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ZeroHedge: Trading is Behavioral, Not Predictive

ZeroHedge: Trading is Behavioral, Not Predictive

"As A Trader It's Not Your Job To Be Right, It Is To Figure Out What Others Will Do"

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VBL
Mar 25, 2024
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ZeroHedge: Trading is Behavioral, Not Predictive
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*Includes an editorial continuation comment at bottom

"As A Trader It's Not Your Job To Be Right, It Is To Figure Out What Others Will Do"

By Eric Peters, CIO of One River Asset Management

“Why do people feel that to be a good leader, they must absolutely believe in one direction over another, one path over another, one person over another?” asked the investor, an allocator.

“Why do most people feel they have to live in a world of absolutes?” We were discussing the illusion of certainty.

“We live in a world filled with questions. And the best traders I’ve known have never been sure of anything.”

The blessing and curse of this business is that it forces us to come to terms with how little we know.

It is at once terribly humbling and awe inspiring, in that to maintain your balance you must continually seek to define a wide range of possible outcomes, possibilities.

Which is an exciting journey, requiring imagination, and a recognition that world history is the story of chance, surprise.

“The most successful traders speak in probabilities of one thing over another. Not one dares pound the table and state something with absolute certainty.”

I have friends who can change their minds twice in the same sentence. They’re the survivors. In their wake are those who needed to be right.

“Something in our nature, or perhaps society, leads us to believe that to have gravitas we need to make grand pronouncements, appear definitive. Such statements are almost always wrong.”

Yet we continue to listen, in a hopeless pursuit of certainty.

“The best leaders amongst us seem to understand that their gift is not in pointing the way, it’s in taking input, maintaining flexibility, openness, adjusting enroute,” he said.

“And as a trader, your job is to figure out what others will do because of their political and financial orientation, in a world that is unknowable, forever changing, and then make money with that.”

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