I think he means central limit theorem. This entire conversation is based around a failure to understand basic math... which is ironic given the title.
How necessary are quantitative skills in order to trade profitably?
- Thread starter c.chugani
- Start date
Because I was such an exemplary employee, my company decided to send me to their condo in Taho for 3 days. I told them I didn't have enough money to go but they insisted.
So we found babysitters for the kids and hopped in the un airconditioned 72 VW sqareback with the bad fuel pump and headed out across the desert and up the big hill.
After several minutes of observation I determined that sooner or later the other color would come up on the roulette table.
So I took the weeks grocery money ($32) and waited for red and then bet $1 on black. If I lost, I just bet $1 again to break even, and then doubled up just to break even. So the only time I won was if the first $1 bet was a winner.
I went with $150 in my pocket, and we spent 3 days eating and having fun and I left with $150 in my pocket.
I thought I was on to something. When I got home, I called the pit boss long distance (and back then you paid extra for a call to NV) and asked "What happens if the little ball falls in one of those green slots?"
Basically you are asking about left-brained traders vs. right brained traders. I am an almost 100% right-brained trader with ZERO and I mean ZERO math/computer/science/analytical skills. I made my first trade in 1966 and after spinning my wheels for the first 19 years as a small time/part time wannebe trader going nowhere, finally got it figured it out and turned $2300 into more than $2.4 million with very little drawdown along the way - just a slow grind up. Being an old timer I am not into all this quant stuff and learned mostly from the likes of a Darvas. Darvas wasn't into the complex and arcane, just a simple trend follower.
Should probably add that around 50% of my profits have come from trading junk bond funds, 35% from equity mutual funds, 11% individual stocks, and 4% stock index futures. Unlike most traders I abhor volatility and seek out tight rising trends/channels with little to no volatility. That's because I am a fervent believer that the failure rate is so high in this game is due to the average trader's inability to tame volatility.
Should probably add that around 50% of my profits have come from trading junk bond funds, 35% from equity mutual funds, 11% individual stocks, and 4% stock index futures. Unlike most traders I abhor volatility and seek out tight rising trends/channels with little to no volatility. That's because I am a fervent believer that the failure rate is so high in this game is due to the average trader's inability to tame volatility.
There was a young girl who was a pretty good blackjack card counter who wanted to learn trading. I kind of helped her and she ended up on the SF stock exchange.
I told her, "You need to learn to be stupid. Just do what everybody else is doing."
We split the profits 50/50, I got my money back.
I was good at math in high school but got a C in the one and only math course I took in college. Majored in art instead, making sculptures and videos. So I would also say no.
Can one think of trading as an artform, and the markets in terms of form, composition, rhythm, tempo? I believe so. Why? Because the markets are essentially an expression of fear and greed via price and time. Profitable trading, at its core, is all about good timing. Accumulate enough screen time, and one's sense of timing begins to develop into a craft.
If you want a more concrete answer, there are probably a number of other skills far more critical and practical than quantitative. A simple but vital one is memory; the levels of the markets you trade day in, day out, should be ingrained for immediate recall. Another skill inherently necessary is the ability to learn how to learn -- you need to be proactive, fearless, and stubbornly independent in this regard. You cannot learn how to trade through reading books, a manual doesn't exist -- just as there is no manual for how to create a good work of art. You can only put in the time and effort in concentrating on what you see, and over thousands of hours finally develop your own sense of what makes sense.
Can one think of trading as an artform, and the markets in terms of form, composition, rhythm, tempo? I believe so. Why? Because the markets are essentially an expression of fear and greed via price and time. Profitable trading, at its core, is all about good timing. Accumulate enough screen time, and one's sense of timing begins to develop into a craft.
If you want a more concrete answer, there are probably a number of other skills far more critical and practical than quantitative. A simple but vital one is memory; the levels of the markets you trade day in, day out, should be ingrained for immediate recall. Another skill inherently necessary is the ability to learn how to learn -- you need to be proactive, fearless, and stubbornly independent in this regard. You cannot learn how to trade through reading books, a manual doesn't exist -- just as there is no manual for how to create a good work of art. You can only put in the time and effort in concentrating on what you see, and over thousands of hours finally develop your own sense of what makes sense.
It's not necessary for profitable trading (I myself don't use a heavy quantitative skillset in mine)
However, I will say that I am an engineer by education and have always been strong with numbers and logical thinking. I think you'll find that though that many great traders have strong affinity for numbers and an INTP/INTJ type personality. It tends to breed the obsession that is necessary to do well in the markets.
However, I will say that I am an engineer by education and have always been strong with numbers and logical thinking. I think you'll find that though that many great traders have strong affinity for numbers and an INTP/INTJ type personality. It tends to breed the obsession that is necessary to do well in the markets.
Absolutely none. It's all quite simple (after Pascal and Fermat got involved); and you don't need to build intuition, though I've found it useful occasionally.
I don't know if it's new math or not. I was in school so long ago, that no one had heard of such a thing. Is new math a bad thing?
I have to disagree with one thing though. There is not, in general, a definitive right answer to every question posed or methodical ways to derive it. There isn't even a definite right answer to every question posed. Not even in mathematics. At least after Goedel you can't say that.
Of course, I know, you were referring to elementary probability.
But I was talking about trading.
Quote from piezoe:
Or perhaps another question is apropos here. Have you ever spent any time observing the traders -- not the clerks, who are generally pretty bright -- on the floor of any of the Chicago exchanges? If so, do those folks who are screaming and waving their hands in the air look like geniuses to you?
if you were looking at the options pits then there are many very smart quantitative people in there with strong intuition for stats.