Developing an edge is the first step for trading successfully. Without that, disciplined trading will only make sure you gradually lose money
Archives of “January 2019” month
rssOn Being the Right Size
I found this 1926 paper “On Being the Right Size” by J. B. S. Haldane quite fascinating.
To the mouse and any smaller animal it presents practically no dangers. You can drop a mouse down a thousand-yard mine shaft; and, on arriving at the bottom it gets a slight shock and walks away, provided that the ground is fairly soft. A rat is killed, a man is broken, a horse splashes.
That reminds me of Billy Eckhardt’s comments on bet size…
If you plot system performance against bet size, you obtain a curve in the shape of a rightward-facing cartoon whale, going up in a straight line before dropping dramatically.
He said: “Trading size is one aspect you don’t want to optimize: the optimum comes just before the precipice. You want to be at the left of the optimal point, in the high zone of the straight curve.” (more…)
No Expectations-No Opinions
The Biggest source of agony and frustration in trading comes from our expectations of what a market should or should not do !Agony becomes intense when we fail to act to correct our orginal assumption of our market expectations.
There is No Mistake in being wron-The
Capitalism -Best Described
Market Wizard Marty Schwartz on how he turned from a loser trader into a winner
Define Necessity
Risk & Chance
Here are some interesting quotes from ‘Risk & Chance’ (Dowie and Lefrere) that have a relevance to trading and speculation more generally:
Henslin (1967) notes …dice players behave as if they are controlling the outcome of the toss. One of the ways they exert this is to toss the dice softly if they want a low number, or hard for a high number. Another is to concentrate and exert effort when tossing. These behaviours are quite rational if one believes that the game is a game of skill.
As a trader I wish I could figure out what portion of my trading results can be attributed to luck, and what portion to skill. The problem is that trading seems to be a game of both skill and luck, so we spend half our time figuring out just how hard we should be throwing the dice. Splitting skill from luck is a problem for all speculators, but high frequency traders can find out much sooner than low frequency macro traders, who only take a few positions each year. In the latter case, it may be close to impossible to look back to a macro trader’s career and make this determination with any reasonable level of certainty.
De Charms(1968) stated that “Man’s primary propensity is to be effective in producing changes in his environment. Man strives to be a causal agent, to be the primary locus of causation for, or the origin of, his behaviour; he strives for personal causation.
The polar opposite of mastery is helplessness. (more…)
60 Minutes: Bill Gates 2.0
For Bill Gates, technology is still the solution. He shows Charlie Rose some inventions he’s working on to help heal the world.
Bill Gates speaks with unexpected emotion about his relationship — and rivalry — with the late Steve Jobs; and, he goes back to Lakeside, the Seattle high school where a rummage sale held by the mothers’ club set him on his path to help change the world. Then, Outtakes from a psychology professor’s lab in which children had to choose between fairness and chocolate
What Do You Think?
Amazing Video Shows How Beautifully Math Translates Into Life
Mathematics has changed the course of human history countless times. It’s easy to forget how much of what we see every day can be described by a series of symbols and relationships.
A video titled “Beauty of Mathematics”from Yann Pineill and Nicolas Lefaucheux shows exactly how true that is. On the left, you see the equation itself, in the middle, a diagram of what’s happening in real time, and on the right, how things look in the real world.
It shows how math reveals everything from the very simple – like how probability determines how likely it is that you’ll roll a two and a four during a game of backgammon.
Mathematics can derive the equations of motion that can model a spinning top – how fast it needs to go, and the topping point for when it will wobble out of control:
The video opens with a quote from Bertrand Russell that just about sums things up:
“Mathematics, rightly viewed, possesses not only truth, but supreme beauty – a beauty cold and austere, without the gorgeous trappings of painting or music.”