How I Make Decisions

Discussion in 'Psychology' started by psytrade, Jun 18, 2005.

  1. Excerpt from article in Fortune Magazine -June 27, 2005

    How I make decisions:
    Trading Derivatives-

    Simon Yates, Managing Director Equity Derivatives, Credit Suisse First Boston-- New York City

    When you see a trader panic, you can be pretty sure that for the next few hours, he's going to lose money. All the base instincts in your brain ---- what I call "caveman brain," the sort of fight-or-flight feeling of emotion that is designed to stop you from being eaten by a sabertooth tiger---- takes over your decision-making. You start trading scared, taking small positions on good ideas and cutting profits too quickly.

    I supervise about 23 people, and we can tade $1 billion a day. My goal is to make money 52% of the time. I can make the right call half the time by flipping a coin; a good trader does a little better. Successful traders don't spend much time regretting decisions of going back over things. If a decision turned out to be wrong, so what? Move on. So when you have to make a quick decision and you know that there's a good chance it will be wrong-- the worst thing you can possibly do is sit there and panic and hope. You have to be decisive--- go on and do it. When I see somebody go into panic mode, I tell them, "Get off the desk. Go for a workout, or go sit in the park for an hour."

    The first thing I look for when hiring trader is emotional robustness. And you can get some very, very smart people, the classic Harvard MB person who has been in the top of his class the whole way through, but they haven't had the emotional experience of failure. They come into this trading job, and they have this view, "Okay, I'm going to work very hard, I'm going to do all the research, and then I'm going to succeed." It's fascinating watching them the first time that doesn't happen. There's this sort of "How can this be?" look on their face. That's when many of them get out of the business.

    If people in a bar ask me what I do, I say it's a bit like stock trading but with more math. In some ways it's like being a police officer: There's a lot more time when nothing is going on, and then suddenly you have to be really fast.

    You can't wait until you have absolute confirmation. You're looking to get enough information to think that you probably have detected something, and based on that, you make your trades.

    Interviewed by Barney Gimbel

    p.121
     
  2. If this putz thinks he can make the right call half the time with a coin flip, he must not be looking at the markets I look at. SIDEWAYS is a direction, too. Or maybe he holds for however long it takes for the market to go his way.
     
  3. Ramzes

    Ramzes

    Excerpt from article in Fortune Magazine -June 27, 2005 --?(today is June 18).


    Agree, but trading is different kind of business,
    and If person wants to be trader, he must change all his life, including personal psychology.
     
  4. nkhoi

    nkhoi

    they date magazine forward to make it looked fresh
     
  5. Ramzes

    Ramzes

    So, they can dated, for example, june 27, 2010. :)
     
  6. ozzy

    ozzy

    If they let him trade 1 Billion every day than he must be doing something right. I would not pass judgement so fast John M.
     
  7. Sigh,

    A dream of mine...(not the 23 people part) Even 10% of that would be nice. I am afraid, I will die dreaming....


    I supervise about 23 people, and we can trade $1 billion a day.
     
  8. The only figures that would impress me are the net profits.
     
  9. Wadu know John M. The guy is a market maker in credit derivatives at CSFB, who the hell are you?
     
  10. kut2k2

    kut2k2

    LOL! Exactly.

    "My goal is to make money 52% of the time."

    Funny, I thought the goal of a successful trader was to maximize gains, not the number of times you are "right".

    You can be "right" 70% of the time in calling market direction and still wind up a loser. That guy needs a reality check.
     
    #10     Jun 19, 2005