well? are traders smart?

[scose-no-doubt]

Those looking for complex answers to simple questions are feeding their egos. Successful trading isn't about intelligence of the IQ variety, it's about listening to what the market is telling you, which requires you getting rid of or at least working around your ego.

You think the fact that I'd be more impressed by a 5k arb trade than a 50k trend trade relates to ego? If that was the case then why would it exist in the professional world? It's about identifying the imbalance and capitalising whilst completely eliminating the risk. It's the risk elimination that I find impressive, I don't care about who or what makes the highest profit in a world where a dart throwing monkey can outperform hedge funds. I care about risk adjusted returns.

 

[JRP2891]

You think the fact that I'd be more impressed by a 5k arb trade than a 50k trend trade relates to ego? If that was the case then why would it exist in the professional world? It's about identifying the imbalance and capitalising whilst completely eliminating the risk. It's the risk elimination that I find impressive, I don't care about who or what makes the highest profit in a world where a dart throwing monkey can outperform hedge funds. I care about risk adjusted returns.

I wish you luck.

 

[scose-no-doubt]

I wouldn't need luck if I could arb lol.

 

[JRP2891]

I care about risk adjusted returns.

This is what i'm also very concerned with, and i'm a trend trader essentially.

 

[scose-no-doubt]

Well then, sir, you obviously have a higher risk appetite than I. Or you're better at picking extremes. Probably both.

Anyway this has gone off on a tangent as I never said I'd rather trade the 5k trade I said I'd be more impressed by it.

 

[the hare]

If your going hire someone, regardless of the traits that you are interested in, you might as well hire someone whose intelligent as well.

If you have the means to compensate someone very well, and the competition for those jobs is high, then common sense would suggest you'd take the best possible candidates.

Intelligence may not be a pre requisite, but its certainly a side effect of recruitment policy.

I could train a chimp to make money using my strategy, but I'm not sure a chimp could work out the strategy for itself.

 

[meanreversion]

If your going hire someone, regardless of the traits that you are interested in, you might as well hire someone whose intelligent as well.

If ***you're*** going to hire someone, you should hire someone who can spell, as well as someone ***who's*** intelligent (and can perhaps spell!).

 

[meanreversion]

I care about risk adjusted returns.

Well, I've been on this website nearly two years now and that's the first time I've ever seen anyone use the expression "risk adjusted returns", when this very concept is perhaps the most important to any trader or investor.

Where a trader adds value is not so much in achieving "excess return", but more in reducing volatility of said return.

But never mind that, I want to make 20% a week etc etc

 

[the hare]

If ***you're*** going to hire someone, you should hire someone who can spell, as well as someone ***who's*** intelligent (and can perhaps spell!).

Thankfully I'm not looking for a job ! but I'm in complete agreement

 

[scose-no-doubt]

Where a trader adds value is not so much in achieving "excess return", but more in reducing volatility of said return.

Is it greed that's making me think you need a good balance here lol.

 

[new_trader]

"risk adjusted returns", when this very concept is perhaps the most important to any trader or investor.

Risk Adjusted Returns? What the phuck is that?

N.B: This is a rhetorical question intended to highlight how utterly insignificant it is in my trading and investing activities.

 

[meanreversion]

Risk Adjusted Returns? What the phuck is that?

N.B: This is a rhetorical question intended to highlight how utterly insignificant it is in my trading and investing activities.

Seriously?

 

[new_trader]

Seriously?

I always hoped it would be more obvious if I was aiming for lulz, but yes, seriously.

Unless I do it subconsciously I don’t know how I would use it to make a decision as to whether I should be going long or short the ES. Perhaps you can enlighten me. Suppose I’m watching the market in an effort to determine the trend. I decide in a split second, after years of experience, study and practice, that I should go short. Tell me how I would use ‘risk adjusted return’ to improve and/or determine whether my judgment has been correct. You did say that the ‘concept’ was the most important to any trader.

 

[meanreversion]

Well irrespective of your style of trading or whatever it is you do, there needs to be some evaluation of the risk taken in order to achieve the return. I'm sure you know a) how much you expect (or would like) to make in a year and b) how much drawdown or loss you can tolerate. The risk adjusted return is simply a) divided by b), the higher the ratio the better.

I would think that most beginners have an idea of a), but no idea of b), thus come unstuck when they start to lose money.

 

[new_trader]

Well irrespective of your style of trading or whatever it is you do, there needs to be some evaluation of the risk taken in order to achieve the return. I'm sure you know a) how much you expect (or would like) to make in a year and b) how much drawdown or loss you can tolerate. The risk adjusted return is simply a) divided by b), the higher the ratio the better.

I would think that most beginners have an idea of a), but no idea of b), thus come unstuck when they start to lose money.

OK, we certainly have a different opinion about the most important concept for a trader. I wouldn’t put picking two arbitrary numbers out of thin air as number one. Maybe for ‘system’ traders it is?

 

[meanreversion]

Ha, ok, maybe it's not the "most" important, excuse my hyperbole. My point is that for any investor or trader, a good starting point is "what's my potential upside, what's my potential downside".

 

[meanreversion]

I was just reading this article in the FT, one line caught my eye (it jumped out actually!)

http://www.ft.com/cms/s/0/6563dda4-3845-11e0-8257-00144feabdc0.html#axzz1E1L1ybMQ

"We have been patient and will remain so, with an eye towards maximising risk-adjusted returns."

 

[Scotty2Cues]

I know three traders. One is an arcade, the other prop, the other for a large American bank.
None of them are wildly intelligent, but you'd be hard put to pull the wool over their eyes about much.

The only common trait is aggression.
The bank trader is overwhelmingly aggressive and I've watched him beat the **** out of someone more than once and enjoys constantly ridiculing the junior traders that work under him.
The prop trader would have quite happily fit in to the category of thug when we were younger.
The arcade guy is the only one you can spend any time with without being worn down.

oh my! Its not the bloody Paras.

2012 prop shop entrance tests will be:

Stage1: Numerical skills test

Stage 2: Spatial awareness test

Stage 3: Remaining applicants enter into cage fighting contest. The last 6 standing will make it to the interview.

 

[Pento]

Getting back to the original question:

I like to think of myself as extremely smart.

And also half decent at spelling, before meanreversion spell checks me.

EDIT: After thinking about it for another 30 seconds; I ain't smart at all.

 

[tdrtw]

>>Old as the hills argument: are most traders of superior intelligence, or quick witted del boys with balls of steel,or a mix?

Generally the "smarter you are or perceived to be", the more pressure you have to be correct. Balls of steel generally implies taking on great risk, which is detrimental to staying in the game long term.

I believe if you understand this video, you are going in the right direction:

http://www.ted.com/talks/dan_gilbert_researches_happiness.html