Long Overdue Post - December Trading Volume
Due to life and work in general, I haven't followed the markets much last month. December has always been a busy month and this year is no different. However, I still took a few trades. While they didn't pan out exactly as I had hoped, I did the right thing by reducing my position down to 0.5% risk.
As the volatility in the FX market falls, my fakeout strategy definitively takes a hit. In the meantime, I do try to stay productive with my trading development. Specifically, finishing "The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution" by Gregory Zuckerman.
I liked this book for quite a few reasons. Warning: I may not get all the facts right. This recap is written after having finished the book a couple of weeks ago.
1. Jim Simons didn't make money right away. He had his own losing streak.
I can't imagine how Jim must've felt when colleagues and students mocked his approach to the markets. He was determined to find an edge and he eventually found it. However, he did start off paying for his education in losses. Isn't that what we're all trying to do? I think this mentality still holds true. The markets is pretty much an experiential learning course. Take the opinions of others with a grain of salt, but ultimately hone in on your own observations. Lastly, be prepared to pay for the cost of education.
2. Historical data works
I'm not saying go technical analysis all the way and screw the fundamentals. Keep in mind that Jim and his colleagues applied historical data with very quantitative methodologies. To be honest, my mathematical comprehension will probably never enable me to trade on their level. What I find fascinating is that the historical data is widely available, but Jim is able to make use of it like no one else can. In short, the lesson is really to figure out a strategy that works for you and only for you. As I develop my own trading, my timeframe, holding duration, and analysis must be very situational. I've previously talked about (or at least I think I talked about) how work and lack of spread advantage made me adopt my trading style to what it currently is - daily timeframe and longer holding times.
3. Volume driven
There was a tidbit in the book that mentioned how their trades would be randomized in order to minimize predictability. I thought this was interesting as it further evidenced the volume-driven nature of markets. We look at the volumes of others, and others at ours. With the noise on the lower timeframes, I simply don't see a visible edge to look at major imbalances, at least not in the FX market. This is another reason why I look at the higher timeframes - to filter out noise and to observe mass accumulation of aggregate positions.
As we're past midnight, I'll leave this post the way it is. I did want to talk about some trading developments for this holiday season, but I don't think I'll get to it. Let's hope for a prosperous 2020. Good night.
I liked this book for quite a few reasons. Warning: I may not get all the facts right. This recap is written after having finished the book a couple of weeks ago.
1. Jim Simons didn't make money right away. He had his own losing streak.
I can't imagine how Jim must've felt when colleagues and students mocked his approach to the markets. He was determined to find an edge and he eventually found it. However, he did start off paying for his education in losses. Isn't that what we're all trying to do? I think this mentality still holds true. The markets is pretty much an experiential learning course. Take the opinions of others with a grain of salt, but ultimately hone in on your own observations. Lastly, be prepared to pay for the cost of education.
2. Historical data works
I'm not saying go technical analysis all the way and screw the fundamentals. Keep in mind that Jim and his colleagues applied historical data with very quantitative methodologies. To be honest, my mathematical comprehension will probably never enable me to trade on their level. What I find fascinating is that the historical data is widely available, but Jim is able to make use of it like no one else can. In short, the lesson is really to figure out a strategy that works for you and only for you. As I develop my own trading, my timeframe, holding duration, and analysis must be very situational. I've previously talked about (or at least I think I talked about) how work and lack of spread advantage made me adopt my trading style to what it currently is - daily timeframe and longer holding times.
3. Volume driven
There was a tidbit in the book that mentioned how their trades would be randomized in order to minimize predictability. I thought this was interesting as it further evidenced the volume-driven nature of markets. We look at the volumes of others, and others at ours. With the noise on the lower timeframes, I simply don't see a visible edge to look at major imbalances, at least not in the FX market. This is another reason why I look at the higher timeframes - to filter out noise and to observe mass accumulation of aggregate positions.
As we're past midnight, I'll leave this post the way it is. I did want to talk about some trading developments for this holiday season, but I don't think I'll get to it. Let's hope for a prosperous 2020. Good night.