How market beats us!

To understand how we lose in the market or how the market beats us

Let us have a look at how Garry Kasparov, the then world chess champion and arguably the best chess player of all times, beat Deep Thought and Deep Blue, two super chess programs in 1989, 1996 and 1997.

In 1989, Kasparov beat Deep Thought 2-0.

In 1996, Kasparov beat Deep Blue 3-1.

In 1997, in a re-match between Kasparov and improved Deep Blue, the computer won 3.5-2.5

In all three matches, Kasparov had beaten extremely developed super capability computer chess-programs which had database of 4000 openings, 7,00,000 grandmaster games and a library of six piece endgames and five or fewer piece positions.

The computer derived its playing strength mainly out of brute force computing power.

Mind you, the computer was actually a combination of 30 parallel computer nodes capable of evaluating 200 million positions per second.

It was 259th most powerful super computer on Earth.

To search and analyse moves to a depth of 6-7 moves burns as much energy in a chess player's mind in a 3-hour game as is burnt by a football player in a 90-minute match physically!!!

And Deep Blue could typically search to a depth of between 6-8 moves to a maximum of 20 or more moves in some situations.

That was simply impossible for a human mind to match.

Still, Kasparov beat it!!!

How?

Anti-computer tactics.

It is based on exploiting the weakness in the very strength of the computer.

- it's logical framework.

A computer is a monster of logic.

It is intelligent but not tactical.

It has I.Q. but not E.Q. (Emotional Quotient)

It can be fooled outside its program!!!

1) A seemingly "sub-optimal" move or set of moves can catch computer on the wrong foot!

2) In 1997, Kasparov fooled the computer by making an unusual opening move. By doing this, Kasparov "dragged" Deep blue out of its "database" experience!

3) Kasparov used double-fianchetto (hidden/covered bishops on the longest diagonals) to unleash a surprise hidden attack to blast computer's position. Here, Kasparov used the ability of the human mind to undertake surprise, rather shock, the opponent. This "scheming" ability is not there in the computers. Human mind is creative whereas computer program is responsive and repetitive.

4) On a number of occasions, Kasparov dodged the computer by misleading and misdirecting it! Kasparov's hidden agenda couldn't be smelled by the super computer! Computers are weak in handling and responding to unpredicted developments!

5) Kasparov never challenged Deep Thought as well as Deep Blue on the ability to calculate moves. He would have been a fool if he had done that! Instead, he attacked the weakness of his opponent - inability to be unorthodox, inability to adapt!

6) Kasparov befooled the computer by planning for something which was beyond the known depth of move calculation by the computer. This is known as the problem of "Horizon Effect" in the world of artificial intelligence.

....and so on

Since those days in 1997, computers have become more mosterous, and much more intelligent.

But since they are still the creation of man, they continue to lag human mind's abilities.

Till a computer gives birth to a computer, it can't beat a man!

Why did I share all this with you friends!

What message does it have for we stock traders?

= We traders are like Deep Thought and Deep Blue!!!!!!!

and the market is like Kasparov!!!!!!!!!!!!!

The market (Kasparov) keeps befooling us and keeps exploiting our mechanical behaviour!