Gambling and currencies--Las Vegas edition

Folks, first excuse me for not updating your favorite blog for so long. First, I was writing a really boring article for an engineering journal, and then I was enjoying a crazy four-day Vegas vacation, and in between these two things I left my blog neglected. Now, however, your faithful blogger has acquired such indispensable knowledge, as how long can you survive on four hours of sleep a day, should you split two 8ths, and can you call it an after party if it is before 4 AM. (In case you are wondering, the answer to the first question is--a lot if you have pure oxygen inserted in your air circulation system; also, yes you should split the 8ths; and to the last one--people do it only in Boston.)

In Vegas, I also figured out that the great trick of gambling is the illusion it gives of pattern and balance. It was so funny to stand next to a roulette table and see all the suckers that have notebooks (helpfully provided by the casino) for recording the numbers that are showing up.

It is so natural that the human brain detests randomness. The ability to see the structure, and the interconnectedness of the surrounding world is what can help you hunt your prey in the jungle, or conquer your enemies, in the battle field. In the casino, however, it turns you into an audacious spender fixated on a never coming payout.

How this doomed search for pattern is different from technical analysis? After all, from my perspective as an engineer, the rational behind most of the technical analysis tools is as laughable as the logic of the guys filling their notebooks with numbers at the roulette table. Well, there is one major difference between gambling and trading, and this is that in gambling, the house is always pattern-blind. That is, the house is a player that does not believe in anything but the law of large numbers, a player that always wins. In markets, however, there is no such agent. There is a democracy there, and the more players believe in the "pattern", the more it turns into a pattern. Is this, however, more rational than a guy putting numbers in a notebook...