Feb

24

 Umberto Eco is the master of how not to run a typical library, one that makes it impossible to take out books, or photocopy anything, or use facilities, or fill out a card, or use the stacks. He studies such libraries to get a feel for what's going on in the world of information.

I wondered if it might be good to consider how to run a trading operation the wrong way in the same vein. Here are some rules.

  1. Be sure that there is much frivolity and high five-ing whenever there is a good trade.
  2. Do mix in much personal business with the trading, as this will get you excitable and ready to pull the trigger.
  3. Have all bills from the service and other agencies come directly to the office and the trader so that they will wish to trade better to cover the bill. 
  4. Be sure to have a voluptuous other in the room at all times so that he or she can be impressed at all times with the big stuff you're involved in. 
  5. Pay much attention to what's on the tube, especially rumors of terrorist action and who's buying and selling as if you're able to react in a nanosecond you could make the bid asked.
  6. Be sure to go for small profits as you can't go broke that way, and perhaps you will be able to cover the transactions costs, when your expectation if you do make the profit is a small part of the grind.
  7. Have much badinage about the money won at Vegas or lotteries, as this is a good substitute for trading.
  8. Always have a pure mathematician at hand so you can solve theoretical problems from the stochastic calculus and really keep track of the latest papers from quantitative finance which are so relevant to trades today.
  9. Be sure not to have any prospective files on hand but use the retrospective ones so as not to interfere with what you actually could have done.
  10. Only look at data series that go back at least 1000 observations and include the 20s and 70s because p/e were so much lower then and interest rates really didn't affect stocks.
  11. Keep track of what's working on the last 3 trades as if something is hot, why you might as well assume that no one else knows about it and you can follow it with impunity.
  12. Do make sure that all meals are taken off the trading floor so you can have a break of at least 2 hours for food and drink and have a fresh start as to where things are and what the rhythms are.
  13. Have very crowded facilities so that one can always be in discomfort and never have patience to put a trade on.
  14. Make sure your brokers call you up at all times to tell you that the reason that the market just went up or down a few percent was that the white shoe firm was buying.
  15. Keep in touch with many lieutenants of the big traders as it's good to know what the big boys want you to know about why the market is so good or bad. Ditto for what the big mutual fund players just sold or bought.
  16. Forget about all markets except the thing you're trading as every trade and individual market must float on its own bottom.
  17. Be sure to find out what the masses of traders are doing on such things as nobletraders.com. They once had big profits and they're very eager to share their wisdom with you on the chance that you might do better than them.
  18. Much argumentation with your colleagues is good as that's the way the unusual ideas can percolate and harmony might elicit zone type ideas.
  19. Be sure that trading sheets are hard to get to so that you can really recheck what happened from memory or based on what your counterparts or brokers have memorialized.

    Please augment with others of an Umbertoan nature.


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