How necessary are quantitative skills in order to trade profitably?

Discussion in 'Trading' started by c.chugani, Aug 25, 2011.

  1. How many people here WITHOUT backgrounds in maths, finance, banking, economics, statistics, computer programming or engineering have developed a succesful approach to trading that delivers consistent profits over time?

    Appreciate your comments.
     
  2. Lornz

    Lornz

    I didn't, I spent my years reading philosophy. I think it helped me grasp the market's abstractedness.

    However, I used to make a living off sports betting. Therefore I had a decent understanding of risk/money management, probability and statistics.

    I have dived deeper into the abyss of quantitative finance for each passing year, though... I think it's fun...
     
  3. I also studied philosophy, and I don't know nothing about nothing else, except a little about trading.

    I did, though, spend a lot of time shooting craps, and that built up a really good intuition about probability. (I'm serious.)
     
  4. here i`m!no education,no background,have even no idea what CV is...
     
  5. Hi Lornz,

    Can you talk about how you made a living betting sports?

    Thanks!
     
  6. piezoe

    piezoe

    I don't know the answer to your question? I can tell you that I personally have a very quantitative background and many years of expensive education. I have found my education to be a terrible hindrance when it comes to trading and have had to work hard to overcome my education.

    Let me put it another way. Suppose you are at the dog track trying to decide which dog to put your money on. How much help do you think your intellect will be in picking the winning dog?

    Or perhaps another question is apropos here. Have you ever spent any time observing the traders -- not the clerks, who are generally pretty bright -- on the floor of any of the Chicago exchanges? If so, do those folks who are screaming and waving their hands in the air look like geniuses to you? :D
     
  7. bone

    bone ET Sponsor

    The smarter quantitatively that my clients are - the more difficult they are to work with. Never underestimate a person's ability to psychologically sabotage themselves and a perfectly good trading system.

    There is a saying amongst the old hands: "the dumber the better".

    The worse combination is extreme quantitative skills blended with an outrageously oversized ego - they get their fucking heads handed to them every time. Quantitative skills blended with just enough humility not to repeat mistakes and to never consider that they are smarter than the market is a great combination - but exceedingly rare.

    Occam's Razor is very appropriate for the quantitative mind and trading systems.
     
  8. I have been trading for a while and every year I seem to go deeper and deeper into the Quantitative rabbit hole. Without it, I do not think that I could have become consistently profitable. I first saw the need for it when I was stationed in Biloxi, MS for a year and took the opportunity to study the casinos. I was intrigued by how they utilized time decay to swing the probabilities in their favor.

    I have taken some math and statistics courses in college, but the majority of my knowledge is self taught. Also, I am a failed day trader and found it suited me to lengthen the timeframe of my trades; an environment where statistical modeling really shines.
     
  9. bone

    bone ET Sponsor

    Yep. Agree 110 %
     
  10. Basically none, as they cannot backtest their "strategies", and probably cannot and will not provide proof of anything that could remotely be called "consistent profits."

    Anybody without a 10 year track record is pretty much dismissed instantly, and some might pay attention to three to five year simulations. You have to have training, and, no, philosophy did not have anything at all to do with formulating strategies that I would consider robust.

    It's like asking the pro poker player how he does it and nobody wants to say it is just luck, but a lot of it is. Those with these abilities stand a much greater chance statistically of getting "consistent profits over time." Win percentages above 60% are good, and 70% are excellent.
     
    #10     Aug 25, 2011