May

19

 The point of having 'will to win' is not to intimidate the opponent but rather heighten one's own motivation, awareness, speed of thought (pattern synthesis) and be able to withstand the pain. I don't think someone can do this well when they're a cold fish. You've got to be 'on fire' to achieve these higher levels of brain function. This is very clear to the fraternity of chess Grandmasters, who tend to discover all sorts of errors in their homework when they're actually sitting at the board in combat.

What enables people to achieve such levels of concentration will vary from person to person; Korchnoi found it was good to hate his opponents. For Fischer I believe it was some kind of sadistic impulse ('I like to crush the other guy's ego').

Not everyone accepts the idea of day trading being a cold intellectual exercise, and quite rightly in my view. Maybe long-term traders and investors can afford to be more aloof. But for good day traders (and chess players) I believe 'aloofness' will be much more the exception than the rule. This is certainly the case amongst people from both fields that I know. The whole brain is needed for tough challenges like day trading, not some lobotomized part of it.

Adam Robinson writes:

I couldn't agree more with Nigel's point.

That heightened emotions can enhance one's cognitive awareness and "power" is well known. As organisms, we are Darwinian beneficiaries whose higher functioning is galvanized by the presence of danger, when adrenaline kicks off a cascade of cognitive and physiological responses.

Moreover, the pure absence of emotion in thinking, as in the complete detachment epitomized by Spock in the original Star Trek series, is demonstrated to be a mistaken ideal by Damasio in his book "Descartes Error" (highly recommended). But. . .

  1. Although a mammal's (trader's) neural and synaptic functioning are accelerated by adrenaline, the field of cognitive awareness is narrowed, leading to potential errors. (In the presence of a potential danger, a mammal focuses on the perceived threat, to the practical exclusion of everything else.)
  2. Emotions may better serve a trader in the discovery of a trading system than in its application. Is it not a goal to trade by a system?
  3. It is well-documented in the history of science that, while heightened emotions are necessary in the "incubation" stage of scientific discovery, that the actual discoveries come when one is relaxed, usually out of the blue (the famous BBB phenomenon is bed, bath, bus — the last being an alliterative proxy for walking or travel).
  4. In my former field, in which I dedicated several decades to pondering optimal brain functioning, I have yet to work out the extent to which intelligence tests measure intelligence versus measure "the will to win" (i.e., solve a problem or answer a question).

From Henry Carstens:

Hmmm….

Trading Firm 1 is filled with discretionary traders. They have back-tested their ideas and have a defined edge which they trade each day with discretion. Traders do additional research on nights and weekends.

Trading Firm 2 is filled with discretionary traders and mechanical systems derived from each trader. Each trader's ideas have been back-tested and their edges defined. Firm 2 uses each trader's mechanical edge as a baseline to monitor their performance, to forecast the performance of the firm, and to create realistic risk and capital allocation controls. When a trader goes on vacation, has a new idea to test, or retires, that trader's mechanical system is substituted for the trader so the firm suffers no downtime.

Trading Firm 3 is filled with computers and researchers. Each researcher builds out all the viable trades in a time frame, mechanizes the rules, and moves onto a new time frame in the same or a new market. Incoming researchers are handed existing systems to maintain and improve before getting their own timeframes to build out. Each system has built in monitoring code that alerts the risk department when it has moved outside normal parameters.

Then,

Which trading firm has the least overall risk?

Which trading firm is most likely to evolve with the markets?

Which trading firm is least subject to ever-changing cycles?

What is the growth curve likely to look like for each of these firms? 

Nigel Davies adds: 

In my mid 20s I learned some methods for systematically relaxing during a chess game because my 'nerves' were often getting the better of me and leading to errors during the later stages of a game. This became more or less automatic over time.

Whilst trading I find that a similar 'controlled intensity' works best, though usually at lower levels than in chess, depending on the state of the market. I think that in both fields the focus may well be on 'perceived threats', but I think that one can learn what to look for via research or experience.

It may be just me but I find any attempt to conduct research whilst trading to be an exercise in futility, not to mention very distracting. It is much better to do it beforehand and have an armory of trading patterns ready prepared.

Research during a chess game would of course be illegal, but I think the effect would be the same - no benefit and plenty of distraction. I even found the Blumenfeld rule (writing down the move before playing it) to be very distracting, though now I've been saved from the temptation because they've made that illegal too (relying on 'notes' apparently).

So this paragraph kind of tallies with my own experience. But my take on it is that adrenaline levels can be controlled by the combat veteran and that any narrowing of cognitive awareness isn't a problem as long as someone has the most important things 'hard wired' via training.

George Zachar writes:

Did Einstein have the will to win? Feynman? What about Mises and Hayek? Palindrome? Chair?

My barstool analysis is that humans have too many personality facets, too many parameters of success, and too many life tracks to allow for broad, empirical rules in this sphere.

Looking in the mirror, I see aspects of my life where I am a complete failure and aspects where I have succeeded beyond my wildest dreams, having marshaled the same intellect and will throughout.

From Stefan Jovanovich:  

Ian Deary's book Intelligence is the best thing I have read on a subject. Deary's position is that (1) yes, there are measurable qualities in human beings that relate to the brain's ability to calculate, (2) the word "intelligence" is the shorthand description people have decided to use to describe this trait (hence I.Q. tests), and (3) as a measure of human capacity I.Q. tests alone are relatively feeble because living is far more complex than calculation.

I continue to trust my Dad's opinion about this. He was shrewd enough to foresee that standardized testing (MCAT, SAT, etc.) and test cramming (Princeton Review, etc.) would be growth businesses well before any other American or European publisher did. He was also someone who understood the limitations of what he did to make money. He thought there were two problems with intelligence testing. The first was that everyone who fell below the 95th percentile - and their parents - ended up hating the test. The second problem was that neither schools nor teachers nor publishers were honest about telling the students and teachers the truth about how limited standardized tests were.

His solution to both problems was to expand testing so that it measured the entire range of human capabilities - spatial orientation, dexterity, honesty (yes, honesty), mechanical aptitude, and all the other skills and abilities for which actual quantitative testing had been developed. That would confirm what people intuitively knew - that straight A students did not automatically rule the world; and allow schooling to be of value to all students.

It would identify each student's strengths and weaknesses so that - ideally - the student, his or her parents, and teachers, could all work towards diminishing the weaknesses and improving on the strengths. Dad believed that everyone could learn to do better. It was not just a matter of faith. He knew that, even in the area of I.Q. testing, repeated drill and practice worked. Students could improve their scores by almost an entire standard deviation simply by taking an I.Q. test every 3 months instead of only once or twice in their entire schooling. Drill and practice worked. The reason it fell out of disfavor was simple; it was hard work for both the teachers and the students.

Nigel Davies adds: 

I'm sure discretionary traders would do badly. But a key factor here is the state of the human material the firms start out with, and even the ancient Hagakure notes falling standards in manhood:

"… [W]hen one comes to speak of kaishaku, it has become and age of men who are prudent and clever at making excuses. Forty or fifty years ago, when such things as matanuki were mainly considered manly, a man wouldn't show an unscarred thigh to his fellows, so he would pierce it himself.

"All of man's work is a bloody business. That fact, today, is considered foolish, affairs are finished cleverly with words alone, and jobs that require effort are avoided. I would like young men to have some understanding of this."


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