Trading Inspiration

It’s Thanksgiving this week, but Puerto Rico is already into the Christmas season, and will be even more so after Thanksgiving passes.  The temperature has cooled down to a not-always-sweating 80 Fahrenheit, and it rains for 1-2 hours a day, which creates a synthetic winter feel after an overly hot fall.  The coffee shops, homes, and grocery stores already have Christmas lights and trees up, and it’s a pleasant environment to live in.

My week was a typical one of work, studying (new Machine Learning things), gym, eat meat (but also “cheat” too hard on the weekend), and plod along with the writing challenge.  I got to check out a new beach about 30 minutes from my apartment on Saturday which was awesome.  I have no clue how many different beaches there are here (a lot obviously), but it’s surprising how a slight change of the beach brings new enjoyment.  It’s like having a variety of hikes close by: some are slightly “better”, but trying a new trail is often more fun than going on your favorites.  I have an unstructured goal of exploring more of the island, even simple things like trying new beaches.  I spend the majority of my week within a 1-mile walking radius, and sometimes long for a vacation, but when I get out of the neighborhood I realize how much beauty I’m surrounded by.

I finished several books this week (I’m always reading several things at once, so sometimes I finish multiple in the same week, but usually they fall by the wayside as something shiner comes into my reading world).

I finished “The Impact of Awakening” by Adyashanti, which I think is the fifth book of his I’ve read.  As usual it was good, short, and soothing.  “Falling into Grace: Insights on the End of Suffering” was the first I read, and my personal favorite, of his work.  I remember getting halfway through that book and immediately ordering several of his other works.  His writing about meditation and enlightenment, something that is beyond intellect, so of course it can’t be concretely explained intellectually, resonates with me better than any other spiritual writer I’ve come across.  I also tried a guided meditation on Adyashanti’s YouTube and loved it!  I hadn’t listened to a guided meditation in a long time, preferring to just lay in the quiet with a timer, but it felt like treating myself with a sugary dessert.  I don’t take my meditation practice too seriously, and I try to have fun with it, so this added a nice change of pace to mix in.

This was only a page or two but loved it.  “The Egg” by Andy Weir sent to me by Jeff: http://galactanet.com/oneoff/theegg_mod.html

Won’t go into it because it’s worth the 3 minutes read on your own.  It’s something I would have loved to have written.

Another Jeff recommendation (my number one blog resource contributor!) was the book “The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution” by Greg Zuckerman.  I listened to the audio version, which I’d highly recommend to people in trading.  For me, this book was inspiring and educational.  Trading is one of the few fields where you can’t Google a book, course, or in general get any decent information about it.  There’s lots of vague information sources, or ones that are blatantly wrong, but I’ve never been able to find anything that gives you a genuine guide on how to transform yourself from wannabe to profitable (if you do please let me know!).

This book is about one the most successful quantitative trading companies, Renaissance Technologies, and the people involved.  Ren Tech is famous for being secretive, and I shrugged as I expected the usual vague “we did well that year, can’t say why” stuff, but it actually explained specific trading scenarios/strategies that went well and wrong.  It’s not a how-to book, but it confirmed my personal process is essentially the same as this company.  Basically looking through reams of data for patterns whether through Machine Learning or just my own eyeballing, hypothesizing why certain patterns make sense, and then optimizing the algorithms that trade them.  You continuously brainstorm/find new ideas, integrate them into your portfolio when they are profitable, try them in other asset classes, and voila; you have a quantitative trading company.   

Depending on how deep you are in the industry this book could either inspire you, or put to bed any ideas you have about competing in quant trading.  I’ve watched some poker videos recently where pros explain their thought process, and I realized it’s doubtful I’ll ever put in the work to get that good.  Listening to how refined Ren Tech’s operation is now (I’m undeniably jealous of them having a room of scientists who just clean and gather data full-time) I was impressed, but could still see room for myself in the eco-system.  When it comes to optimizing computer hardware, perfecting systems, etc. I’ll never be able to touch that, but there’s still a large creative component to trading.  There might be hundreds of people working on making things .01% better (which over billions of dollars adds up), but there are few people (even at RT with their multi-decade history) who can come up with new company-altering strategies.  Sometimes I feel foolish and naive to think I can compete against the established monoliths, but over time I keep coming up with new ideas that work, some that barely eke out positive edge, but they work.  Unlike traditional art, it is more of a competitive zero-sum game, but there’s still a beauty to me in finding patterns and crafting a unique design to take advantage of those patterns.

I’m going to get back to Sunday evening relaxation before the workweek.  One small (but hopefully significant) research project for this week, and lots of Machine Learning study for a future big project.  Leaving you with a picture from the new (to me) beach near Carolina, Puerto Rico.  If you visit remember sunscreen, I have been cooped up too much lately, and forgot that I lost my tan.  Don’t be like me and the 3-day tourists walking around with our scorched shoulders.

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