Different jobs require different skills. In finance, salespeople need skills that differ from those of research analysts or traders. Yet, if you look at the job qualifications employers look for, there seems to be a one-size-fits-all approach. All finance and investment jobs apparently require a high level of cognitive skills (i.e. the ability to think ‘rationally’) with a dash of positive behavioural traits.
(Apologies if it was you who pointed to this game earlier, It‘s a sure sign of having read too much finance-related stuff: I can no longer remember where I got my references to interesting material).
Great post as always, but I am a tad wary of trading too far ahead as it can create a theses with far too many variables, and with that many failure points. Empirically I have found, thinking 3 steps ahead and trading 1.8-2.2 steps ahead (and no more) creates the best risk-reward ratio, with each confirmation step setting the ground for further trades down the road.
Incidentally the paper also seems to echo similar thoughts - "Effectively no one in this contest would need to think beyond two steps of reasoning, so even if players can, they are better off not doing so (i.e. avoiding the curse of knowledge)"
Saying there is "no relationship whatsoever between... trading performance.... and... cognitive skills" and then concluding that "trading success correlates with strategic thinking" is a blatant contradiction. Claiming on the one hand that IQ doesn't matter, and then turning around to say strategic thinking capacity is an asset, makes no sense. An individual with outlier-level ability to engage in strategic thinking has a significantly above average intelligence by definition, at minimum in that one area if not generally, which also fits the observation that there are many different types of intelligence. Either way, it's kind of silly to imply that being smart has no advantage and to then extol an edge that, on balance, is far more likely to show up in smart people. Cognitive egalitarianism in trading is akin to arguing that height doesn't matter in basketball. Being six-foot-eight doesn't mean you're an NBA candidate, but it sure as heck improves the odds.
Thanks, Joachim. This made me think of Figgie, a game invented by Jane Street. See https://figgie.com/how-to-play
(Apologies if it was you who pointed to this game earlier, It‘s a sure sign of having read too much finance-related stuff: I can no longer remember where I got my references to interesting material).
Great post as always, but I am a tad wary of trading too far ahead as it can create a theses with far too many variables, and with that many failure points. Empirically I have found, thinking 3 steps ahead and trading 1.8-2.2 steps ahead (and no more) creates the best risk-reward ratio, with each confirmation step setting the ground for further trades down the road.
Incidentally the paper also seems to echo similar thoughts - "Effectively no one in this contest would need to think beyond two steps of reasoning, so even if players can, they are better off not doing so (i.e. avoiding the curse of knowledge)"
Saying there is "no relationship whatsoever between... trading performance.... and... cognitive skills" and then concluding that "trading success correlates with strategic thinking" is a blatant contradiction. Claiming on the one hand that IQ doesn't matter, and then turning around to say strategic thinking capacity is an asset, makes no sense. An individual with outlier-level ability to engage in strategic thinking has a significantly above average intelligence by definition, at minimum in that one area if not generally, which also fits the observation that there are many different types of intelligence. Either way, it's kind of silly to imply that being smart has no advantage and to then extol an edge that, on balance, is far more likely to show up in smart people. Cognitive egalitarianism in trading is akin to arguing that height doesn't matter in basketball. Being six-foot-eight doesn't mean you're an NBA candidate, but it sure as heck improves the odds.