Friday, 26 September 2014

If you start(up) me up

11:25 Posted by The Thalesians (@thalesians) No comments

Music began with the heartbeat. Every one of us has rhythm, every moment of our lives, that heart beating, whilst time cascades on, a visitor whose sojourn among us is briefer than any of us would like. And so, as our heart beats on, through the music, we hear our heart whispering thoughts and dreams of change.

Our mind seeks to ignore. Our mind seeks to keep our life on track, along some journey it believes is pre-defined. Keep going, keep going and that goal will be reached, it mutters. Yet, what if that goal is illusory, simply some manifestation of what others desire? It is so easy to fall in love with time, simply watching it drift away. So obsessed we become, that the notion of change falls away out of view, some strange distraction from watching the seconds hand of our life's clock, tick, tick, tick away. But sometimes life needs change, it needs risk, it needs the cajoling comfort of certainties to dissolve away.

Change as a concept can feel hostile. It is the force, which seeks to break apart. The force which alters the course of our present journey. I have always had an odd relationship with change. When it comes, I adapt and seek to make it work. Yet before it arrives, it is sometimes fear which envelopes me and I seek to avoid it. The most difficult part of change I find is to embrace it, when my journey has been relatively comfortable. Why alter the path, when everything seems to be going well?

I faced this quandary just over a year ago. My life seemed comfortable. I had a job which I enjoyed, working at a large investment bank in the currency markets. I wrote for clients deciphering the quantitative side of market. I also had exposure to the bank's P&L developing systematic trading models traded by the desk, a crucial link to understanding markets. The process of learning in financial markets is so much clearer, when you feel some feedback of P&L. You cannot backtest pain, you can only feel it. I still loved (and do love) markets, as I am sure do many of you reading this. I felt and still feel that I am too young to throw away the thrill of the markets. However, I felt that after a decade in banking, I could apply my knowledge in a more independent capacity. That required that crazy little thing called "change", that concept which I had failed to grapple with before.

I had co-founded the Thalesians several years before, with several friends, primarily to do finance seminars alongside my full time job in banking. In essence, it was much more of an educational venture than a company. However, could I develop it into a fully-fledged start-up, specialising in research and consulting in systematic trading, if I went full time? Usually, I would shy away from change, unless it greeted me first. This would be one of rare occasions, when I would seek out change from its place resting in the future.

A year ago, I did it. I resigned. The first time I had willingly left a job. My sojourn at Lehman Brothers has ended rather more abruptly after the bankruptcy. Once I started working full time at the Thalesians, suddenly, I had to decide what to do, it was no longer a question of . I researched. I sold. I wrote (a book).

In this past year, I have realised that “change” can actually be good, although the journey can be an arduous affair. The experience also highlighted what I was successful and somewhat less successful at in my previous jobs. Sometimes, the environment of the trading floor can be intoxicating. It is the ideal environment to absorb markets. However, such absorption can be too successful in a somewhat blinding way. After a year, though I feel that the fruits of my work have slowly begun to show, most notably through a partnership between the Thalesians and RavenPack, a news data vendor.

Furthermore, the past year has made me realise that being able to “change” as a concept is central to financial markets. The most difficult aspect of trading is not so much having a view. Rather, it is having the ability to see that the view is now wrong and needs change. There is a subtle line between being right and being stubborn. It is when these two concepts are able to balance one another that a trader becomes successful. This applies both to systematic and discretionary traders, who become too wedded to an approach of trading the market or to a particular position. Being the doom-sayer forever in markets, might well bring fame, yet it is unlikely to bring profitable trades in the long run (I admit that phrase is the most loaded of terms in the financial lexicon).  Moreover, it is perhaps one of the most difficult decisions to make in markets deciding when the time is right to abandon a strategy.

Change can be good. Fear can be good. Yet, always siding with fear against change, is a mistake. I’m glad for once, I gave change a chance. Change doesn’t mean having to do a start-up, although for me it has. It simply means an ability to change the unknown to the known. I leave with you a few words from the Rolling Stones, who seemingly have a knack of enveloping a somewhat complex sentiment in relatively simple lyrics. Somewhat paraphrasing them, if you start and you’ll never stop, but first you must start.

If you start me up
If you start me up I'll never stop
If you start me up
If you start me up I'll never stop
I've been running hot

My book Trading Thalesians - What the ancient world can teach us about trading today is out in late October on Palgrave Macmillan, also has some colour on this topic (mixed in with a bit of ancient history). You can pre-order the book on Amazon.


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