- I haven’t seen much correlation between good trading and intelligence. Some outstanding traders are quite intelligent, but a few aren’t. Many outstanding intelligent people are horrible traders. Average intelligence is enough. Beyond that, emotional makeup is more important.
- As I recall more than half the course revolved around developing the right attitude, guarding against debilitating emotions, how to think about risk, and how to handle success and failure.
- Teaching the turtle system itself doesn’t take very long. I was saying you need less than 12 degrees of freedom in a system; versions of the turtle system had three or four.
- We spent a lot of time talking about our theories on how to control risk; that was actually the bulk of the course. Attitude, emotional control, discipline; those things are harder to teach. All the turtles learned the system and learned the strategy; that was the easy part, but some of them brought the right attitude and right mental set to it and they prospered and became very rich. Others had a more halting career and did not succeed as well. They had the same training, but maybe they did not have the same emotional make-up.
Archives of “Psychometrics” tag
rssHold Your Position Until the Trend is Invalidated, Do Not Let Go of Your Position. Be Willing to Experience Your Anxieties
- Maintaining a commitment is particularly important when it comes up for a test.
- Somewhere along the line of keeping your commitment you may get a feeling that you don’t like.
- If you are willing to experience the feeling, it can transform into an AHA that supports your commitment.
- If you are unwilling to experience the feeling, you might abandon your commitment to try to make the feeling go away. That only results in having to feel the feeling after all.
- The more you are willing to experience the feeling of bumping into walls, the less you have to bump into walls.
- Trading requires skill at reading the markets and at managing your own anxieties.
- People have a Conscious Mind and Fred. Fred wants to communicate feelings to CM so CM can experience them and gain experience and share it with Fred so Fred can learn how to react. This is how we manufacture wisdom. When we don’t like our feelings we tie them in k-nots and do not experience them. This interrupts the wisdom manufacture process, and draws drama into our lives.
- K-nots, protect us from truth and keep our lives in drama. To untie k-nots, fully experience whatever appears in the moment.
- When you keep your eye on the prize and are willing to experience all the feelings that arise, the prize soon becomes yours.
6 Ways to Separate Lies From Statistics
1. Focus on how robust a finding is, meaning that different ways of looking at the evidence point to the same conclusion. Do the same patterns repeat in many data sets, in different countries, industries or eras?
2. Results that are Statistically Significant means it’s unlikely findings simply reflect chance. Don’t confuse this with something actually mattering.
3. Be wary of scholars using high-powered statistical techniques as a bludgeon to silence critics who are not specialists.
4. Don’t fall into the trap of thinking about an empirical finding as “right” or “wrong.”
5. Don’t mistake correlation for causation.
6. Always ask “so what?” The “so what” question is about moving beyond the internal validity of a finding to asking about its external usefulness.
A dozen lessons from Jim Simons
1. “Models can lower your risk…. It reduces the daily aggravation.” With old-fashioned stock picking: “One day you feel like a hero. The next day you feel like a goat. Either way, most of the time it’s just luck.” “We don’t override the models.”
2. “Certain price patterns are nonrandom and will lead to a predictive effect.”
3. “Efficient market theory is correct in that there are no gross inefficiencies, but we look at anomalies that may be small in size and brief in time.”
4. “Great people. Great infrastructure. Open environment. Get everyone compensated roughly based on the overall performance… That made a lot of money.”
5. “Luck, is largely responsible for my reputation for genius. I don’t walk into the office in the morning and say, ‘Am I smart today?’ I walk in and wonder, ‘Am I lucky today?’”
6. “We have three criteria. If it’s publicly traded, liquid and amenable to modeling, we trade it.” (more…)