Greetings All,
Though GG proposes an interesting thesis, I tend to disagree with this point of view. My reasoning is below.
While I somewhat agree with the statement that;
âTrading is all about finding a robust method or algo with positive expectation as a function of time and then applying proper risk management to minimize risk of ruin and maximize equity growth. All else, is a waste of timeâ.
I do not believe that negating or ignoring ones emotions and their subsequent impact on the traderâs state of mind, is a âwaste of timeâ. I believe that our emotions are an essential part of the human condition, and as such make us human. And from what I have seen, although totally divorcing oneself from their emotions is possible, I believe that it is likely that most individuals who have accomplished this feat are what society has come to label as âpathologicalâ. And fortunately for all of us, most of the extreme cases reside in the appropriate institutions for dealing with these conditions.
I do not see this kind of âpathologyâ as an âideal state of mindâ for any trader. Further, if you are in an altered state of mind due to your emotions, no amount of Algo analysis can change that. This is because your emotional issues are likely due from your own individual fears. These fears can only be resolved as a direct result of dealing with, and learning how to manage their negative effects. I also disagree with the statement below that:
âBy the time you manage to deal with your emotions, the game is lost, you are a burnoutâ.
There are plenty of traderâs who stalk this forum, who have, as evidenced by the âtruthâ in their words, obviously managed to survive this âPass of Painâ. They have somehow managed to emerge victorious on the other side and avoid this âburnoutâ. And as a matter of fact, to some of them, trading is obviously an all consuming passion in their lives aside from the money. They are the often âsilent minorityâ, whose presence here makes this forum an occasional intellectual treat.
Further, in the world of Automated Trading, there are plenty of Algo traderâs who daily sit at their desks in a âdark poolâ of dripping human sweat. This is true even when their Algo is working extremely well. As markets tend to change states from time to time, constant vigilance of the efficacy of their Algoâs is their intense center of focus. As a result of this stressed state of mind, they too are thereby subject to an array of individual fears, that oftimes have little to do with the market, but everything to do with how it can directly impact the technical changes to their highly profitable Algo. Witness a hypothetical case of a demanding Algo boss, who constantly asks for more and more profit, from an Algo that is likely already highly optimized to its maximum for todayâs market conditions.
As most seasoned professionals can attest, the traderâs state of mind, and their trading method, are two uniquely different subjects. They cannot be construed as the same thing, nor in application, can they be entirely divorced from one another. That too is the human condition. This will be the case as long as humans are in the loop, or humans are in some manner in direct control of the loop.
As I find this missive interesting, I look forward to an insightful response to these views, if any. I seek to learn and grow from contemplative, civil, views and commentary different from my own. And in point of fact, that is one of the primary reasons why I enjoy the âtreasure huntâ on the ET Forum,...stalking for the occasional priceless tidbit.
KDASFTG
Though GG proposes an interesting thesis, I tend to disagree with this point of view. My reasoning is below.
While I somewhat agree with the statement that;
âTrading is all about finding a robust method or algo with positive expectation as a function of time and then applying proper risk management to minimize risk of ruin and maximize equity growth. All else, is a waste of timeâ.
I do not believe that negating or ignoring ones emotions and their subsequent impact on the traderâs state of mind, is a âwaste of timeâ. I believe that our emotions are an essential part of the human condition, and as such make us human. And from what I have seen, although totally divorcing oneself from their emotions is possible, I believe that it is likely that most individuals who have accomplished this feat are what society has come to label as âpathologicalâ. And fortunately for all of us, most of the extreme cases reside in the appropriate institutions for dealing with these conditions.
I do not see this kind of âpathologyâ as an âideal state of mindâ for any trader. Further, if you are in an altered state of mind due to your emotions, no amount of Algo analysis can change that. This is because your emotional issues are likely due from your own individual fears. These fears can only be resolved as a direct result of dealing with, and learning how to manage their negative effects. I also disagree with the statement below that:
âBy the time you manage to deal with your emotions, the game is lost, you are a burnoutâ.
There are plenty of traderâs who stalk this forum, who have, as evidenced by the âtruthâ in their words, obviously managed to survive this âPass of Painâ. They have somehow managed to emerge victorious on the other side and avoid this âburnoutâ. And as a matter of fact, to some of them, trading is obviously an all consuming passion in their lives aside from the money. They are the often âsilent minorityâ, whose presence here makes this forum an occasional intellectual treat.
Further, in the world of Automated Trading, there are plenty of Algo traderâs who daily sit at their desks in a âdark poolâ of dripping human sweat. This is true even when their Algo is working extremely well. As markets tend to change states from time to time, constant vigilance of the efficacy of their Algoâs is their intense center of focus. As a result of this stressed state of mind, they too are thereby subject to an array of individual fears, that oftimes have little to do with the market, but everything to do with how it can directly impact the technical changes to their highly profitable Algo. Witness a hypothetical case of a demanding Algo boss, who constantly asks for more and more profit, from an Algo that is likely already highly optimized to its maximum for todayâs market conditions.
As most seasoned professionals can attest, the traderâs state of mind, and their trading method, are two uniquely different subjects. They cannot be construed as the same thing, nor in application, can they be entirely divorced from one another. That too is the human condition. This will be the case as long as humans are in the loop, or humans are in some manner in direct control of the loop.
As I find this missive interesting, I look forward to an insightful response to these views, if any. I seek to learn and grow from contemplative, civil, views and commentary different from my own. And in point of fact, that is one of the primary reasons why I enjoy the âtreasure huntâ on the ET Forum,...stalking for the occasional priceless tidbit.
KDASFTG
