Friday, November 11, 2016

Brett Steenbarger: Overcoming Boredom and Overtrading

This is really a great post from Brett Steenbarger that sheds light on perhaps the most important point about trading. 

Trading for me is not about the excitement of entering and exiting from positions or making money. Though, the latter is the final goal of the whole exercise. The point is that if I do everything well, if I continuously improve myself and try to be more and more professional, it must be profitable at the and of the day.

Trading is about continuously feeding my intellectual curiosity. Finding out the real cause and effect relationships behind price moves and try to project or feel what is to come is the goal. I like the video How The Economic Machine Works by Ray Dalio. It is a good example how we should think about the economy and the markets. We should try to find the main cause and effect relationships, positive and negative feedback loops and create a simplified model of the issues we try to understand. Each model has a great deal of simplification as our word is extremely complex. But, having a simplified model that covers at least a few very important relationships always better than just tossing a coin. This makes trading so much different than "pulling the levers on slot machines".

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