If you are of the first kind, “the wills”,  you will overcome all the obstacles on your way to consistent success.  You will accept, even embrace, uncertainty as the driving force behind the next big opportunity for gain.  You will lose gracefully and move on to the next trade, knowing that trading is a game of probabilities and possibilities; not certainties and absolutes.  You will leave money on the table, thankful for what you were able to gain; not bitter by what was left.  If you are of the first kind you will succeed. You will indeed.

If you are of the second kind, “the won’ts”, you will look for the always elusive easy road to riches.  You won’t believe in the effort required to become a disciplined trader, driven by solid habits repeated daily. You won’t apply the skill necessary for managing risk as that would require planning and preparation, something you just do not have time for.   You won’t develop your own well defined trading edge, depending instead upon others to do it for you. If you are of the second kind your opposition to anything other than what is easy will make it quite difficult to succeed when times get tough, and they will but you won’t.

If you are of the third kind, “the can’ts”,  you will blame everyone and everything for your failures.  You can’t succeed because you are too busy finding fault in any trading strategy that produces a loss.  You can’t succeed because anyone who does so has some special knowledge or gift that you obviously cannot possess.  You can’t succeed because the market is rigged.  If you are of the third kind…quit. You are a quitter with a quitter’s attitude.  Be in the majority. Be a can’t. It’s easy.

So, what kind of person (trader) are you?

Jim Simons is a hedge fund manager and a mathematician. He is a quantitative investor and the founder of the hedge fund Renaissance Technologies. His hedge fun specializes in systematic trading using quantitative models derived from mathematical and statistical analyses. Mr. Simons primary models were on pattern recognition. He  contributed to the development of string theory by providing a theoretical framework to combine geometry and topology with quantum field theory. Jim Simons was a mathematics professor from 1968 to 1978, and chair of the mathematics department at Stony Brook University. He founded his hedge fund in 1982. His net worth is currently estimated at $21.5 billion.

“Renaissance’s flagship Medallion fund, which is run mostly for fund employees, “Is famed for one of the best records in investing history, returning more than 35 percent annualized over a 20-year span”. From 1994 through mid-2014 it averaged a 71.8% annual return.Renaissance offers two portfolios to outside investors—Renaissance Institutional Equities Fund (RIEF) and Renaissance Institutional Diversified Alpha (RIDA).” via Wikipedia 

Here are some of his top trading quotes that distill some of his wisdom:

“We search through historical data looking for anomalous patterns that we would not expect to occur at random.” – Jim Simons 

“Patterns of price movement are not random. However, they’re close enough to random so that getting some excess, some edge out of it, is not easy and not so obvious-thank God. God probably doesn’t care. Thank whoever.” – Jim Simons 

“Past performance is the best predictor of success.” – Jim Simons

“The system is always leaking, and we keep having to add water to keep it ahead of the game.” – Jim Simons

“I wasn’t the fastest guy in the world. I wouldn’t have done well in an Olympiad or a math contest. But I like to ponder. And pondering things, just sort of thinking about it and thinking about it, turns out to be a pretty good approach.’ – Jim Simons

“One can predict the course of a comet more easily than one can predict the course of Citigroup’s stock. The attractiveness, of course, is that you can make more money successfully predicting a stock than you can a comet.” – Jim Simons

“It’s supply and demand. If gold is discovered, then it gets harder to make money mining gold because everyone’s competing with you.” – Jim Simons 

“We have three criteria: If it’s publicly traded, liquid and amenable to modeling, we trade it.” – Jim Simons 

“There’s no such thing as the goose that lays the golden egg forever.” – Jim Simons

“In this business it’s easy to confuse luck with brains.” – Jim Simons

“The things we are doing will not go away. We may have bad years, we may have a terrible year sometimes. But the principles we’ve discovered are valid.” – Jim Simons

 “We don’t override the models.” – Jim Simons

In 1921, the Weimar Republic was saddled with war debts that it could not afford, a problem exacerbated by printing money without any economic resources to back it A loaf of bread that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923!

Here are four examples of how these types of biases can affect people in the business world:

Familiarity Bias: An investor puts her money in “what she knows”, rather than seeking the obvious benefits from portfolio diversification. Just because a certain type of industry or security is familiar doesn’t make it the logical selection.

Self-Attribution Bias: An entrepreneur overly attributes his company’s success to himself, rather than other factors (team, luck, industry trends). When things go bad, he blames these external factors for derailing his progress.

Anchoring Bias: An employee in a salary negotiation is too dependent on the first number mentioned in the negotiations, rather than rationally examining a range of options.

Survivorship Bias: Entrepreneurship looks easy, because there are so many successful entrepreneurs out there. However, this is a cognitive bias: the successful entrepreneurs are the ones still around, while the millions who failed went and did other things.