How George Soros knows what he knows

C

chessman

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** Like many of my posts, this is targeted primarily for swing or long term traders. Especially those that follow mechanical systems. Again no disrespect to day traders, just a different style. Thanks**

I recently met Flavia Cymbalista in New York. She has a Phd in, of all subjects market psychology, interesting work !

She will have an article in the next issue of SFO magazine titled 'How George Soros knows what he knows'

Her thesis is that nobody trades well based exclusively on a mechanical system. You have to combine gut feel with a mechanical system. Almost develop a filter if you will.

This does make some sense to me, in the mkt wizards book, it was talked about as one of the key elements of mkt wizards success, the ability to step on the gas when you sense that extraordinary opportunity. Alas for me every trade represents 1 % risk.

Please download the article about her presentation to Linda Raschke's group.

I try to be a systematic trader who feels if I leave the door open to gut feel, its nothing but trouble. Not sure how to incorporate her ideas??

Please let me know what you think? I would greatly appreciate your comments.

http://www.marketfocusing.com/
 
Ok


You do realize that shorting the British pound was a make or break for George Soros

Obviously he had a gut feeling but he fully knew the risk. Period.

If he had been wrong, we would not know that name today.
 
Quote from Mecro:

Ok


You do realize that shorting the British pound was a make or break for George Soros

Obviously he had a gut feeling but he fully knew the risk. Period.

If he had been wrong, we would not know that name today.
More...

No, we would KNOW the name George Soros if the British pund didn't break. But he would be associated with the other big British loser speculator like Nick Leeson of Barings Bank who bet big and lost it all.

He would be infamous instead of famous! LOL. There seemed to be a moral hazard problem in this field if you play with OPM. If you win big you get a huge bonus and recognition. If you lose big, then you either 1) lose your job (BFD) 2) go to jail (well, pretty big deal).

But still, for a $1B wouldn't you do the trade too? haha
 
chessman,

i am familiar with flavia's work on intuition and uncertainty. she is a very talented researcher and is attempting to quantify intuitive qualities of trading / traders. her work is absolutely fascinating and her ability to make it understandable is commendable. she is part of a group that i am a member of, where did you meet her ??

all the best,

surf
 
Quote from chessman:



This does make some sense to me, in the mkt wizards book, it was talked about as one of the key elements of mkt wizards success, the ability to step on the gas when you sense that extraordinary opportunity.



More...

That is how we get paid for our past expieriences. In a way, that our "double time pay"

At certain times you gotta play some size and let it happen.
 
Quote from misctrader:



No, we would KNOW the name George Soros if the British pund didn't break. But he would be associated with the other big British loser speculator like Nick Leeson of Barings Bank who bet big and lost it all.

He would be infamous instead of famous! LOL. There seemed to be a moral hazard problem in this field if you play with OPM. If you win big you get a huge bonus and recognition. If you lose big, then you either 1) lose your job (BFD) 2) go to jail (well, pretty big deal).

But still, for a $1B wouldn't you do the trade too? haha
More...


Misctrader,

I don't think it is fair to compare George Soros with Nick Leeson. Prior to his famous British Pound trade, Mr. Soros had been a successful trader with an established track record. Mr. Leeson was a fraud who began to lose almost immediately after a small run of good luck.

Regards,

Thunderdog
 
Quote from chessman:

** Like many of my posts, this is targeted primarily for swing or long term traders. Especially those that follow mechanical systems. Again no disrespect to day traders, just a different style. Thanks**

I recently met Flavia Cymbalista in New York. She has a Phd in, of all subjects market psychology, interesting work !

She will have an article in the next issue of SFO magazine titled 'How George Soros knows what he knows'

Her thesis is that nobody trades well based exclusively on a mechanical system. You have to combine gut feel with a mechanical system. Almost develop a filter if you will.

This does make some sense to me, in the mkt wizards book, it was talked about as one of the key elements of mkt wizards success, the ability to step on the gas when you sense that extraordinary opportunity. Alas for me every trade represents 1 % risk.

Please download the article about her presentation to Linda Raschke's group.

I try to be a systematic trader who feels if I leave the door open to gut feel, its nothing but trouble. Not sure how to incorporate her ideas??

Please let me know what you think? I would greatly appreciate your comments.

http://www.marketfocusing.com/
More...

chessman,

thanks! That's pretty interesting stuff. If you read Monroe Trout, mainly a systematic trader, in Market Wizard then he said that even though he trades off the signals from his system, he also used nonquantifiable cues like noise level of trading floor etc etc.

Anyhow, though I try to be systematic I think it's hard to quantified everything. There are certain things that are almost impossible to quantify I think. So, I think you follow your system signal about 95% of the time. And the 5% when you have a really good intuitive feel you press the pedal to the medal.

But for the average person, I think it's better off if they just follow some kind of system since they are so erratic and can't control their psychology or whatever.

thanks for the link,

99
 
And didn't Soros lose on a russian currency trade, and I believe there was one another billion dollar trade that went south for him to. I think these were both after the british currency trade made him well known. I don't have to tell you he's very intelligent and knows his stuff. But there's always a certain element of "when you're rich, they think you really know" I feel whenever someone espouses a forecast.

And since it is hard to quantify everything, and since to make cause and effect observations may not be accurate at all, and because the ability to affect probabilities is usually non-existent or not fully in anyone's power, there's the thought that the advantage of discretionary actions over those purely mechanical may not perform so much greater, over the long term, as some may think.
 
soros is used as an example of utilizing intuition and feelings to place trades. intuitive knowledge, be it connecting to your own stored data bank or some sort of a connection to a "collective unconsciousness" or gaien mind is something that is just starting to be studied as it relates to decision making. flavia is on the forefront of this movement.

best,

surfer
 
Keep in mind that when George Soros did his BP trade, he has inside information. Big time inside info. If you do enough research you can find out more on this story but it takes some digging.

As far as mechanical systems needing a human filter, I'm not so sure. I truly wish that were the case. I don't relish my lake of programming skills getting in the way of making money...

But, the only really awesome trader I personally know who I am absolutely sure makes mountains of money takes his trades from a computer. It took him over 3 years to program the code, along with a partner. He knew how to trade before. But, he was able to jam his thought process into a PC.
 
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