Can anyone reflect on taking college psychology or behavioral finance for trading?

[TraderGreg]

Can anyone reflect on taking college psychology or behavioral finance with trading?

Never thought about it with the number of psychology and trading books out there, but a couple traders said they thought it was the key to the markets.

Thanks

 

[Stosh]

Whatever helps to "know thyself". College psychology shows you some tools in that regard. In my case, learning from bad mistakes was necessary......but they say smart people learn from the mistakes of others. Most people make the same mistakes over and over. Stosh

 

[jtnet]

Quote from TraderGreg:

Can anyone reflect on taking college psychology or behavioral finance with trading?

Never thought about it with the number of psychology and trading books out there, but a couple traders said they thought it was the key to the markets.

Thanks

if you thinks writing pointless papers and reading shitty books

 

[schizo]

Ironically, I learned more about human psychology in the market than I have ever learned in school. Nowhere else will you get a hands-on experience on raw human emotion or the herd mentality but here. Not only will you learn about the psychology of others, you will gain a fresh insight into your own fragile mind. As you're glued to the monitor with sweaty palms and jittery knees, you will begin to see things about yourself that you thought was not possible before. Indeed, only when large sums of money change hands (and, consequently, the thickness of your wallet) by the tick can this be possible.

 

[TraderGreg]

Quote from schizo:

Ironically, I learned more about human psychology in the market than I have ever learned in school. Nowhere else will you get a hands-on experience on raw human emotion or the herd mentality but here. Not only will you learn about the psychology of others, you will gain a fresh insight into your own fragile mind. As you're glued to the monitor with sweaty palms and jittery knees, you will begin to see things about yourself that you thought was not possible before. Indeed, only when large sums of money change hands (and, consequently, the thickness of your wallet) by the tick can this be possible.

I agree with all of you, and especially well-written Schizo. I have noticed this with trading myself.

It seems I should explain my question much further, though. I am reading a macro prop trader / hedge fund book and a trader was talking about making trades based on the opinions of the masses, and by only conversing with his junior traders so that he could pick out their amateur psychological mistakes and take the other side of the trade.

It was a longer term approach to the market. I am currently in intraday forex but I am in college and considering a career in macro.

 

[Cutten]

Quote from TraderGreg:

I agree with all of you, and especially well-written Schizo. I have noticed this with trading myself.

It seems I should explain my question much further, though. I am reading a macro prop trader / hedge fund book and a trader was talking about making trades based on the opinions of the masses, and by only conversing with his junior traders so that he could pick out their amateur psychological mistakes and take the other side of the trade.

It was a longer term approach to the market. I am currently in intraday forex but I am in college and considering a career in macro.

What book/interview was this, out of interest?

IMO the best degree course for macro trading is philosophy - especially logic, philosophy of science, and the empiricists. However, employers will probably prefer economics or finance.

Most of my non-daytrades are macro-based. I would recommend the following:

Read the Market Wizards series (a few macro traders there); everything written by or about George Soros, Julian Robertson, Paul Tudor Jones, Bruce Kovner etc etc; Marc Faber's old reports.

Read every single issue of the Financial Times and The Economist, and the Bloomberg "Markets" and "News" section for every market, every day, for at least 5 years straight. Order back issues (or find online) of financial newspapers (WSJ, FT etc) for prior major bull and bear markets, and read them cover to cover, whilst checking the long-term price charts. This will give you a feel for sentiment and popular opinion at the time, along with valuations etc that prevailed. Seeing how sceptical many people were of the internet in 1995, 1996, and 1997, and how net stocks were valued and how they traded back then, is incredibly useful information. Ditto for ALL major booms, bubbles, busts, crashes and bear markets.

Watch every major global market - whenever one is at or near a 12 month high or low, check the news and try and figure out why it is being driven that high or that low. You want to develop an understanding of every single major move that happens in the markets over the next 5 years. After a year or two of this, if you can afford it, open an account and start trading your views on *minimum* size.

If you do all this, you will develop good macro analysis skills, and some market experience, both of which are the foundation of good macro trading skills.

 

[Bootsie]

Quote from TraderGreg:

Can anyone reflect on taking college psychology or behavioral finance with trading?

Never thought about it with the number of psychology and trading books out there, but a couple traders said they thought it was the key to the markets.

Thanks

Take statistics instead. It's been the biggest applicable university level course that has helped me with trading... means, data collection and interpretation...

The rest is discipline and following your rules... which Mom taught you when you were 3.

B

 

[Bootsie]

Quote from Cutten:

What book/interview was this, out of interest?

IMO the best degree course for macro trading is philosophy - especially logic, philosophy of science, and the empiricists. However, employers will probably prefer economics or finance.

Most of my non-daytrades are macro-based. I would recommend the following:

Read the Market Wizards series (a few macro traders there); everything written by or about George Soros, Julian Robertson, Paul Tudor Jones, Bruce Kovner etc etc; Marc Faber's old reports.

Read every single issue of the Financial Times and The Economist, and the Bloomberg "Markets" and "News" section for every market, every day, for at least 5 years straight. Order back issues (or find online) of financial newspapers (WSJ, FT etc) for prior major bull and bear markets, and read them cover to cover, whilst checking the long-term price charts. This will give you a feel for sentiment and popular opinion at the time, along with valuations etc that prevailed. Seeing how sceptical many people were of the internet in 1995, 1996, and 1997, and how net stocks were valued and how they traded back then, is incredibly useful information. Ditto for ALL major booms, bubbles, busts, crashes and bear markets.

Watch every major global market - whenever one is at or near a 12 month high or low, check the news and try and figure out why it is being driven that high or that low. You want to develop an understanding of every single major move that happens in the markets over the next 5 years. After a year or two of this, if you can afford it, open an account and start trading your views on *minimum* size.

If you do all this, you will develop good macro analysis skills, and some market experience, both of which are the foundation of good macro trading skills.

A good approach IS the Macro view. Follow Cutten and some others around this site - the Eric P's (just created a thread that you need to read), the Lescors etc.

B

p.s. Another good book (my favourite) is Pit Bull by Martin S. If you can approach the markets like this guy, you don't need a 'job'.

 

[TraderGreg]

Quote from Cutten:

What book/interview was this, out of interest?

Inside the House of Money by Steven Drobny

Thanks for the ideas for developing a macro view. I put it on my to do list for this summer. I will reply in more depth and talk about this in my other thread (my journal) that you replied in shortly.

Quote from Bootsie:

A good approach IS the Macro view. Follow Cutten and some others around this site - the Eric P's (just created a thread that you need to read), the Lescors etc.

Can you link me to that thread? I found lescor using the search, but not Eric P. Thanks

 

[Cutten]

Quote from TraderGreg:

Inside the House of Money by Steven Drobny

Can you remember which person it was? Kind of a slog to re-read the whole book to find it