Thread by @therobotjames

This is a fantastic initiative from @KrisAbdelmessih.

It is hard for a beginner to know what effective trading "looks like", and where to concentrate efforts.

This will help bring the best of pro trading training programs to the masses.

Some thoughts on trader training... 1/n

https://twitter.com/KrisAbdelmessih/status/1366078234945748992

The path to profitable trading is straight and narrow.

Having a theory on inflation, or memetics, or an in-depth knowledge of the VIX expiration, is a waste of time if I'm quoting corn options.

So good training concentrates the trader on things that matter.

2/n

You need to concentrate on micro things (information, motivations, constraints, game theory) when you're playing micro games.

And you need to concentrate on macro things (stats, broad behavioural tendencies) when you're playing macro games.

3/n

Twitter lets us observe people's learning journeys in real time. So we can see some patterns of where people get stuck.

On this site, you see many examples of smart but inexperienced traders trying to play micro games and macro level and vice versa...

4/n

Often this looks like an attempt to identify cause->effect relationships in markets/timescales where noise is dominant and the inefficiencies that persist are weak tendencies at best...

A good training program keeps you on the straight and narrow.

5/n

To trade a very sloppy market, you'll want to concentrate on imbalances you can observe directly.

You'll concentrate on understanding your competitors, and carving out a win/win niche for yourself thru understanding their constraints + motivations.

6/n

Good training for this market has you concentrating on the easy arbs, on watching your competition like a hawk, on understanding "the game", knowing how to compete whilst avoiding an "arms race" etc.

Good training has you majoring in the stuff that matters for the trade.

7/n

What about medium frequency trades in more liquid stuff?

That's a different game...

The understanding of motivations, constraints, game theory, is still important - but you must use that info differently.

The market is very good at dispersing wrinkles and imbalances.

8/n

So a cause and effect type understanding: "he's got to do this, then she'll do this, and this will have this effect" is not so explicitly helpful at this level.

You're operating in an environment that is a lot noisier than that...

9/n

So you need to turn your understanding of market actors and "the game" into blunt observable statistical factors.

You need to concentrate on finding blunt, tendencies, which make sense and are (ideally) observable in the past data.

10/n

Game theory and micro stuff are important here - but ultimately you need to boil this understanding into factors that are almost embarrassingly over-simplified.

You're just trying to quantify noisy tendencies as robustly as possible.

And then "ensemble go brrr"....

11/n

At this level, statistical modelling is important. In the first example, less so...

It is this "understand what makes the difference and major in it" / "ignore the stuff that doesn't matter" that I think is hardest for the beginner without a structured program.

12/12 fin