Friday, 7 November 2014

Learning Rhapsody

10:59 Posted by The Thalesians (@thalesians) No comments

I see a little silhouetto of a man
Scaramouch, scaramouch will you do the fandango
Thunderbolt and lightning - very very frightening me
Gallileo, Gallileo,
Gallileo, Gallileo,
Gallileo Figaro – magnifico

Song lyrics, they always seem faintly odd, when written down on a page. In a sense, it’s akin to watching a lion in a zoo, wondering around his cage, aimlessly thinking of better days in the wild. Indeed, take a look at the lyrics above. Recognising their origin is far easier with a melody, which is after all, the way we usually interpret lyrics. The melody itself acts as a memory aid for the lyrics themselves. Melody somehow seems simpler to remember, forming a base on which to build the words. Whilst I love music, I am incapable of producing it. I managed to screech my way to playing the violin as a child, but I suspect for anyone listening, the sound I produced in this manner, was perhaps more noise than music. Yet, despite being a repeatedly failed musician, music is still one of things that I enjoy.

For me at least, the lesson of music, is that music is an interaction of so many things. Clearly, there’s the melody, the rhythm, the lyrics. There’s the infectiousness of live music, singing along to your favourite band or singer (such as Souad Massi, pictured above), in a crowd of others doing the same,

In finance, we don’t really sing along to price action in the same way. However, like music, markets are an interaction of many factors. Is there a secret to trading and a way to understand the markets? Sorry, to dampen your joy, but there is unfortunately no secret sauce to trading!

Perhaps the one “secret”, is not even a market based trading strategy. It is simply that you learn from others more than you learn from yourself or a book (although, I would hope my book is somewhat informative). Whilst hard work and reading are of course important to understand markets, they cannot replace real life communication with others. I have been particularly lucky in my career to learn from many market practitioners such as traders in banks. Had I not had this luck, I suspect my knowledge of markets would be far narrower.

Now working in the Thalesians, I'm now away from a massive trading desk in a bank. I no longer have continual interaction with traders. Hence, I've found it even more important to meet market practitioners and hear their thoughts in person. One result has been that I have started to attend and also speak at more financial market conferences. Whilst I do enjoy presenting my research, chatting to market practitioners at events has been incredibly useful.

Indeed, there's always something I should have added to a presentation, which someone in the audience has spotted. At the same time, I would hope that in every presentation I make, there's at least one very usable theme for the audience to take away. In the past, I've found that hearing just a single point has given me enough ideas to go away and build or improve a trading strategy. It even be one sentence, which someone says, which is sufficient to spark an idea.

However, sometimes perhaps a single talk isn't quite enough to articulate a subject. I'm also going to start doing workshops, to provide a bit more of an interactive way to present my research work. The first Thalesians led workshop will be held at the new AlphaScope conference in Geneva in February 2015. I shall be leading the workshop alongside Paul Bilokon, Director in MET (Market Electronic Trading) at DB and my fellow founder of the Thalesians. The idea will be to cover a large amount of my research work on systematic trading, in cash and vol markets, in particular in the subject of Big Data. Paul, will be covering his area of expertise which is electronic trading. I will also be attending the rest of the conference, to hear ideas from the world of systematic trading from other practitioners. So watch this space, if you're interested in systematic trading…

In the meantime, I'll stop reading lyrics and start listening to them.

For further details of the AlphaScope conference can be found here. To learn more about the Thalesians workshop at AlphaScope click here.

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


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