Money, Pressure and Computers
It seems like a lot of day traders are having trouble lately (except for 100% Richard) – which seems strange since the market has been very strong the last couple of months. JC writes a lot of his thoughts down, which is great because I can relate to them all. Trader Gav wrote this today:
My recent trading performance stalled, and it is longer than I expected. It is a psychological challenge rather than financial damage… as long as I can get through this bad period, I will be stronger when good days come.
It’s true – trading and psychology are tied together. Your psyhcology affects your trading and your trading affects your psychology. Trading is not only about managing your risk, it is about managing your ego.
It is also about money. Studies show that money worries hinder job performance. Traders already know that very well. And how much money you have or make (or lose) unfortunately often affects your ego.
Computer traders have a big advantage over human traders. They can calculate billions of operations per second – without emotion, psychology or ego. The only advantage we have is that human brains happen to be very good at recognizing patterns – even better than today’s computers. And trading has a lot to do with recognizing patterns. But I don’t think this advantage will last because it is shrinking at an exponential pace.
Fifteen years ago, it used to be funny to me to see a novice chess player write a program that could beat a grandmaster. Now it is widely recognized that computers are better at chess than humans. And today there are people who can’t trade that are writing programs that trade better than most humans. It won’t be long until computers are the best traders and maybe they already are. If you are a human trader – you better start writing some programs, because your time is limited! I wouldn’t be surprised to see traders’ profits consistently decrease in the years to come.
Then why am I in such a dead-end career? Because I think almost every career is in this position. What job doesn’t use some sort of knowledge and pattern recognition? Here is a list of occupations – if/when technology surpasses human intelligence, which profession will be spared?
The world is changing and the rate of change is increasing. Understanding this, I think it is all the more important to do what you love with whomever you love wherever you like, and forget about ego and pressure. Even if the pace of technological growth suddenly stops (don’t fight the trend – the trend if your friend!), would there really be any harm in doing what you love?
I guess I am thinking about all of these things because I have been feeling the same pressures lately and I’m trying to work through them. Everyone can only see the world from inside their own head, but I guess traders are stuck deep within their heads all day long and then after the market closes, they stay inside and think about it some more. You really get to know the inside of your head as a trader – a human trader.
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