“The game taught me the game. And it didn’t spare me the rod while teaching.”
Jesse Livermore (the character that inspired Reminisces of a Stock Operator)
Having previously worked in finance as an analyst, one of the roles that was most interesting to me was trading. I interacted on a daily basis with the traders, producing analytics (read: pictures created in matplotlib) that helped them come to a decision. I also produced data that was fed into more automated strategies, but even then I was producing a dashboard of charts and graphs to ensure that the processes were running correctly.
Traders are the people at the centre of a desk’s operations. The traders are those interacting with the market, creating and reacting to opportunities that flash up on their screens, or come screaming down their phones. In other words, I was back-office and the traders were at the coal face, acting on information that I provided.
There is something romantic about being the actor, the prime-mover. However, as a trader there is very little place to hide, since your name will be associated with that decision, and in hindsight every trade looks bad, making managing regret a key part of a traders day job. But accountability is key to learning and improving.
The second law of trading: You’re never happy with the amount you traded.
You’ll never be truly happy with the trades you did. The best you can do is to be mildly unhappy and accept that this is a fundamental aspect of the job.\
The Laws of Trading: A Trader’s Guide to Better Decision-Making for Everyone, Agustin Lebron
I am heading to join Ricki Heicklen in New York City to learn about quantitative trading. This is slightly different from the role of discretionary traders. My current understanding is that quantitative trading is about statistical arbitrage, about building bots to execute your trades in the market. The rise of “algorithmic trading” (computer programs written to express traders intentions) has been well documented.
What are my expectations? What do I hope to learn? This post is about ensuring epistemic hygeine by writing down what I want to learn and what I expect to get out of the course prior to attending.
At a high level these are my questions:
- What do quantitative traders actually do day-to-day?
- Is quantitative trading something that I would enjoy?
- Am I the fish? Is quantitative trading something that I would be good at?
- What principles and practices from trading can I take into everyday life? How can I use the skills and mental models elsewhere?
Converting these into tangible goals:
- I will be able to explain to my partner what quantitative trading is and what the traders do each day. To the level that she can explain it to her parents.
- I will update my probability of “Will I enjoy quantiative trading?” currently 65%
- I will update my probability of “Will I be good at quantiative trading?” currently 35%
- I will write a blog post applying one of the concepts taught to everyday life.
Excited to see how it goes!