Episode 276: The Pick-Up Artists of the Financial World

by robbooker on July 30, 2014

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In Episode 276, you’ll hear your host Rob Booker ask Jason the producer a number of quick-response questions. One such question — which we’d love for the listeners to answer in the comments below — is this: People are ________ (fill in the blank). Rob talks about our snap-judgment perceptions of people, such as when our neighbor gives us a stern look — how do we interpret that look? Rob says the market “gives us looks,” too, and that we shouldn’t take it personally. Rob also talks about how traders are the pick-up artists of the financial world. All of this and more in Episode 276 of The Traders Podcast. Thanks for listening.

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{ 5 comments… read them below or add one }

Brian F. July 31, 2014 at 12:14 pm

1. People are: Delusional. It’s not that they are insensitive, that’s just a symptom, the disease is they are living in their own little world. The good news for the human race is people are delusional and can adapt to life in deserts, jungles, the arctic circle, or even a life in chains (Especially a life in chains, because is anyone ever really free?). The bad news is this asset can be a liability to us as an individual. It’s a liability when it prevents us from seeing and correcting our personality disorders (for example, insensitivity), and it’s an absolute death sentence when we take our delusions into an artificial environment like the markets.

2. My favorite book in the world is: Time Compression Trading by Jason Alan Jankovsky.

3. I am good at restraining my impulses: False, so I’ve instead gotten great at avoiding those impulses. This is the difference between discipline and restraint. Discipline is an action word we talk about a lot, and mostly fail at in practice. Restraint is almost the polar opposite, it’s passive, a lack of action, something we never talk about, and something that always works.

For example, if your position size is too big, activly thinking about discipline won’t save you from the inevitable. Restraint is just not going there in the first place because you have learned the hard way about what you always do. Bradley setting his trades and walking away is a perfect example. That’s not discipline, that’s restraint, simply avoiding those impulses rather than trying to wrestle with them.

I personally think all our talk about discipline is another kind of delusion. We are not made that way. In my opinion, the goal should be to trade in a boring way that requires less discipline (stay out of trouble), not more, less complexity (see Episode #184), not more. Most of us don’t see this, because of our delusions about trading make us think “this is how it’s done.” Using logic, that’s absurd. If most people lose, “this is how it’s done” is a death sentence.

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fxoutlier August 1, 2014 at 5:21 am

Just bought that book and going back to listen to 184. Also just starting on Don Miller’s book. Looking forwards to your book.

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BrianF August 2, 2014 at 6:48 am

You are too kind. #184: I liked that episode because it stands for the proposition that a random system won’t make or lose a lot of money, therefore we are all within a finger’s breath from being profitable traders right from the start, and that’s why a lot of traders that make it say “keep it simple.” I like Jankovsky’s mind because he doesn’t believe technical analysis is what makes us win. Put both of these concepts together and we avoid what a lot of the winners are saying, don’t spend your career obsessing on TA and creating overly complex systems that are destined to work no better, and in most cases worse, than simple ones.

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OCtrader August 1, 2014 at 12:01 am

People are …. people
So why should it be
You and I should get along so awfully?

Sorry, the Depeche Mode lyrics were the first thing that came to my head.

To your point, we can only trade our opinions of the market but whether our opinion about what the market is telling us is right or wrong, we can structure asymmetric risk/reward trades such that we don’t lose a lot when we are wrong as long as we are OK with being wrong, which some people are not. Such people are generally attracted to high win rate/high risk to reward systems where they collect pennies in front of steam rollers.

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Serge August 4, 2014 at 9:02 am

Boys,
I loved this episode as I loved answering the questions. Got me thinking that depending on the audience, your responses would change. Hmm… I know if I were to answer the questions out loud, I would have a different response that the stuff in my head!

Coincidentally, my wife used a similar questionnaire when she interviewed people for her blog, Beyondbostonchic.com based on the poet Proust (see example here http://www.beyondbostonchic.com/2012/03/09/style-profile-jessica-sutton/).

We have both done the questionnaire at different times of our lives and the difference in the responses are really interesting.

You can find the questionnaire here (http://en.wikipedia.org/wiki/Proust_Questionnaire)

Cheers
Serge

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