountering systemic risks.

Ultimately, this choice is a helpless remedy for logical defects.

Conclusion

For the one and only truth, everything else is a fallacy, all rubbish. It's just that some deviate by 10°, while others deviate by 180°. Although each understanding is imperfect, their universality, effectiveness, stability, and safety are different.

By understanding the nature of truth and applying these insights to trading logic, we can develop more robust and effective trading strategies. While the absolute truth may remain elusive, striving for greater universality and fewer limitations in our trading logic can help us navigate the complex world of markets with greater success.