About Kioseff Trading

Brandon Kioseff is the author of Simple Techniques that Beat the Market and the founder of Kioseff Trading. He has a developed interest in mechanical trading system design and application in addition to a never-ending desire for knowledge. Brandon lives in San Diego where he develops algorithms, manages his automated trading, and produces tabular data and user-friendly optimization tools for discretionary traders.

Investment Philosophy

Markets are noisy, usually. Periods of systematic price movement exist, and it is the job of an active investor to distinguish them. However, distinguishing systematic periods is half the battle; the active investor must also develop a methodical process to profitably trade such periods. Safe to say this is a difficult and unceasing task that investors endure for one reason only: market-beating performance.

There are several analytical methodologies for use by the investor to achieve this task, such as fundamental analysis and technical analysis. The two disciplines are often used in conjunction. Fundamental analysis uses public domain financial and macroeconomic data to draw inferences about the future. Technical analysis looks for methodical sequences in past price data and, if replicable, uses such information to draw inferences about the future should the sequence repeat. The two differ in philosophy and means for prediction, yet their goals are the same: market-beating performance.

While users of either discipline have the same ambition, a more polarizing question exists that rattles the very nature of these investment philosophies. Are they art? Or science? Strong arguments can be made for either camp; however, the answer rests somewhere in-between these antithetical beliefs.

The process of forming a unique investment hypothesis is an art. This hypothesis is then reduced to an objective ruleset and scientifically challenged. Art, rife with inexactness, is unfalsifiable and resistant to empirical refutation. Conversely, a systematic process is exact, given substance by empirical evidence.

In this sense, the two complement one another. The formation of an investment strategy requires a degree of creative power as an infinite number of unique interpretations exist. Consequently, an infinite number of investment strategies exist that once crystalized might have predictive power. However, an ambiguous investment strategy (art) is contingent on the private interpretation of the user. These strategies are implemented with discretion; thereby, no objective ruleset is established, and the strategy cannot be programmatically tested. This might seem inconsequential, but the inability to test an investment strategy through experiment is where trading becomes solely an art.

All statistical inferences about the future rely on the evaluation of existing data. A technical analyst looks to distinguish replicable sequences and correlations in data sets. Finding such sequences and correlations is art; however, we cannot say for certain these sequences or correlations are statistically significant without testing them (science).

The Kioseff Trading team appreciates both the art and science of investing.