Jul

29

 Sharks are not known to swim in a school. They are mostly known for being one of the top predators in the ocean, but they usually swim alone. When I think of a shark I immediately think of a great white shark and the movie, Jaws. But there was only one shark.

If traders can be compared to sharks, which they often are, then is there really a legitimate comparison in nature where we can find a bunch of sharks swimming around in a school? I didn't think so and I almost ended my little study until I found out about hammerhead sharks.

I soon found out that hammerhead sharks were an easy comparison to market traders. There are many different species of hammerheads (9), which come in all shapes and sizes (even their heads can be a different shaped "hammer").

The hammerheads practically span every nook and cranny of the ocean looking for food. They can be found close to the shores and very far from them, swimming over continental shelves, island terraces, passes, and lagoons. They can navigate and find food from a depth of 1-300 meters.

But the reason why the hammerhead sharks swim in schools is yet to be agreed upon by shark experts. However, Peter Klimley, from the University of California, who has been studying sharks for more than 20 years, has an interesting hypothesis. He thinks that they swim in schools because of the magnetic polarity of the sea mounts. They use these magnetic patterns like roads to guide them in their travels. As they continue their migration they follow these magnetic flows swimming from landmark to landmark. 

What is a rather interesting aside about these hammerhead schools, especially when compared with traders, is that the schools only exist during the daytime. Every evening, each shark leaves the group and spends the night alone.

Another great comparative aspect about hammerhead sharks is the fact that really big hammerhead sharks, the sharks that have been around for quite some time, hardly ever take part in the school. The schools, it seems, are for the smaller, weaker sharks that seem to thrive on being a part of the crowd. In fact, their very existence seems to depend on the crowd theory.

Shark experts have been able to qualify and quantify which hammerhead sharks join the school. In other words, "the quantification of persistent psychological bias" (from Education of a Speculator) has been, and can be, performed in the shark world. Peter Klimley has spent 20 years of his life trying to figure out sharks and he's starting to "get it" in his particular endeavor. I have so far to go in trying to figure out what the "magnetic flows" are in the markets.


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