Archives of “January 3, 2019” day

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Is your Trading Fragile? Robust? or Anti-Fragile

  
  Education
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Fragile- “Easily broken, shattered, or damaged; delicate; brittle; frail.”

Robust- “Strong and healthy; hardy; vigorous.”

Anti-Fragile- “A postulated antithesis to fragility where high-impact events or shocks can be beneficial. Anti-fragility is a concept developed by professor, former trader and former hedge fund manager Nassim Nicholas Taleb. Taleb coined the term “anti-fragility” because he thought the existing words used to describe the opposite of “fragility,” such as “robustness,” were inaccurate. Anti-fragility goes beyond robustness; it means that something does not merely withstand a shock but actually improves because of it.”

7 Words for Traders

  
  Education
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  • Think risk first and profit second — Profitable traders view every potential and actual trade through the lens of risk or whether they are willing to truly accept the potential damage to their account as opposed to focusing on the potential reward of trades.7
  • Accept risk — Profitable traders truly accept the associated risks once they decide the potential reward is worth it.  These traders understand that in order to win consistently they MUST experience controlled losses.  They know that if they minimize losses and exercise patience with winners, they can reap incredible profits.
  • Think more/Trade less –  Profitable traders know that their profit on every trade lay in the short distance between their ears.  They understand that the siren song of securities is an invitation to trouble much of the time.  They spend more time assessing a security’s overall chart structure and identifying optimal transaction points rather than focusing on the physical activity of clicking an entry or exit.
  • Stalkers — Profitable traders are disciplined and patient.  They will pass up a good entry to wait for a great one.
  • Decisive — Profitable traders make decisions.  They know that as long as their decisions are framed properly (i.e. from a risk perspective), their first thought is generally the right one.
  • Forgetful — Profitable traders have short memories.  As we were told many years ago on a Wall Street trading desk, “If you have a losing trade, forget it quickly… the chance to profit is coming up.  If you have a winning trade, forget it even more quickly… the chance to give up those profits is coming up… stay in the moment.”
  • Group think — Profitable traders care little for any one trade.  They know they have already taken steps to minimize the impact of any single trade.  Instead they focus on groups of trades as groups are more indicative of their process… which is what’s really important.

6 Lessons from Paul Tudor Jones

  
  Education
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  1. I approach every stock with the understanding that my knowledge is imperfect, that I could be wrong and I give myself permission to make mistakes.
  2. If something falls more than 10% versus the market, I force myself to re-evaluate my thesis and think about how I could be wrong – what is the price action trying to tell me.
  3. I ask myself if I didn’t own the stock here, would I buy it today. If the answer is no, I sell immediately.
  4. If something falls below its 200-day moving average I sell 50% of the position right away, and again re-evaluate my thesis.
  5. If a position is causing me a lot of stress or is consuming an undue amount of time on a weekly basis, I cut 50% – the position is obviously too big.
  6. If I wake up worried about a position repeatedly, I cut it 50% immediately.

Stuck in line at airport? The humble ant can help you

  
Analysis, Education
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Some scientists are trying to find answers to human problems by unlocking the secrets of fish schools and insect swarms, applying their behavioral patterns to ease congestion at airports or perfect self-driving technology. 

Bottom-up communication 

“The way this job is being done now is worse than how ants would do it,” Katsuhiro Nishinari, a professor at the University of Tokyo, often tells executives.

Nishinari has worked with 10 companies in areas such as manufacturing and logistics to research how to improve business practices. He took note of ant behavior while studying the mechanisms behind gridlock and now tests ways to apply it to how humans work.

Lines of ants do not need to slow down even when the insects gather en masse to move a big piece of food. “Ants use pheromones laid on the ground to communicate information like in a game of telephone,” Nishinari explained. This bottom-up method lets them “respond flexibly based on conditions,” he said.

The lesson has been applied in the customs area at Narita Airport near Tokyo, where the number of immigration counters had not kept up with the surge in foreign visitors, leading to long wait times. Nishinari helped develop a solution that involves sharing detailed information among airlines, the airport operator and the Ministry of Justice. (more…)

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