Simple Things, Ed Stewart

July 19, 2015 |

 I'm wondering if others have this experience. Sometimes when I try to reach for something new or novel, I never seem to find it. Other times I look to what I already know. The weird thing is I learn more that is new and novel when I look at something I thought I already knew. The most simple thing that I thought I knew 15 years ago–it turns out I had only the most superficial understanding of it. With luck, in 15 years I will feel the same way about what I know now. Some things are so deep, perhaps it is only just before you die you finally understand half of it, but at each moment you felt you knew everything about it.

Stef Estebiza writes: 

The more you accumulate, and from different angles, points of view, the more your Dbase accumulates nuances, alternatives on which to reason. Reread old books. Concepts overflown and unassimilated, suddenly seem logically obvious. Like trading, the more you experience, the more you realize that they are many faces of the same coin. The problem is that the brain eventually degenerates, loses enamel, and has a hard time tracking down the cluster stored. The hard drive is likely to lose sectors. For this reason you take photographs, directors make movies to store the emotions, a programmer writes a code idea to simplify and recover in a moment the hard work of years of accumulated experience. There is nothing more powerful than the human brain…

anonymous adds: 

Practical trading experience and genuinely new research into live trading applications is asymptotic, i.e there are permutations and combinations of market outcomes that have never happened before. So, in that sense, one never reaches perfect knowledge.

The reaching for something 'new or novel' often comes after observing something new work perfectly and then trying to test it and seeing that it is, like most things, ephemeral.

Intriguingly however, there are things about markets that one can know everything about. I do not believe that 99% of market participants know everything that is publicly available about the quantitative (measurable) securities that they trade, invest or hedge exposures in. Things like: How the Bund and DAX futures open and what goes on in the 60 seconds between the two events.

One can know everything that has happened to a market individually and relatively in the past. The Chair and Ms. Kenner have suggested a periodic table of markets with a bunch of relevant statistics. One suspects this would help prevent much stupidity.

The heterogeneous nature of the FX markets, the uselessness of Value at Risk, the times of day when market making machines are maintained and serviced, the importance of New Zealand and Australia to FX are all knowable.

So, yes, I understand your sentiment.

Also, 'simple' is relative. My first 'upstairs' trade in 1992 was the purchase of an SPI futures contract because it went through a line someone had drawn on a chart. Could there be anything simpler?

Well, on Thursday I sold EURUSD based on an approach I have used more than a score of hundreds of times that looks like rocket science compared to the 1992 stupidity.

As you say, perhaps we will feel the same in another 20 about what we do now.





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