Mathematics skills for discretionary trading.

does george soros have a maths phd?

how about warren buffet?

marty s?

paul tudor jones?

jesse livermore?

richard wyckoff?

get the drift?

if you dont have the picture yet, think about victor neiderhoffer. now he does have a lot of maths qualifications. does anyone know what happened to him?

the only reason why some i-b's request academic qualifications is cos thats the norm for society. i really dont think that i-b traders are the best anyhow. lets face it, were talking about people who can move markets here. you dont need a maths phd to do that do you - you just need a heap of cash - which coincidentally - often isnt even their cash.

just cos something is the norm in society, it doesnt mean its 'right' - what ever that is.

time to start thinking for your self here guys. your college professor aint here in the markets to save you is he.
 
Quote from mhashe:

Although we're all playing in the Major league, the level of mathematics you need to learn depends on wether you want to play at the major league level, the minor league level or the local neighborhood league level.

At the major league level, you're up against some of the toughest, brightest and skillful players who have access to vast intellectual and monetary resources. They subject each system they trade to continuous rigorous mathematical testing. The level of mathematics used is most often graduate level, eg. do you know how to derive the Kelly formula to optimize your bet size for each trade? If you're able to hang with the players in this league, you stand to make 10's to 100's of millions a year.

In the minor league level, you don't need to know how the Kelly formula is derived, all you need to know is how to apply it. Some under-grad knowledge in Statistics, algebra, arithmetic is sufficient. It's like driving a vehicle, you don't need to know how the engine works for you to be able to drive. Suffice it to say, at this level you will never make 10's of millions, let alone 100's of millions. But it's better than going to college for 15 years to make a doctors salary.

In the neighborhood league, all you need to know is the most rudimentary arithmetics. However you will need to know how to press the correct calculator keys. You can subscribe to various "market newsletters" to formulate your trades and find new trading ideas. For those able to survive a few years playing at this level, they're usually able to make enough to get by. The hours are great, you own your own business and don't need any employees.
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I also agree with this. But I would like to emphasis my point of view.

mhashe made to references... one to "betting" and one to knowing how a car's engine works.

As for "betting" (conventional stops & targets). I hate the word. It goes hand in hand with "predicting" in my trading glossary. Defined as "Taboo"; and weak; and fallible; and NOT necessary.

As for referring to a car's engine mechanics... It's funny, because I use the automobile in many analogies as to how I approach trading in the markets.

References are, as that of an engineer. I've given myself a title of "financial engineer",lol. Ever since I was a little man, I have taken things apart to their core components inorder to determine what makes them work.

As such, I approach trading from it's most primary elements, and physical characteristics... The underlying mechanics involved, etc... To know exactly how it gets from to A --> B, or what restricts it's movement. The car Is a wonderful example for demonstration.

To determine what makes the markets move (we're talking core primary elements here), And to trade with the utmost control, requires knowledge in mathematics, a little physics (Newton,Brown,etc and the laws of motion), and basic computer science.
 
Quote from FredBloggs:

does george soros have a maths phd?



marty s?

paul tudor jones?

jesse livermore?

richard wyckoff?

get the drift?

if you dont have the picture yet, think about victor neiderhoffer. now he does have a lot of maths qualifications. does anyone know what happened to him?

the only reason why some i-b's request academic qualifications is cos thats the norm for society. i really dont think that i-b traders are the best anyhow. lets face it, were talking about people who can move markets here. you dont need a maths phd to do that do you - you just need a heap of cash - which coincidentally - often isnt even their cash.

just cos something is the norm in society, it doesnt mean its 'right' - what ever that is.

time to start thinking for your self here guys. your college professor aint here in the markets to save you is he.
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Some helpful points and even the last one ,Victor;
got some basic math right -''one red robin doesnt make a spring''

:cool: You may do better than Warren Buffet advaced math quote ''buy and hold forever'' unquote.


Geometry maybe helpful and enough math skills to find the middle number .
And advanced math maybe helpful
-if you want to work for someone else.




