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The classic case is of course evolution by natural selection: re run the tape from the beginning and you would ''not'' get the same result.
The classic case is of course evolution by natural selection: re run the tape from the beginning and you would ''not'' get the same result.


===Backtesting===
===Backtesting, how how “hindsight is a wonderful thing”===
Backtesting is the industry of try to solve for the future by reference to the past. We observe 5 years of market data and conclude that a certain trading strategy, x, would represent optimal performance in that historical environment. Notwithstanding that had trading strategy x have been adopted in that environment, the outcome of that environment would have been different. Historical timeline is fixed and not contingent. Decisions we make now can no longer affect it. The future timeline is contingent and depends on decisions we make
[[Backtesting]] is the most naked way of trying to solve for the ''future'' by extrapolating from the past.  
===Causal determinism===
Amazon butterflies: confusion about the power of iteration lies behind our obsession with butterflies in the Amazon setting off hurricanes in the Philippines.


We accept causal determinism because the alternative seems inconsistent with the regularities we apprehend. But still, even in the past the lattice of potential causal chains is far more complex than we can dream of  — our data is necessarily incomplete — so even historical causal chains we construct are works of imaginative fiction. (This is why historians do not agree).
It is ''so'' naked that only the genuinely dense or mendacious have any truck with it.


But looking at a unitary historical causal chain (that we made up), in hindsight we miss the contingency from which it was created. Once it is laid down it looks inevitable. It looks to be set in stone. It looks to have been pre-ordered a full stop This is a curiously ''religious'' idea.
We collect and analyse 5 years of market data and from it construct the optimal trading strategy, that, had we used it, would have returned the greatest profit.


In any case, if we accept the proposition that there is but one past (whether or not we can never be sure what it is) there remain, from any given present, an ''infinity'' of futures.
Of course we didn't know at the time how the data would turn out, so didn't know no to use the optimal strategy. Had we known, and had we adopted the strategy, others would have too, trading patterns would have been different, the data would have come out differently, thereby confounding the strategy. Backtesting is a preposterous idea.
 
By the lights of history, the market’s course is now fixed whereas when you are there in the moment, it is not. It reacts to you, just as you react to it. It is dynamic. Contingent. Alive. There are unlimited possibilities. A trading strategy derived from its fossil remains is similarly inert  Dead. Unable to participate in the symbiosis between market and participant. 
 
This is true of any algorithm that depends on data. Data is a fossil record. Good for answering questions to which there already is an answer. (You shouldn't scoff at this: many of our best questions are things for which there is already an answer; just one we don't personally know. Hence: the value of Google. The value of a ''library''.
 
But note the mode of discovery: static; historical; final; determinate.
===Causal [[determinism]]===
Iteration lies behind our obsession with the power of Amazon butterflies to set off hurricanes in the Philippines.
 
We accept causal [[determinism]] because the alternative seems to deny the apparent regularity of the universe. But still, even the fossil record flatters to deceive: the lattice of potential causes is far more complex than we our wildest dreams — we form our dreams from what we see and what we hear and that necessarily infinitesimal. The histories we construct are works of imaginative fiction. (This is why historians do not agree). We make them; we do not ''find'' them.
 
By looking at a unitary history (that we made up), in hindsight we miss the contingency from which it was fashioned. Once it is laid down, it looks as if it was inevitable. It looks to be immutable of operating causes. It looks pre-ordained. This is a curiously ''religious'' idea.
 
In any case, if we accept the proposition that there is but one past (whether or not we can never be sure what it is) still there remains, from any given present, an ''infinity'' of futures.


The temptation of looking at our concrete past, is to see a single decision, at any point on that timeline as having determined the remaining history to the present. The extrapolation is that it will determine future also, unless a counterweighting single decision of equal significance can be made.
The temptation of looking at our concrete past, is to see a single decision, at any point on that timeline as having determined the remaining history to the present. The extrapolation is that it will determine future also, unless a counterweighting single decision of equal significance can be made.


But neither is true. We have, and our ancestors had, the ongoing ability to change things  daily by the decisions they, and we, made. ''Everyone'' makes bad decisions. The key is not to be ''defined'' by them . To make more ''good'' decisions than you do bad ones.
But neither is true. We have, and our ancestors had, the ongoing ability to change things  daily by the decisions they, and we, made. ''Everyone'' makes some bad decisions. The key is not to be ''defined'' by them. Everyonevmakes good decisions too  we have good luck, and bad luck.
 
Our permanent aspiration: from here, make more ''good'' decisions than you do bad ones. Improve your ratio.  


You can't undo the decisions of the past, whether made by you or about you, or by your ancestors or about them.
You can’t undo the decisions of the past, whether made by you or about you, or by your ancestors or about them.


So, serenity’s prayer: have the courage to fix the things you can do, being those in the present live.com and up for debate; and the patience 2 2 to bear those things you cannot, and the wisdom to know the difference.  
So, serenity’s prayer: have the courage to fix the things you can do, being those in the present live.com and up for debate; and the patience 2 2 to bear those things you cannot, and the wisdom to know the difference.  
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