The Forex Metaphor

A metaphor is an appropriate tool to explain something from another dimension, not easily explainable in the first dimension. George Lakoff states:

"We are neural beings," Lakoff states, "Our brains take their input from the rest of our bodies. What our bodies are like and how they function in the world thus structures the very concepts we can use to think. We cannot think just anything — only what our embodied brains permit."

In his 1980 book “Metaphors we live by” with Mark Johnson, he explains ‘the great metaphor’ known as a conceptual metaphor:

There are two main roles for the conceptual domains posited in conceptual metaphors:

* Source domain: the conceptual domain from which we draw metaphorical expressions (e.g., love is a journey).
* Target domain: the conceptual domain that we try to understand (e.g., love is a journey).

A mapping is the systematic set of correspondences that exist between constituent elements of the source and the target domain. Many elements of target concepts come from source domains and are not preexisting. To know a conceptual metaphor is to know the set of mappings that applies to a given source-target pairing. The same idea of mapping between source and target is used to describe analogical reasoning and inferences.

A primary tenet of this theory is that metaphors are matter of thought and not merely of language: hence, the term conceptual metaphor. The metaphor may seem to consist of words or other linguistic expressions that come from the terminology of the more concrete conceptual domain, but conceptual metaphors underlie a system of related metaphorical expressions that appear on the linguistic surface. Similarly, the mappings of a conceptual metaphor are themselves motivated by image schemas which are pre-linguistic schemas concerning space, time, moving, controlling, and other core elements of embodied human experience.

Conceptual metaphors typically employ a more abstract concept as target and a more concrete or physical concept as their source. For instance, metaphors such as 'the days [the more abstract or target concept] ahead' or 'giving my time' rely on more concrete concepts, thus expressing time as a path into physical space, or as a substance that can be handled and offered as a gift. Different conceptual metaphors tend to be invoked when the speaker is trying to make a case for a certain point of view or course of action. For instance, one might associate "the days ahead" with leadership, whereas the phrase "giving my time" carries stronger connotations of bargaining. Selection of such metaphors tends to be directed by a subconscious or implicit habit in the mind of the person employing them.

The principle of unidirectionality states that the metaphorical process typically goes from the more concrete to the more abstract, and not the other way around. Accordingly, abstract concepts are understood in terms of prototype concrete processes. The term "concrete," in this theory, has been further specified by Lakoff and Johnson as more closely related to the developmental, physical neural, and interactive body (see embodied philosophy). One manifestation of this view is found in the cognitive science of mathematics, where it is proposed that mathematics itself, the most widely accepted means of abstraction in the human community, is largely metaphorically constructed, and thereby reflects a cognitive bias unique to humans that uses embodied prototypical processes (e.g. counting, moving along a path) that are understood by all human beings through their experiences.

It is difficult to explain philosophy to a dog, because they do not have a means of understanding the language, hence the need for doggie metaphor. Everything to a dog can be equated to throwing the ball (in the case of Labradors, for other dogs a smelly metaphor can be used). Dogs and other animals have an intelligence which can be measured, such as the Monkey who outperformed the human memory champ in a memory test . Modern humans struggle with basic math skills; the understanding of money and finance is 95% numbers and mathematics. Finance is math, not magic, as many would like you to believe. It is possibly the last subject yet to be understood by the scientific method.

Is it ironic that the country with the most money, and the most dynamic capital markets, struggles with basic math skills, and money and finance is understood only by the understanding of math? Why is it that Americans have the highest per capita GDP and some of the lowest scores in mathematics globally? Could this be connected to Consumerism, multiple market bubbles, and a growing problem in financial literacy? Americans nearly flunk financial literacy, says Bankrate:



That's disappointing enough, but the statistically valid survey of 1,000 Americans, conducted for Bankrate by RoperASW, also shows that Americans are in "debt denial." They're unwilling to admit that credit is a problem -- in fact the only thing Americans are more secretive about is their love lives.

Finance is not tree-cutting. Making an investment portfolio is not like chopping a branch of a tree, while the analogy is a powerful tool to educate, it can’t turn a caterpillar into a butterfly.

Making a cup of coffee is an algorithm: plug in machine, put filters, put water in tank, put ground coffee in filter, turn on coffee maker, pour coffee into cup, wait to cool down, drink.

Educators use analogies like this to explain algorithms to those who have never been exposed to them. An algorithm is a process, a procedure, a series of steps – it must have a beginning and an end .

Just because making coffee is also an algorithm, doesn’t mean if you brew a cup of coffee you can design a good Forex algorithm.