Doing the same things, the same ways, has predictable results. Sometimes it is important to do things differently.
Here is a photo of me at the National Society of Black Engineers' Professional Development Conference, where I had the opportunity to present and participate in several panel discussions.
I'm neither black, nor an engineer, and they aren't traders; so why would they ask me to present… and why would I say yes?
Value is often added at the edges. Likewise, good things often happen when you travel outside your comfort or habit zone.
I gained a lot from the experience. For example, I had a discussion with the nuclear physicist who talked about how they use computer simulations to model the effects of a nuclear explosion. That gave me great ideas about how to measure the effect of a particular trading system or algorithm on a market.
Luck does favor the prepared. That conversation could just as easily have been me simply saying 'hello,' shaking hands, and moving on to the next person. To some extent, the ability to take advantage of opportunities comes from the intent to find them.
Is Luck Something That You Can Maximize, Or Would You Consider It Random?
It's possible that luck is both random and something you can maximize.
Here is an example. Many people consider the stock market to be random. Nonetheless, there
are groups of people who consistently beat the market and trade
profitably. How is that possible?
To explain, let's examine the
decision to purchase Apple Computer stock. Regardless of whether that
decision was based on gut instinct, fundamental analysis,
or a technical chart pattern … whether price moves up or down the
moment after that purchase is for the most part random.
However, if you
make 10,000 trades over time, then your ability to make and keep money is about how you manage risk and opportunity. At that point, your
system is not necessarily random. Consequently, it is something that you can
improve.
Transform Results By Getting Un-Stuck.
Improvement means getting better and different results. And, as you already know, it doesn't make sense to continue to do the same thing, yet to expect different results. So, a key skill is learning to recognize when things are "stuck" in rut.
The trouble with many "ruts" is that you don't know you're in one, while you're in one. Consequently, it often takes a different perspective to become aware of new possibilities, opportunities, or best next steps.
Implications.
The interesting thing that this implies is that those opportunities were always there … they just weren't there for you in your current state of awareness.
Similarly, recognize that many of the processes that we rely-on limit our "luck" or opportunities precisely because they limit our choices. When this is done consciously it can be helpful. However, when it's an unconscious act, it can be dangerous.
In general, you can categorize many tools as either being multipliers or diminishers. Neither one is good or bad in and of itself. The trick is to recognize that you have a choice, and that not choosing is still a choice.
Frank Partnoy ex-Wall Street derivative trader and self-confessed procrastinator, reveals the science behind our decision-making disasters and successes, and argues that decisions of all kinds, whether 'snap' or long-term, benefit from being made at the last possible moment.
The art of knowing how long you can afford to delay before committing is at the heart of many a great decision.
Energy flows where
focus goes … and questions are a great way to direct focus.
Planning is one
thing, “real life” is another.So, how do
you give stakeholders a clear picture of what’s happening, the relevant business
terrain, and the best path for them to navigate given their daily challenges
and objectives?
15Five is a
management tool that can help with those issues.It consists of a few simple questions that
each of your direct reports has an opportunity to fill out each week.
The name, “15Five”, comes
from the concept that it should take someone 15 minutes to think about and fill
out their answers to these questions; while it should take you about five
minutes (per person) to review those answers and give feedback. These responses
can be public or private, as you see fit.
The good news is that
15Five is simple and usable.You’ve
probably heard the phrase “Garbage in, garbage out.”More importantly, though, “Nothing in,
nothing out.”If people don’t use a
tool, it is tough to benefit from it, regardless of how “good” it is.
So, How Did Our Team Respond to This New
Tool?
Predictably, after a
week or two of using it, several members of the team approached me to ask how
long they'd have to do this. However, just a few weeks later, some of those
same people shared how much they're enjoying the process.
Ultimately, they
recognize that it's helping them raise their focus from the immediate to a
chunk higher. They also recognize that it's a chance to have a one-on-one
conversation with their boss about what they want to talk about … without
taking time away from their work or interrupting their focus time.
The 15Five process
also gives respondents a chance to think about and prepare worthy answers
(rather than to feel tongue-tied or regretful that they failed to mention
something when they had the chance).The
result is something they are likely to be proud of – and something to build
upon.
For the manager, it
is a chance to give individual attention to each respondent. It also provides
an easy way to comment (or ask for additional information) about specific
ideas. Just click a button and write your note. The other party gets an email
that they can respond to directly, or they can see it in the conversation
thread for that week’s report.
Where Is Value Added?
15Five helps people
think about the business (rather than simply working through their daily grind).
It helps them recognize why what they are doing matters, and how what they are
doing helps move things in the right direction. As a result, using the tool builds confidence and momentum. Ultimately,
15Five helps people steer themselves to take appropriate actions and make
better decisions.
As a trader, I
understand that price is the primary indicator of the market. However, to get a
better understanding, many traders use secondary indicators (like sentiment,
momentum, rate of change, or even the response to good or bad news). Beyond a direct communication tool, these are
the types of insights that the 15Five feedback mechanism makes possible.
For example, don't
just look at one week's set of responses in a vacuum. Instead, notice the tone
and the amount of care that someone uses when they send you their information.
Coachable Moments.
Here is another
example.If someone typically writes
three or four sentences to respond to a particular question, but this week they
only responded with three words, that might be an important thing to pay
attention to and note.
Sometimes a
non-answer is important. Last week one of the questions was “What
challenges are you facing? How are you going to fix it, and where do you need
help?”Someone answered that
they were not facing any new challenges that week. Great, right?Or, is that really an opportunity for
coaching?
