Turning your brain into foie gras.

As I type this in front of my 6 screens, down from 10, I go back to the question I was asked when I showed a friend my office. “Do you really need that many screens?”  I explained I needed 4 for trading and wanted 2 for internet.

Going further I explained how I used the 4 screens and I was semi-successful in justifying my apparent screen addiction.  The truth is I really need 4 screens to get all of the information in an efficient way throughout the trading day.  It is specifically designed, needs no more or no less. This is much more easily defined and a great starting point.

From the outside I understand how it can be confusing.  Trading, investing, finance is so big.  It is a fools errand to try to learn it all.  Are you going to achieve a high level doing 1 thing a 1000 times or 1000 things 1 time?  What if it really is 5000 things or 10,000 things to be good?

I admit, trading has forced me to learn things I did not want to know in ways that I couldn’t imagine.  Politics, bonds, reading mediocre publications with big audiences, watching bad financial tv, etc.  But at the end of the day, it is about being an expert in yourself and maximizing your strengths.  I will never be good at politics or macro, that is not what I do.  That does not mean it should or can be completely ignored.  Gathering enough information to not be dangerous is  important. Knowing what the minimum effective load in your information gathering should be determined early.

Slow, range bound markets lead us down the information trap.  Gathering information from people who must produce content turns our brains into foie gras.

There is something exciting about gathering information however at some point it does hurt your decision making. Too much of anything is a bad thing.  Small bites of information from everywhere leads to poor result in part because it is impossible to learn.  Have a control group.

Trying to make sense of every market move leads us down these paths.  Human need for certainty is ultimately what does the traders mind in.  Do we get better at predicting or do we get better at accepting uncertainty?  Is the goal of trading to understand the reason or make money?

As information become more readily available we need to be better at pushing the plate away or risk becoming fat with knowledge and unable to move out of our own way. Keep It Simple Stupid.

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  • Dda

    Infomania – ” The compulsive desire to check or accumulate news and information, typically via mobile phone or computer.” 

    • I hope the law of diminishing utility kicks in soon. 

    • PG

       Infomania: another addition after TV shows.

  • Trendisyourfriend

    A fellow trader sent me a link to your blog.  I couldn’t agree more.  I’m currently an independent trader, though in my former life, I trader at a big bank.  Sat beside this guy that reacted to every piece of news/data/flow like a squirrel on cocaine.  “2 yards and a cloud of dust” as I like to call him.  Once I realized the potentially fatal disease ‘paralysis by analysis’, I began to trim some of the fat from my daily reads etc.  The market already has a lot of noise, as does a trading floor.  Letting too much additional information in your mind can be a form of noise.  Your mind needs to be in a nirvana state.  Every time the squirrel yelled what happen, why it happened, I chuckled to myself and thought of this quote by Paul Tudor:     

    ” I see the younger generation [of hedge
    fund managers] hampered by the need to understand and rationalize why something should go up
    or down. Usually, by the time that becomes self-evident, the move is already
    over. When I got into the business, there was so little information on
    fundamentals, and what little information one could get was largely imperfect. We
    learned just to go with the chart. Why work when Mr. Market can do it for you?
    These days, there are many more deep intellectuals in the business, and that,
    coupled with the explosion of information on the Internet, creates the illusion
    that there is an explanation for everything.. There are young men and women
    graduating from college who have a tremendous work ethic, but they get lost
    trying to understand the logic behind a whole variety of market moves. [at the
    end of a bull market or bear market] there’s typically no logic to it;
    irrationality reigns supreme, and no class can teach you what to do during that
    brief, volatile, reign.”

           
    Great post sir. 

    • Thank you, said much better than I did. 

  • jimmy

    I agree and would answer provided I understand enough to know why it is likely price will move to or from support and resistance areas, to be honest why would I care about what the economy is doing or how likely Obama is to be re-elected so far as my trade is concerned.  My concern is the chart, the price, and any information I use to assist in the analysis of the trade, I am aware of the maximum risk I am willing to accept when entering (or I should not be in there at all), and have identified a point at which I am wrong, and will therefore exit.

    Whether that trade is stopped out or assisted to succeed by a financial decision taken by the EU, the Fed, or Humpty Dumpty doesn’t really concern me, the market decides.

