Alpha Trader: The Mindset, Methodology and Mathematics of Professional Trading

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With the knowledge that these facets of conscientiousness are major predictors of life success, think about how you can improve in one or more of these areas.

The second half of the book shifts the spotlight towards methodology (while still reiterating the importance of mindset). He has traded global macro for a Connecticut hedge fund, and he has day traded equities with his own money. Speculators put on the trade they wanted to have before, because now that the event (and associated gap risk) is out of the way, it’s safe to do so. Spend most of your time thinking about the future path of markets and how you can predict and capitalize on that path. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time.

Instead, we see a U-shaped pattern with more highs and lows near the start and the end of the series. Now, you still pay the bid/offer spread and you pay a hidden transaction fee which is the profit earned by a high-frequency market maker which receives an ultra-short-term “free” option as it chooses how to execute your trade.

Don’t just scan the surface of information you receive and let it make its way into your mind, unfiltered.In Chapter 3 you learned that superior performance on the Cognitive Reflection Test (CRT) predicts trading success. To succeed in trading, you must learn to accept and deal with the fact that it is a competitive field with few barriers to entry and no specific credentials are required. My thinking on this has evolved over the years partly because markets have evolved, but also because I have seen enough evidence to conclude that technical analysis is not a source of alpha or edge. Look at what we just discussed for example on the central bank policies: trading what you think they will do rather than what you’d like them to do.

Alpha Traders filter information with slow System 2 thinking, even if the conclusion drawn from that information seems simple or obvious at first. Once approved, traders will be able to manage 3rd party capital under the cover of our Investment Management License (SCB). Alpha Traders work hard (even when they don’t feel like it), seek to continuously improve, and love markets more than they love money. You have observed that the success rate for people starting out at banks is very different (~50%) to the success rate for individual traders (~5%).The information on this site is not directed at residents of the United States, Belgium, New Zealand, and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Be aware when you receive information from people like this; they will never change their view and as such their view is probably not worth much. It is not worth it for speculators to stay short all that time where the is so little juice left in the trade. If you take the time to record these reassessment triggers, you should find very few occasions where you make on the fly decisions mid-trade. By completing your purchase, you agree to Audible's Conditions of Use and authorise Audible to charge your designated card or any other card on file.