Archives of “statistics” tag

rss

A dozen lessons from Jim Simons

  
  Education
#  #  #  #  #  #

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…)

Trade Management & Psychology (One Liners )

  
  Education
#  #  #  #  #  #  #  #
  • Let winners run. While momentum is in phase, the market can run much further than might be expected. Do not exit winners without reason!
  • Be quick to admit when wrong and get flat.
  • Sometimes a time stop is the right solution. If a position is entered, but the anticipated scenario does not develop, then get out.
  • Remember: if one thing isn’t happening the other thing probably is.
  • Flat is a legitimate position.
  • Be careful of correlations. Several positions can often equal one large position bearing unacceptable risk. Respect the potential for correlations to change—you have to deal with today’s correlation, not the correlation that existed when you put on the position.
  • The crowd is not always wrong.
  • Most trading problems come from an incorrect perception of risk. If you’re trading with an edge, the “risk” of any trade being a loser is not actually a risk at all.
  • Intuition is real, but all traders develop it. Intuition, alone, is not an edge.
  • Intuition must be trained properly. It is very easy to develop incorrect intuition due to cognitive biases and the nature of the market.
  • Mental capital is just as important as financial capital. Protect both.

Reduce Your Trading Loss

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Trading is an evolutionary process. Nobody can wake up being a Master Trader. Unfortunately there is no book or magic trick that can turn you into the highly profitable trader. Although the belief and the hope to obtain those skills instantly is still in place.

The statistics say that only the ones with the self-dedication and discipline succeed in this business.

The most common mistakes leading to losses:

-Trading against the market;

-No trade potential;

-No serious buyers or sellers in the stock;

-Wide stop-loss;

-Fear of loss. (more…)

Go to top