I was reading The 4-Hour Body by Tim Ferriss and found two quotes that are highly applicable to trading:
Does that mean [the workout routine] won’t work for some people? No, it just means that it will fail for most people. We want to avoid all methods with a high failure rate, even if you believe you are in the diligent minority. In the beginning everyone who starts a program believes they’re in this minority.
Take adherence seriously: will you actually stick with this change until you hit your goal?
If not, find another method, even it it’s less effective and less efficient.
On listening to others:
Everyone you meet (every male, at least) will have a strong opinion about how you should train and eat. for the next two to four weeks, cultivate selective ignorance and refuse to have bike-shed discussions with others. Friends, foes, colleagues, and well-intentioned folks of all stripes will offer distracting and counterproductive additions and alternatives.
Nod, thank them kindly, and step away to do what you’ve planned. Nothing more and nothing different.
If you’re starting out, don’t worry about being innovative. Find a methodology and trade it with extreme discipline. For the first couple years, innovate by reducing your errors. Only add when there is nothing left to take away.
– Dynamic Hedge from 10 Tip From the Trenches
Every investment strategy goes through periods where it works poorly. That’s life. If you have a strategy that always works well, that means:
- You haven’t run it long enough.
- You’re not running enough money.
- You’re not taking enough risk.
Survive through your bad times, and prosper during the times where your intelligent strategy is paying off. Patience is a virtue in investing for the most part.
– from the post “If you want to be Well-off in Life” by David Merkel from The Aleph Blog
An engineering risk analyst thinks in terms of systems, their functional components and their dependencies, Paté-Cornell said…… Therefore, the analyst must first understand the ways in which the system works as a whole to identify how it could fail.
– Kelly Servick from How ‘black swans’ and ‘perfect storms’ become lame excuses for bad risk management
One of the concepts that I have always stressed is to normalize market movements versus their actual distribution to increase the success rate out of sample. Another concept I try to emphasize is the ability to simplify or “fuzzify” rules so that they can also be more generalizable.
-David Varadi from CSS Wave Theory Building Blocks Part 1