1/ One of the strongest predictors of success in trading and in life, I think, is working at the appropriate level of meta. 👉
2/ Most often the failure mode is not going high enough in meta-level.
For example, when faced with problems and challenges, the weakest interns asked for help solving the problem.
The strongest asked for help in how to *think* about the problem.
3/ For them, improving their mental schema about a domain was the important thing. Once they had a good mental model, the rest was merely *work*.
And we all know work is easy.
4/ In my current life talking to CTOs, I see the exact same thing over and over again.
- The really good CTOs are looking for help framing the problems they have.
- The marginal ones want someone to tell them how to solve their problems.
- The bad ones want to buy a solution.
5/ We know this is true in math too. Lots of interesting results and proofs happen when you generalize and abstract the problem.
Category theory is perhaps the greatest example of this.
6/ Of course, there is the rare person who makes the opposite mistake. They live in too high a level of abstraction. Solving the overly-meta problem takes too long or is just too hard, and doesn't get you any tangible results.
Not many of you out there but you know who you are.
7/ But for most of us when faced with a tough problem, it's usually useful to ask meta questions:
- What is this a special case of?
- What *kind* of problem is this?
- What mental structures are useful to think about this?
etc.
What else? Any other good meta questions?
/END
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The better the trader, the less they care about which specific product/market they're trading.
That doesn't mean they don't have deep knowledge of the market or product. Far from it.
It means they don't *care*.
2/ Conversely, I see a lot of aspiring, new, and frankly bad traders who care a *lot* about the product.
"I trade options," "I trade futures" like it's a religious commitment. It's not. The product you're trading is a means to an end, at least if you care about money.
3/ One of the founders of my former company loved saying something like:
"If they made financial markets illegal tomorrow, we'd probably suffer for a while but we'd eventually be fine. We'll just go find something else to trade."
1/ A thread about the relationship between getting older and learning new things.
🧵👉👉
2/ It’s a weird relationship. One way of looking at it is through the lens of the explore-exploit tradeoff.
3/ In reinforcement learning, when you have to act in a novel environment and learn in an online way, there's a tension between trying new things vs doing the things you’ve already learned are good.
There’s a subtle but very real fallacy about backtesting that lots of smart quant-y people fall into. I’ve fallen into it many times. And arguably I still do, just in more and more subtle ways.
A thread 👉👉
1/n
So you have a trading strategy, and you want to backtest it to see if it’s any good. Being good boys and girls and others, we know we mustn’t overfit to the data we already have.
We know that historical data is precious gold, and it must be used carefully.
2/n
Well, imagine I propose the following solution: build a model of the market in all its gory detail: fat tails, heteroskedasticity, vol clustering, etc etc. I calibrate this model using historical data, and it’s pretty good.
"In all honesty, most finfluencers have pretty shit takes on the market. It kind of arises based on the mismatch between the skills required to actually trade and the skills required to market oneself."