Thursday, February 28, 2013

Things I've learned this past year

So it's been about a year since I left the quantitative analyst job to trade full time, here are some things I've learned.

  • It's pretty easy to find inefficiencies for profitable trading, it just takes a ton of work finding the MOST profitable trades. 
  • A good trade must always start with robust theory, therefore when the discovered inefficiency erodes, it would be simple and cheap to stop investing capital into it.
  • Back testing historical data has only 1 real purpose: Estimating transaction costs, explicit and implied, to determine whether the fundamental edge is large enough.
  • About code writing for automation. It more often adds another layer of liabilities than value; therefore unless the trade absolutely requires it, it's better to do everything by hand.
  • Commodity futures/options are the way to go as a self employed trader due to leverage available.
  • Even with profitable trading, life still gives you plenty of other challenges. It never gets easy.
  • There's still a ton of stuff I have to learn.

0 Reflections: