A Peek Behind the Curtain

From a reader:

In the past I worked as an institutional money manager. The first final I went to the consultant essentially stopped me mid presentation and told me they were looking for a gunslinger. They wanted to be sure that when the market was hot I would take as much risk as possible. They “felt” the market was going “to turn around” and wanted a “gunslinger” to take advantage of it. I won’t say the name of his firm, but it is one of the largest institutional consulting firms in the business. They allocate billions of dollars for others. I still am not sure what a gunslinger is, but I told him what he wanted to hear and won the final. The consultant had a ton of experience and talked about his prudence and Ivy League education on his firm’s web site. If people had experience dealing with consultants they would be shocked at how poorly they do their jobs. Trend Following is just too concise for them. They can’t wow clients with it so it will always be a niche style.

Thanks.

63 thoughts on “A Peek Behind the Curtain

  1. guy is exactly right. if it’s not difficult to understand, or something the consultant can sound important at a cocktail party discussing, they aren’t interested. what’s amazing to me is that when you drill down about what their precise objections are, 98% of the time, I identify them as idiots, purely ignorant, in that they have never read anything on the subject, or read anything in depth in terms of returns, style, rationale etc. it’s similar to the high brow types that always pontificate on a subject or person, based on someone or some news columnists’ (typically slanted) opinion… but when you ask what specifically they like or dislike, they can’t answer as they never do the primary research.

  2. I work for a large institutional investment consultancy and I find the above discussion frankly odd.

    My firm research in depth a large number of trend following funds. Some achieve very high ratings and are put forward to clients as part of their alternatives allocation. Some trend following funds are not so highly rated (sometimes due to business management issues, sometimes because the process isn’t as strong as other trend following funds).

    I can assure you that you can “wow” a client with TF performance.

    In my opinion the consultant described above is failing in his/her fiducary duties (if the story is true).

  3. Adam, you have consistently demonstrated a lack of TF knowledge on this site. If I had to sum it up you think TFs are lucky monkeys and all of the London TFs have success due to a 100 PhDs on staff. That stuff is nonsense and you don’t know it. All you know is what people tell you. I think anyone who possesses those 2 views is failing their duties as well. Then again, it depends on what the duties even were to begin with!

  4. Note, this site will not debate your point of view ongoing. If you want to create a site that simply says TFs are all lucky monkeys and 100s of PhDs = success…go for it. But that message is tired, has been heard and frankly is just ignorant. Everyone gets their shot here, but at some point, come on and wise up or move on.

  5. You’ve taken my points out of context and I suppose you’ll have to ban me.

    Glad to see this forum welcomes an open debate.

  6. Not out of context at all. It is the essence of your view. You said it. Open debate requires people to know what they are talking about, not parrot marketing materials.

  7. I agree with MC and the original post. I work for a TF and we consistently come up against ridiculous objections from consultants such as “it’s just a black box” or “clients don’t understand systematic trading”…surely it is their job to educate?! Still doesn’t stop them allocating billions towards strategies such as statistical arbitrage or “event driven”…..a term which I’ve never really understood, isn’t everything “event driven”?

  8. I made the original post. It is a true story. “We look for good companies that trade at a discount to their intrinsic value”, that is a statement that literally means nothing but consultants and clients eat it up. Clients are for the most part unsophisticated Union Leaders and they get the above statement. The fact that “good” “discount” and “intrinsic value” are different to everyone doesn’t stop people from using them as crutches. The meeting I referenced was on an extemely hot day in the summer of Y2k in Connecticut. The consultant “felt” the pullback was over and wanted us cowboys to step in and add some spice to his clients portfolios. Not the best time to add to aggressive mandates but hey he “felt” it was right. If you tell the vast majority of consultants we have no idea what will trend or when, but we will ride each trend that breaks out or down and stay with it until the system tells us to change, they’ll become very creative with the “that just doesn’t work talk”. Just the plain truth.

  9. “business management process”

    nothing like business jargon to get your through the day.

  10. Tom, unfortunately most market participants are sheep…they can handle volatility, on the upside…

    I was at a client presentation in mid 2002 for a large equity/long only asset manager, who was a closet index tracker, an the presenter had a great powerpoint with all the “catch phrases” as to why clients should invest with his firm…

    Then a potential client started asking about their CSCO position and how long they held it, the asset manager proudly stated for a few years…

    The client then asked why they never sold a single share from 80 down to 18, and what happened to the people who placed money with them at CSCO/$70+ …talk about a half-baked explanation…even the insiders are sheep…

  11. BTW Michael, can we at least add an “ignore” button to the site for AdamL…I can almost tolerate ignorance, but to question the validity of the person who posted is beyond even my tolerance…

    AdamL I find most of what you post “frankly odd”…thanks

  12. Not all investment consultants are the same and my view is that the consultant depicted in the story above is failing in his responsibilites to his client.

    My firm (and a number of my clients) have large holdings in trend following funds. However, TFs don’t make up the entire asset pot for a number of good reasons.

    I have tried to comment only where I have actual experience and I am not “parroting marketing materials”.

    With respect to “business management” all this means is the ability of the trader to manage the demands of an institutional client and whether the appropriate people and systems are in place to ensure the smooth running of the operation.

    Thanks

  13. Surely if the due diligence was conducted properly in the first place (to ensure the systems are good and the reporting is correct) then the “business management” part is not necessary.

    A good trader will remain a good trader regardless of the “demands of an institutional client” and to say that they need to manage the demands of an institutional client surely suggests that they would need to alter their approach to suit the client??! Would this not compromise other investors who already had money with the manager?

    I’m actually amazed that some of the big consultancies (no names mentioned) are still in business after having recommended Madoff funds

  14. It is true that at present a trader may be able to run their systems correctly and report correctly BUT this can change if AUM increases rapidly.

    Sometimes when a trader is successful they attract a lot of new clients and a large amount of money. This can put some strain on the overall IT structure and the time required to manage the existing client base (i.e. accounting, tax, reporting) which is entirely separate from the investment process.

    There are examples were a “good trader” is distracted by the non-investment issues which appear to lead to a degredation of the overall investment performance.

    The level of service required from an institutional client is often very different from an individual client. What I mean by this is that institutions often require regular meetings and more in-depth portfolio analysis. For example, most individual clients would not meet with the trader on a quarterly basis while a large institution probably would. This does not mean changing the process to suit the client it mearly means the non-investment demands are more time consuming.

    I agree about Madoff – that was complete madness.

  15. Larry just use a feedreader and then you can block anyone or anything you don’t want to see, only read what feels good, and continue to see the world through rose colored glasses. I think alot of comments on here are being misinterpreted but that’s the nature of a blog so some tolerance is needed. So Larry since you seem to be most bothered by the question, why don’t you tell us why are the phds there? what are they doing all day?

  16. Find the idea that someone thinks 100 PhDs are doing something in a trend following shop all day related to entry/exit day to day trading — to be out to lunch. It’s almost a complete lack of understanding of what TF even is. Take for example, one TF recently spoke with. 30 year track record. Over 75M AUM. 3 people running show. If the PhDs are cleaning data, coding, managing the operational details of running billions, yeah, ok, no doubt. But the idea that some think trend following trading systems require these huge staffs and constant new research (what, do they change the system daily?) to be effective is just ignorant. There is no way around that in my mind…and I am a guy who has been influenced/educated behind the scenes by more than a few people — and those people to a man share my view — except perhaps the few who have marketing machines to impress the whales who want ‘stories’.

    What’s the old Carl Sagan line?

    Interviewer: “Didn’t [Sagan] want to believe?”
    Druyan: “He didn’t want to believe. He wanted to know.”

    Well, some in here just want to believe. That’s fine, but don’t expect me to respect your inability to know. Not being cocky or arrogant either. Would love to see some skeptics actually ‘know’, but anyone with a pulse can see some are just defending their turf to the bitter end. Great, go for it. Flat earth thinking ain’t new and many died in that state.

  17. I hadn’t seen these comments and I sent Michael an email asking for his thoughts about PhDs at TF shops. Not terribly long ago he mentioned Liz Cheval who mentions on her site she has a PhD on staff and I know Chesapeake has some PhDs too. I really wonder what they do. My guess is they hire them because they can.

    Like Michael said, TF firms don’t need big staffs. I know a guy, a TF, who has somewhere around $80M AUM. He has 3 people. At one point I think he had 5. No PhDs, no need for them. I imagine he would hire one if they applied and he had a need, but I know he wouldn’t want them rewriting systems. They would be doing what any other person would be doing.

    If you want to see the results of what a group of PhDs can do read the book “When Genius Failed.” They recently, I believe, failed again.

    It’s funny, I’m in a master’s program now for finance. If I weren’t almost done I’d probably quit. Some of the models are laughable. One interest rate model requires that you make a prediction on what you think interest rates will be in a year (or x period of time). With rates at 0 they aren’t going down, but how do I have any idea about what rates (or stock/commodity prices) will be the future? This class was taught by a guy I would consider a genius, but I’d never invest money with him if he ran a fund.

    Some of my classmates started what is basically a stock picking website. They are both smart guys, but they are using fundamentals. Seriously? The one guy mentioned using mean reversion for making money. See book above to see how that can work out. The normal distribution? No thanks.

    Trend following is the way to go. I don’t have a crystal ball. I can’t predict the future. I can only get on the train when it’s going where I want to go. If it starts taking me where I don’t want to go I get off and wait for the next one.

  18. Coffee, coccoa, cotton, oil, and gas have all had nice runs recently. Anyone who comes to understand TF could have been on those according to what MC teaches. Golly the peso broke out today. Hmmm, should I look for the news story as to why or would it be good to just follow it?

  19. @nick – my firm’s research note says that EMC lost five researchers in 2003 including a senior researcher called Stuart Rabin in 2008 who supported Brian Procter (MD and ex Richard Dennis Employee) in their research effort. Liz cheval said that all of the senior team are involved in this research effort. Not sure they have any phds left unless they have recruited recently. The EMC system has developed a lot since the turtle days.

    In particular EMC uses 4 separate break out models and one based on something they call the “commodity spread” which only has a small amount of risk capital (basically seeks to be clever when rolling contracts).

  20. Amazing thing Adam? You are only building more of a case of what I have been saying — know v. believe.

  21. This PhD hype is quite possibly the biggest misdirection (read: ruse) in the discussion of trend following that I have seen in 15 years.

  22. Well that’s what I mean, I haven’t seen anyone say that phds are required or are changing entry/exit systems all day. I don’t find Adam’s view to be anti-TF and there is some interesting info in there. Anyway, that’s my interpretation.

  23. Thanks Ken.

    I am a big fan of trend following and a lot of my firm’s clients are happy with their allocation to these funds!

  24. I just see a fundamental disagreement, whether or not your clients allocate to TFs or not. Doesn’t make me mad or angry, but it is a fight for the truth.

  25. Perhaps they think having Phds on staff may lead to volatility-less returns, like Jim Simons.

  26. @traderken…you guys who are romanced by the 100 Phd’s bit in a TF strategy don’t really get what robust trading systems are about…

    @AdamL…unless you trade for EMC, you don’t really KNOW how they trade…you just know what they TELL you they do…

    @trender…the only guy who had volatility less returns was Madoff…

    you guys are reading too many brochures…

    come on guys, wake up…

    re-read TF where Dunn’s office is described…how many people are in his shop???

    do you really think you need 100 Phds to trade S1, S2 and similar systems?

    some of you need to STUDY TF and CTT…if you did, you would realize these debates are pointless…

  27. I’m glad to hear what you have to say about TFs Michael, especially the 3 man 75M shop.

    The TF I work for is of similar size and it frustrates the hell out of me that other TFs with an inferior track record to ours are allocated to very heavily SIMPLY because the investors seem to take comfort from the 100PhD story. I meet so many allocators who claim to specialise in trend following yet none of them can really say why they just choose the big 3 or define how their models work

  28. @ AI, I have some sympathy with your situation but you need to understand that if an institution wishes to allocate (say) $100m to a trendfollower then it is unlikely to want to allocate to a fund with only $75m AUM.

    The reason for this is that they may feel “overexposed” or in other words at a high risk of being selected against if things go wrong and the other investors run for the exit.

    I understand the concerns regarding the proliferation of PhDs (you don’t need a PhD to follow S1 and S2) but it is nonetheless the case that many large funds do employ them. Perhaps they are there just to provide narrative and it is all one big ruse.

    @ Larry – I find it hard to believe that EMC would say they trade one way when actually the trade in a completely different way. Their methodology seems consistent with the turtle philosophy and I have no reason to doubt that they employ the methods they have described.

  29. @AdamL…I would not be surprised that they trade 4 different breakout systems…

    Please explain to me why you think it takes 5 Phds to trade 4 breakout systems?

    Also explain what you think the 10s or 100s of Phds do at other TF shops all day?

    AdamL, what is your definition of a robust trading system? And how do scores of Phds fit into your definition?

  30. Hello Larry,

    I don’t think you need a PhD to run a breakout system (nor any other type of trend following system).

    I was ridiculed last time I discussed what PhDs do at large TF shops but for those that are interested I can tell you what these traders have told me and my colleagues.

    These PhDs are often involved in the following:
    – data acquisition and management (i.e. working with high volumes of data which requires specialist skills)
    – Research into the actual mechanics of a particular futures contract (i.e. monitoring limit ups/down, liquidity and other risk factors)
    – “Simulation” of new trading strategies (i.e. programming in C++, Python etc).
    – Developing software for the automation of trading (not exactly straightforward if you are managing a lot of money).
    – Researching capacity constraints (i.e. how much can we trade in XYZ contract before moving the market/being selected against by other traders)
    – Transaction cost analysis (i.e. minimising slippage and other frictional costs)
    – Research into high frequency trading
    – Monitoring of correlations/volatility to ensure robust risk management
    – Developing the risk management systems and monitoring tools.

    You will notice that many of these things do not alter the basic method (i.e. they aren’t looking to alter the system on a daily basis).

    I am not claiming you “need” these researchers to run a successful fund but there is no doubt that many large funds do much of the above work (and more besides).

    To me a robust system is one that is persistent and consistent in its behaviour under perturbations (changes in parameters) or conditions of uncertainty (i.e. it is not fragile, nor predicated on only one type of market condition).

  31. Al, that’s because they don’t know what they are talking about. They want to believe, but clearly don’t know. Telling me that Liz Cheval has Brian Proctor on her staff? Proctor, good guy, met him, but he was a Turtle — so what for this conversation. There are people in this space flying blind, and with just enough info to be dangerous. Sure they can get paid by pushing wealthy clients into good trend following funds (how hard is that?), but their understanding of how TF works is in a blender spinning.

  32. I guess none of its surprising. TF goes decades with traders from all walks of life and backgrounds… and when institutional people finally get interested they have to drape it in the same mystery they drape everything else in. For some this exercise is a justification of their paycheck.

  33. Sat down with a guy at his home recently. Nearing 70. Been a TF for 35+ years. He is part of a firm with 30 year track record. At his home? Down to earth conversation sipping tea. He then mentioned his wife was trading and kept track of everything on a hand written piece of paper. Here was a guy, part of a massive TF firm where everything is automated and technology is top of line for the business, but behind the scenes his wife is trading as a TF on a simple piece of paper. If you want to believe you need a PhD to be a trend follower, I say go get one or quit cause you don’t have one. On the other hand, people wise will see the truth and keep on keeping on.

  34. Larry you are a perfect example of the misinterpretation Im talking about. Show me where I or anyone else ever said a phd was required. Post the link.
    It seems to me Adam is trying to give advice to help TFers get allocations, what’s wrong that?

    I also asked you what you think the phds are doing but you didn’t answer it, but then you turn around and ask others the same question? Come on. Why don’t you tell us what you think the phds are doing? And don’t just parrot back the good responses of others. Again I find it very interesting that the one who was most bothered by the question, who wanted to essentially block it from the blog, doesn’t have a response…

  35. Yeah I agree, I really don’t think there’s a great link between academic qualifications and ability as a trader. I’ve often seen examples where some of the best traders are in fact far less “intelligent” (if you define intelligence as being academic) simply because they don’t question “why” all the time.

  36. Ken, I disagree. I have seen way too many comments from Adam about ever changing systems and the need for PhDs. I will grant you that Larry has sharp elbows, and I am not defending anyone here, but this PhD stuff is definitely being pushed. I think it is nonsense. In terms of what they are doing, my view of that is up there somewhere in the thread! Bottom line, the PhD conversation/acquisition spree is to sway investors cause TF by itself has no sex appeal to their way of thinking.

  37. @Ken I think the Phds are probably playing some ping pong and ordering alot of take out…

    the Phds are the bait on the institutional money hook…

    read Dunn’s interview where he hasn’t changed his strategy much in 30 years…it isn’t really that complicated…

    when you have statistical arb shops and guys like LTCM doing what they did, you need alot of rocket science…trend following by its definition isn’t rocket science…

    this debate is old…Michael already told you guys how it was weeks ago..if anyone knows he knows…why do you guys actually think you know something he doesn’t, because you read a website or a brochure?

  38. Larry thanks for seeing the vision, but I am not good on compliments! lol. Everyone here is bright, it just comes down to a major difference of opinion.

  39. i agree, everyone is bright, and we can respectfully agree to disagree, and we are all traders…

    but as you are the only one here who has written 2 books on the subject and spent time with Hite, Abraham, Dunn, Rogers, etc over the past 11 years or so, I’m not sure why guys want to debate this stuff with you, but that’s just me haha

  40. guys, keep in mind, sometimes things get a little heated in here because we all strongly believe what we believe…but we are all traders, so if my elbows get a “little sharp” at times, it’s nothing personal…i have respect for anyone who studies and trades seriously…

  41. I know we have discussed this before and sorry to sound like a broken record but…

    1. Dunn implemented a “major program modification” in 2006. Michael said he had discussed this with Bill Dunn but (sadly) he didn’t share the details – perhaps he changed the ping pong table?

    2. Ironically Bill Dunn has a PhD.

    I doubt the PhDs at certain TFs are playing ping pong and ordering take away. Why would a serious academic give up on an interesting scientific career to play games? Maybe just for the cash…

    These researchers are expensive – just ask yourself why would any trader waste his money on this stuff. Surely this can’t be just to impress investment consultants and gullible clients. My experience of these traders is that they are humble, diligent, honest and are seriously interested in getting the best results for their investors.

  42. I am sure they are interested in the best returns Adam…but most of their supposed duties that you propose = curve fitting and over-optimizing

    OK, I will admit that maybe they get the food delivered instead of going to get it…

    In Dunn’s quote that you posted before re:”major program modification” he says they doubled the number of markets traded, which many have stated reduces overall portfolio volatility by reducing correlation…

    AdamL, to reiterate Michael’s question…when you spoke with Dunn directly, what did he say to you?

    And 46 posts into this thread I am not sure why it even matters to how we trade properly…

    lets ask John Meriwether how all of his Phds did…

  43. by the way, found this on wiki…

    This is great …he alomost took out the world at LTCM, blew up again, and is on his 3rd fund…

    investors = sheep

    FROM WIKI:
    “A year after LTCM’s collapse, in 1999, Meriwether founded JWM Partners LLC. The Greenwich, Connecticut hedge fund opened with $250 million under management in 1999 and by 2007 had approximately $3 billion.[1] The Financial crisis of 2007-2009 badly battered Meriwether’s firm. From September 2007 to February 2009, his main fund lost 44 percent. On July 8, 2009, Meriwether closed the fund. In a Bloomberg story on the closing of JWM Partners an investment adviser said that, “For many investors, John Meriwether is by now just another hedge-fund manager,” and that “LTCM’s infamy was a big story in 1998, but the events of 2008 might finally relegate LTCM and 1998 to footnote status.”[2]

    [edit] JM AdvisorsMeriwether is opening his third hedge fund venture, named JM Advisors Management, also based in Greenwich, Connecticut, in 2010.[3] The fund is expected use similar strategies as both LTCM and JWM, namely highly leveraged “relative value arbitrage”.

  44. Larry I am afraid your logic doesn’t really follow -do you really think that all PhDs from all disciplines are all the same?

    This is like saying all traders are the same therefore because a fundamentalist trader lost 50% in 2008 then all traders are rubbish therefore all trend following traders are rubbish.

    The LTCM traders were interested in mean reversion while the TF researchers I have spoken to are interested in the opposite.

  45. In logic this is known as the inductive fallacy and occurs when there’s not enough data or cases to warrant a generalization, For example, a waitress complains, “That British chap left me a lousy tip. All British people are cheap!” She has made a generalization about tens of millions of people based on an experience with a few of them. A hasty generalization like hers takes this form:

    1.A very small sample A is taken from population B.
    2.Generalization C is made about population B based on sample A

  46. I had no idea my original post would lead to so many responses.

    Below is post #32 by Adam telling us unwashed what all these PhDs do all day. This is a bunch of noise. Does the company have a system in place? If so, it works or doesn’t work. His bullets sound an awful lot like “optimization”. Optimization has attracted more money that is then poorly managed then just about any other buzz word. The PhDs he referenced spend the bulk of their time writing “stuff” to flood clients/consultants.

    The system buys here and sells there. Our track record is this. Our core belief is that markets, all, trend. We do not know when so we do not anticipate. When the trend begins up/down we jump in and the sell/cover is triggered when this happens. This gives us an edge on each trade. When the edge goes away we get stopped out for a small loss (predetermined), when the trend continues we ride it for all it is worth.

    That sums it up. As for the bullets below, the Adams of the world eat it up. VERY little meat in the bullets below if you read it critically, but the gate keepers love it.

    As for JW. Go back to Liars Poker, a classic in its time. They describe his trading accumen as a guy that took big bets, and then got more capital from partners to double up when the trade went against him. Question, what happens when you go independent and you don’t have more capital? LTCM is the classic example of PhDs and consultants in action. They were generating returns of 20-30% and refused to tell consultants what their models were or their leverage. I know they presented to me for my firm to become a client. All they told me was that they find relationships and when they diverge from the norm they bet big that they will revert to trend. I said every methodology runs into a rough patch and every relationship diverges from trend eventually. If you use heavy leverage with your system you go out of business when your system goes out of favor. They then told me about the PhDs etc. My response was that I’ll take my SDSU diploma on the opposite side of the trade when you hit the rough patch because you are highly highly levered. They asked me how I could infer they were overly levered, I reponded “it doesn’t take a PhD to realize that if you are not being candid about something there is usually a reason. Glad I didn’t invest with those geniuses. Long winded but thanks for the interesting discussion on the board.

    These PhDs are often involved in the following:
    – data acquisition and management (i.e. working with high volumes of data which requires specialist skills)
    – Research into the actual mechanics of a particular futures contract (i.e. monitoring limit ups/down, liquidity and other risk factors)
    – “Simulation” of new trading strategies (i.e. programming in C++, Python etc).
    – Developing software for the automation of trading (not exactly straightforward if you are managing a lot of money).
    – Researching capacity constraints (i.e. how much can we trade in XYZ contract before moving the market/being selected against by other traders)
    – Transaction cost analysis (i.e. minimising slippage and other frictional costs)
    – Research into high frequency trading
    – Monitoring of correlations/volatility to ensure robust risk management
    – Developing the risk management systems and monitoring tools.

  47. Larry there is nothing wrong with sharp elbows as long as you can back up your position. But you can’t. You can’t show us anywhere where anyone said “phds are required”. You are really debating about nothing.

  48. And also Larry if you think that all there is to a good trading system is just a robust entry/exit then you are sadly mistaken. Yes, that is important but there is a whole lot more.

  49. My world connects me with many of these top trend traders along with new retail guys longing to be the next big dog. No doubt that the numbers of emails asking if they need to be a PhD to be a trend follower OR why do the top firms have all these PhDs? Followed by that must mean I can’t be a trend follower — have increased. So I would say so far it has been an effective marketing scheme for confusing those who are not sure and are stuck in the know v. believe battle.

  50. @ Ken and AdamL I just checked in to see that you guys are still at it…sorry I was actually reviewing some positions, etc, looking to improve my trading while you guys were still here debating the Phd thing…

    This whole discussion on Phds helps you two trade better exactly how?…

  51. Really Larry? So you can sit around all day and try to improve your trading but those at big firms can’t? Are you improving your system, doing research? I bet you’re not, you are really just sitting around eating popcorn and its all one big ruse! Just kidding…but I think you see my point 🙂

  52. @Ken

    Phds are yesterdays news …I saw on Winton’s site they have specialists on staff in…

    extragalactic astrophysics…

    so this whole Phd debate is pointless as Phds are yesterdays news…its all about extragalatic analysis now…

    now I think you see my point! 🙂
    Jesse Livermore is probably rolling over right now…

    I think you see my point! 🙂

  53. Good traders don’t sit around “reviewing positions” all day. They trade systems, the system says buy, they buy. The system says sell, they sell. There’s nothing to review, they just execute.

    Jim Simons said the important thing is to think scientfically. He also said that it’s not so much the specific skills they have (meaning the subject matter of their education) as it is the ability to think scientifically. If he hires a phd he knows he’s got a scientific thinker. That’s not to say you need a phd to think scientifically, you don’t, the Scientific Method is very clear and anybody can learn it. Astrophysicists, voice recognition experts, etc are hired because at the heart of those fields is the ability to extract a “signal” out of what seems to be a bunch of noise. Hmmm, sounds alot like building a trading system to me! Of course the casual, unfinformed person reading marketing materials will think “oh what do galaxies have to do with trading?!”. They don’t understand the deeper meaning behind it all, nor do they want to.

  54. Ken, don’t be so contentious…how many trade do you execute at 11:30pm on a Friday night? Your system gives off alot of signals then I’m sure…

    save your techno babble for the classroom…profitable trading isn’t as complicated as you try to make it sound, when you know what your doing…

    you can keep thinking that Phds and astrophysicists are needed to trade systematically…

    the system itself is not the most important part of the trading system…tell that to your voice recognition experts…

  55. @TraderKen…I will rephrase for you so you don’t digress…

    in a 10 word or less answer to the following question…

    In your opinion, what is the most impotant aspect of a winning trading system?

  56. @Ken … finally, since you speak about the complexities and “deeper meaning” of it all…of extracting “signals” from noise…and the importance of galaxies in trading, that the uninformed person wouldn’t know of…

    Below is a link from one of the best in the business, for over 20 years…

    how many voice recognition experts and astrophysicists can you count here?

    http://abrahamtrading.com/about-us

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