When learning was history

​Lounging about on Saturday afternoon, my mind seems less honed to thinking, and more adept at wondering away the hours, a boat seemingly poised to eventually land at the shores of the asleep. However, rather than surrender to sleep, I thought it best to try my hand at writing this blogpost.

As ever, the main challenge is not so much writing it, but working out the subject! Rather than thinking up a subject myself, I tweeted suggestions for ideas. One of my followers @grodaeu suggested writing about a historical figure (although, I think the suggestion was somewhat tongue in cheek). His reply nevertheless (together with the book I'm reading) gave me an idea, why not write about history in an abstract sense. Why do we write so much about history?

In a sense, understanding our past might well shed light on our future. Whilst, technology might change from age to age, there is often a common thread which binds us with our ancestors. I'm currently reading a book on the French Revolution and Robespierre. I can hardly claim to be an expert on this period of history, or indeed any. However, what struck me was that many of the motivations which drove the revolution, would not be out of place today.

From the point of view of markets, we could argue that motivations for investors has not changed over the years. Investors actively seek to make a profitable return. How this is achieved is obviously a different question!

The notion of high frequency trading has only come about through the widespread adoption of electronic trading for example. However, one thing that hasn't changed is the need to have a well thought out hypothesis behind a trade. We also use our own histories (or perhaps better put our experience) to view the market. Statisticians use historical data to generate more quantitative descriptions of the past.

Indeed why investors should look to history is a subject which I wrote about extensively in my book Trading Thalesians - What the ancient world can teach us about trading today. Your experiences will impact how you see future events. A trader who experienced the Lehman crisis is likely to behave in a different way when stocks fall, compared to a trader who hasn't.

History might not be able to tell us precisely what the future holds (and perhaps lead us to mistakenly believe that the future will be identical to the past), but it can help us to understand in more abstract way to approach problems.

Like my writing? Have a look at my book Trading Thalesians - What the ancient world can teach us about trading today is on Palgrave Macmillan. You can order the book on Amazon. Drop me a message if you're interested in me writing something for you or creating a systematic trading strategy for you! Please also come to our regular finance talks in London, New York, Budapest, Prague, Frankfurt, Zurich & San Francisco - join our Meetup.com group for more details here (Thalesians calendar below)

14 Apr - New York - Lawrence Glosten - Limit Order Book Tail Expectations (Thalesians/IAQF)
20 Apr - London - Jacob Bartram - Can option trading strategies enhance CTA/trend following
12 May - New York - Luis Seco - Are Negative Hedge Fund Fees on the Horizon?
13 May - Budapest - Saeed Amen/Paul Bilokon - Thalesians workshop on algo trading at Global Derivatives
20 May - London - Martin Bridson - Knots and what not