Apophenia is pattern detection with the threshold set too low. Evolution favoured false alarms over misses, so the system fires readily and markets give it endless material.
In trading it produces indicator systems built on coincidence, superstitions about times of day, and elaborate correlations between unrelated instruments discovered by looking at enough pairs. Look at a hundred relationships and several will appear significant by chance alone.
The defence is to fix the hypothesis before the search, count how many things you tested, and require a reason as well as a fit. A relationship with no mechanism is a coincidence waiting to end.
Related: clustering-illusion, narrative-fallacy, backtesting, indicator-shopping