    Not unlike the methods and various ways there are to trade. Information overload is not hard to slip into, separate personal views from trade analysis, nothing wrong with either, however one can be used as income, the other is like a bum, we all have one.    

  • Andrew Ramponi

    The market is like an ecosystem; traders need to find a niche where they can survive, learn the habits of the other traders in that niche and stick there till they get competent and  success tells them to move beyond. For some that might mean multiple monitors/time frames/indicators/news feeds; others might want one monitor, no news, no indicators.  I can’t say what will work for someone else, even if they share the same niche. The trouble starts perhaps because we get consumed by the quite obvious pickings in the vastness of the market, and start moving out of our little niche before we’ve evolved  enough skills to cope. 

  • PG

    One of the greatest challenge for a trader is being able to decrypt the noise and gain sufficient confidence to trade well. Sometimes this means more monitors, indicators, news.. other times simply find what the trader is able to manage internally and coherently with his/her edge.

8 Responses to Turning your brain into foie gras.

  1. Dda says:

    Infomania – ” The compulsive desire to check or accumulate news and information, typically via mobile phone or computer.” 

  2. Trendisyourfriend says:

    A fellow trader sent me a link to your blog.  I couldn’t agree more.  I’m currently an independent trader, though in my former life, I trader at a big bank.  Sat beside this guy that reacted to every piece of news/data/flow like a squirrel on cocaine.  “2 yards and a cloud of dust” as I like to call him.  Once I realized the potentially fatal disease ‘paralysis by analysis’, I began to trim some of the fat from my daily reads etc.  The market already has a lot of noise, as does a trading floor.  Letting too much additional information in your mind can be a form of noise.  Your mind needs to be in a nirvana state.  Every time the squirrel yelled what happen, why it happened, I chuckled to myself and thought of this quote by Paul Tudor:     

    ” I see the younger generation [of hedge
    fund managers] hampered by the need to understand and rationalize why something should go up
    or down. Usually, by the time that becomes self-evident, the move is already
    over. When I got into the business, there was so little information on
    fundamentals, and what little information one could get was largely imperfect. We
    learned just to go with the chart. Why work when Mr. Market can do it for you?
    These days, there are many more deep intellectuals in the business, and that,
    coupled with the explosion of information on the Internet, creates the illusion
    that there is an explanation for everything.. There are young men and women
    graduating from college who have a tremendous work ethic, but they get lost
    trying to understand the logic behind a whole variety of market moves. [at the
    end of a bull market or bear market] there’s typically no logic to it;
    irrationality reigns supreme, and no class can teach you what to do during that
    brief, volatile, reign.”

           
    Great post sir. 

  3. jimmy says:

    I agree and would answer provided I understand enough to know why it is likely price will move to or from support and resistance areas, to be honest why would I care about what the economy is doing or how likely Obama is to be re-elected so far as my trade is concerned.  My concern is the chart, the price, and any information I use to assist in the analysis of the trade, I am aware of the maximum risk I am willing to accept when entering (or I should not be in there at all), and have identified a point at which I am wrong, and will therefore exit.

    Whether that trade is stopped out or assisted to succeed by a financial decision taken by the EU, the Fed, or Humpty Dumpty doesn’t really concern me, the market decides.

    Not unlike the methods and various ways there are to trade. Information overload is not hard to slip into, separate personal views from trade analysis, nothing wrong with either, however one can be used as income, the other is like a bum, we all have one.    

  4. Andrew Ramponi says:

    The market is like an ecosystem; traders need to find a niche where they can survive, learn the habits of the other traders in that niche and stick there till they get competent and  success tells them to move beyond. For some that might mean multiple monitors/time frames/indicators/news feeds; others might want one monitor, no news, no indicators.  I can’t say what will work for someone else, even if they share the same niche. The trouble starts perhaps because we get consumed by the quite obvious pickings in the vastness of the market, and start moving out of our little niche before we’ve evolved  enough skills to cope. 

  5. PG says:

    One of the greatest challenge for a trader is being able to decrypt the noise and gain sufficient confidence to trade well. Sometimes this means more monitors, indicators, news.. other times simply find what the trader is able to manage internally and coherently with his/her edge.

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