Reading Time: 5 minutes Financial activity: Trading Knowledge level: Beginner
Summary
Statistical edge is important, not the reason why it
exists
Stick to your plan as a businessman
Consider being part of a team
Some videos to watch on YouTube
Conclusions
Statistical edge is important, not the reason why it exists
Reading Gregory Zuckerman’s book: The Man Who Solved The Market, I have learned that the most important thing is to find some edge statistically significant, without bothering to explain why this model works.
Let the data show you how to trade, without any bias.
Your activity as a trader must be data-driven.
Of course, if you can find a compelling reason why you
get an edge, you will have more control over it, but in most cases, this is not
possible due to the great complexity of the causes that generate it.
So, find an edge that works and never discard it
because you cannot explain it.
And I have another good news for you: the edge does
not have to be big! Remember that Renaissance Technologies LLC, the asset
management group that manages the Medallion Fund, has a 50.75% win rate only
for its trading systems.
Combining small edges, you can gain a lot of money.
Stick to your plan as a businessman
As I wrote above, your activity as a trader must be
data-driven, so consider trading like a business that can be programmed and backtested,
and follow it.
Build a portfolio of strategies based on edges and
trade with it.
Don’t consider your talent or your emotional state or
your instinct: work with data as a mathematician (Jim is a great
mathematician).
Consider being part of a team
Simons is a genius, but Medallion’s performance is
generated by the work of 300 people.
The old saying “If you want to go fast go alone, but
if you want to go far go together” applies here and in trading.
Don’t trade alone. Consider exchanging ideas and feedback
with other people and consider building your trading team (I’m doing it with my
great friend Sergio and I’m happy for the contributions that I receive).
Some videos to watch on YouTube
I have found some videos on YouTube, that you can
watch too:
Jim Simons' Trading Strategy Explained
James Simons (full-length interview)
James Simons - Mathematics, Common Sense, and Good Luck: My Life and Careers
Conclusions
- Statistically relevant edge is important, not the reason why it exists (and it does not have to be big).
- Build a portfolio of strategies based on edges and trade with it as a businessman.
- Consider building your trading team (Don’t trade alone).
A sincere wish of good work to all!
Written by F. GRAMOLA (*).
(*) Member of S.I.A.T., the Italian Society of
Technical Analysis (member society of I.F.T.A. – International Federation of
Technical Analysts).
Warning
We merely cite our personal opinions for educational
purposes only.
All trademarks are the property of their respective
owners.
Investing and trading are risky. Don't invest or trade
money that you cannot afford to lose.
Initial photo by Gerd Altmann from Pixabay
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