Can someone explain?

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Old Aug 15, 2011, 12:23am   #8
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Re: Can someone explain?

Martinghoul - What a nice and giving chap.
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Old Aug 15, 2011, 3:35am   #9
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Re: Can someone explain?

dribs started this thread
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Originally Posted by Martinghoul View Post
Right, first let me say that I strongly disapprove of shortcuts that you describe. For me the ONLY way to do anything is to understand it from the bottom up. You don't qualify to be a macro punter until you understand every detail of the thing you're punting. This is one of my most fundamental beliefs and I would discourage you from doing anything quick and dirty, in the strongest possible manner. I could properly wax poetic about this, which is one of my most important guiding principles. I have seen too many "legends" blow up on little things that they neglected to understand properly. The reason is that there's absolutely nothing in the mkts that follows pre-defined rules. Correlations change, liquidity rises and falls, models break down, etc. The only way you can navigate all this is with thorough understanding, which can only be obtained through hard work and experience (and you'll never achieve perfect understanding, as things in the mkt always evolve and change). So I would suggest you stop looking for shortcuts and work on all these confusing details and formulas, because only if you understand them will you be able to do the whole macro stuff.

All that said, my normal recommendations are these two:
"Fixed Income Securities" by Tuckman
"Understanding the Yield Curve" series of papers by Antti Ilmanen
Wow ok, so you know all the hundreds and thousands of formulas to do with everything you trade? And that helps with your trading? Interesting. I don't see how knowing these formulas is going to help me in making trades that last a few seconds to minutes. I barely understand all the nitty gritty details of a car, yet I understand the basics and trust my life in it. I know markets are always evolving and changing, correlations change, models break down, models based on formulas, I'm not trying to be a "macro punter", just trying to get a more traders perspective rather than an academic one from a book as I don't believe formulas will help me read the market on a very short term basis. I'd rather learn the nitty gritty of how people work and think, how traders think and what positions they're likely to take if X happens, not the formulas of what they're trading down to that much detail. Sure you need to know about what you're trading, but I don't see how knowing formulas of some miniscule detail is going to help my decisions, but you're much more experienced than me and you're obvioulsy right, so mabye I'm a fool. I'm not looking for a shortcut, just a different perspective to those in the books, because I highly doubt if those that wrote the books are actual traders. I'll keep reading and pushing.

Thanks for the book recommendations and answers to the questions, much appreciated
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Old Aug 15, 2011, 8:53am   #10
 
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Re: Can someone explain?

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Originally Posted by dribs View Post
Wow ok, so you know all the hundreds and thousands of formulas to do with everything you trade? And that helps with your trading? Interesting. I don't see how knowing these formulas is going to help me in making trades that last a few seconds to minutes. I barely understand all the nitty gritty details of a car, yet I understand the basics and trust my life in it. I know markets are always evolving and changing, correlations change, models break down, models based on formulas, I'm not trying to be a "macro punter", just trying to get a more traders perspective rather than an academic one from a book as I don't believe formulas will help me read the market on a very short term basis. I'd rather learn the nitty gritty of how people work and think, how traders think and what positions they're likely to take if X happens, not the formulas of what they're trading down to that much detail. Sure you need to know about what you're trading, but I don't see how knowing formulas of some miniscule detail is going to help my decisions, but you're much more experienced than me and you're obvioulsy right, so mabye I'm a fool. I'm not looking for a shortcut, just a different perspective to those in the books, because I highly doubt if those that wrote the books are actual traders. I'll keep reading and pushing.

Thanks for the book recommendations and answers to the questions, much appreciated
No problem... I am glad to be of help and don't hesitate to ask more questions (while reading those books).

As to your points, yes, I do know the formulae that describe all the things I trade. This, obviously, limits me to a relatively small set of products/securities, but I know them relatviely well (again, I am still constantly learning new things). And no, it doesn't help me with my trading, it's absolutely essential to it. Obviously, if you intend to be a sort of "high-freq" trader, that's a completely different line of business and your knowledge may have to be different in this case. I am not too familiar with it, so you may want to ask others here.

As to the car parallel, I don't think it's appropriately framed. If you're a trader, you're not like a guy who's just driving the car to get from point A to point B. You're a professional and more like a race car driver. Do you think the top F1 drivers don't know and understand every little bit of their cars?

My point is that, in my opinion, to get to a point where you can be a good "macro punter" and make decisions about how mkts react to this or that development you always need to start from the bottom and work your way upwards. To be sure, this is just my opinion, but it's one that's near and dear to my heart. Maybe there are other people who would have a different view, so that you can form a more complete view.
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Old Aug 15, 2011, 10:08am   #11
 
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Re: Can someone explain?

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Martinghoul - What a nice and giving chap.
Still hasn't made the thread he promised though has he
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Old Aug 15, 2011, 10:41am   #12
 
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Re: Can someone explain?

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Still hasn't made the thread he promised though has he
What a f*ckhead he is (MG, I mean, to be sure)!

I'll do it, honest.
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Old Aug 15, 2011, 10:43am   #13
 
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Re: Can someone explain?

I'm coming for you if you don't innit bled.
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Looks like Scose be trollin' 'aaaaard tho... as far as some are concerned!
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Old Aug 15, 2011, 11:27am   #14
 
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Re: Can someone explain?

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I'm coming for you if you don't innit bled.
I iz trembling in my wee little boots...
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