I wasn't particulary adept at higher math.I think I excelled at knowing which statistics had meaning -John Henry
 
Quote from FredBloggs:

all you need is to understand the basic expectancy calculation, and understand the basics of probability theory.

as someone wisely pointed out - if all the nobel prize winners cant make a dime, then whats the friggin point?

complex maths stuff like taleb and his philosophy babble (www.fooledbyrandomness.com) is interesting coffee table stuff imo, but beyond the typical street fighting traders who make consistent money day in day out.

remember markets can do anything at any time. algebra wont predict that!
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Statistics can though
 
If you can find an edge (and are able to understand what an edge is) without having a clue in advanced maths, why do you care then ?

However, if you want to find a real edge and capitalize on it correctly and manage your risks at the same time, you better have to go and study maths at a university level. You don't need to study maths directly. Anything like an engineer grade should be enough.
 
I think that all you need to know is how to recognize when insiders are trying to shake the crowd out of a good position and trade against that. The mathematics of that are pretty simple. On the fingers of two hands, usually.
 
Quote from science_trader:

If you can find an edge (and are able to understand what an edge is) without having a clue in advanced maths, why do you care then ?

However, if you want to find a real edge and capitalize on it correctly and manage your risks at the same time, you better have to go and study maths at a university level. You don't need to study maths directly. Anything like an engineer grade should be enough.
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hey science - ive rated an awful lot of your posts, but this one i am afraid, i just cant agree with.

you need to take a walk down any trading floor - be that at a bank, prop shop or pit. i can guarantee that the guys bringing home the bacon wont be the phd's, they will be the street fighters.

good trading is often based around common sense believe it or not. phd's are too busy finding an equation to explain and then exploit common sense, rather than doing it.

i guess it all depends on whether you wanna make money, or explain the rationale behind it, and why it should be possible.

a phd is just an ego security blanket. the market just dont give a fig.
 
Last weekend I met student teams (MBA, Econ, Fin) from the US and some abroad in the final competition of the 12 best schools which emerged from regionals. My partner and I are judges each year.

Two of the coolest guys pounced on me after the end of the finals. What they ask and said will fill you in on what it takes to be on the winning team.

"Thank God you asked us that Q!!!!!!" And the Q they ask: "were we shooting too high? we didn't want to be over the heads of the judges."

All they did was work for 36 hours straight to solve a tough problem; present it and answer tough Q's from a national team of successful judges.

You do the same thing to make money in the markets (a psychological/financial paradigm that you apply all the resources you have available).

Maths trigger assessment of opportunity. Maths keep you on topic where the action is and in a timely decision making model.

Thus it turns out that almost any one trained in any way can really make money in the markets. Since 1957 I have met people who come from all sorts of places and they are very successful. personally I am limited as an amateur. I never trade more than 100k (shares of stock) where I just position trade. I always go for preventing partial fills (at least very few) in intraday SCT trading.

Luckily the market is not a sopphisticated thing in any way. It turns out to be more a psychological model (human driven rather than science driven) that pours money out the end at which you are standing. It is a real time thing only that is monitored and deci8sions are made. You watch and use sports memory (like riding a bike) only while the market is open.
 
Quote from FredBloggs:

hey science - ive rated an awful lot of your posts, but this one i am afraid, i just cant agree with.

you need to take a walk down any trading floor - be that at a bank, prop shop or pit. i can guarantee that the guys bringing home the bacon wont be the phd's, they will be the street fighters.

good trading is often based around common sense believe it or not. phd's are too busy finding an equation to explain and then exploit common sense, rather than doing it.

i guess it all depends on whether you wanna make money, or explain the rationale behind it, and why it should be possible.

a phd is just an ego security blanket. the market just dont give a fig.
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Who's talking about PhD ? Do you have any personal frustration vs PhD holders ? Personally I don't.

When it comes to all these 'common sense' traders who make money, I have some bad news for them : they have to fall in one of the following categories

1) They manipulate markets : illegal
2) They have access to insider information : illegal
3) They are market makers (and not traders)
4) They are lucky and haven't bankrupted yet
5) They lie about their performance
 
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