In that situation, my
response was: “There are always challenges. Sometimes they are easy to spot
because they clearly present themselves as problems.Other times they can show up as opportunities
or choices … Sometimes, however, they are harder to identify because they could
stem from something as subtle as conflicting desires. Remember that the goal of the question to look above the
day-to-day activities to focus on your higher level intent and purpose.”
The point is that 15Five
gives you great opportunities to add value – and the time to notice coachable
moments. Here are some examples:
Is
somebody telling you what they “don't
want” rather than what they
intend to do?
Are
they so focused on the obstacles and challenge that they forget to recognize the opportunity or potential
competitive advantage?
Are
there opportunities to include other
people to create a unique ability team rather than a solo effort?
Are
there things that you can express
gratitude about or help the other person to feel proud about?
Are
they focused on the forest for the trees? If so, what is a quick compass check to ensure that we are moving in the
right direction?
Are
they focused on the right part of the problem; and have they right-sized it into chunks small enough to work on
effectively?
What does this
accomplishment make possible? And
how can we continue to build confidence and momentum?
From my perspective, the
thought process and preparation may be more important than the answers
themselves.
So, Is It Worth Paying For?
15Five helps avoid
communication problems by creating and preserving appropriate context for
decision-making.In addition, it is a
tool you can use to effectively direct focus and “steer” the company.
It is also worth
noting that 15Five feels like a separate tool. Because of that, I suspect people respond differently to it than they would
to a simple email or a discussion thread on the corporation’s private intranet.
Ultimately, this
process is something that people like better and gain more value from as they
do it more and do it better.
Energy flows where
focus goes … and questions are a great way to direct focus.
Planning is one
thing, “real life” is another.So, how do
you give stakeholders a clear picture of what’s happening, the relevant business
terrain, and the best path for them to navigate given their daily challenges
and objectives?
15Five is a
management tool that can help with those issues.It consists of a few simple questions that
each of your direct reports has an opportunity to fill out each week.
The name, “15Five”, comes
from the concept that it should take someone 15 minutes to think about and fill
out their answers to these questions; while it should take you about five
minutes (per person) to review those answers and give feedback. These responses
can be public or private, as you see fit.
The good news is that
15Five is simple and usable.You’ve
probably heard the phrase “Garbage in, garbage out.”More importantly, though, “Nothing in,
nothing out.”If people don’t use a
tool, it is tough to benefit from it, regardless of how “good” it is.
So, How Did Our Team Respond to This New
Tool?
Predictably, after a
week or two of using it, several members of the team approached me to ask how
long they'd have to do this. However, just a few weeks later, some of those
same people shared how much they're enjoying the process.
Ultimately, they
recognize that it's helping them raise their focus from the immediate to a
chunk higher. They also recognize that it's a chance to have a one-on-one
conversation with their boss about what they want to talk about … without
taking time away from their work or interrupting their focus time.
The 15Five process
also gives respondents a chance to think about and prepare worthy answers
(rather than to feel tongue-tied or regretful that they failed to mention
something when they had the chance).The
result is something they are likely to be proud of – and something to build
upon.
For the manager, it
is a chance to give individual attention to each respondent. It also provides
an easy way to comment (or ask for additional information) about specific
ideas. Just click a button and write your note. The other party gets an email
that they can respond to directly, or they can see it in the conversation
thread for that week’s report.
Where Is Value Added?
15Five helps people
think about the business (rather than simply working through their daily grind).
It helps them recognize why what they are doing matters, and how what they are
doing helps move things in the right direction. As a result, using the tool builds confidence and momentum. Ultimately,
15Five helps people steer themselves to take appropriate actions and make
better decisions.
As a trader, I
understand that price is the primary indicator of the market. However, to get a
better understanding, many traders use secondary indicators (like sentiment,
momentum, rate of change, or even the response to good or bad news). Beyond a direct communication tool, these are
the types of insights that the 15Five feedback mechanism makes possible.
For example, don't
just look at one week's set of responses in a vacuum. Instead, notice the tone
and the amount of care that someone uses when they send you their information.
Here is another
example.If someone typically writes
three or four sentences to respond to a particular question, but this week they
only responded with three words, that might be an important thing to pay
attention to and note.
Sometimes a
non-answer is important. Last week one of the questions was “What
challenges are you facing? How are you going to fix it, and where do you need
help?”Someone answered that
they were not facing any new challenges that week. Great, right?Or, is that really an opportunity for
coaching?
In that situation, my
response was: “There are always challenges. Sometimes they are easy to spot
because they clearly present themselves as problems.Other times they can show up as opportunities
or choices … Sometimes, however, they are harder to identify because they could
stem from something as subtle as conflicting desires. Remember that the goal of the question to look above the
day-to-day activities to focus on your higher level intent and purpose.”
The point is that 15Five
gives you great opportunities to add value – and the time to notice coachable
moments. Here are some examples:
Is
somebody telling you what they “don't
want” rather than what they
intend to do?
Are
they so focused on the obstacles and challenge that they forget to recognize the opportunity or potential
competitive advantage?
Are
there opportunities to include other
people to create a unique ability team rather than a solo effort?
Are
there things that you can express
gratitude about or help the other person to feel proud about?
Are
they focused on the forest for the trees? If so, what is a quick compass check to ensure that we are moving in the
right direction?
Are
they focused on the right part of the problem; and have they right-sized it into chunks small enough to work on
effectively?
What does this
accomplishment make possible? And
how can we continue to build confidence and momentum?
From my perspective, the
thought process and preparation may be more important than the answers
themselves.
So, Is It Worth Paying For?
15Five helps avoid
communication problems by creating and preserving appropriate context for
decision-making.In addition, it is a
tool you can use to effectively direct focus and “steer” the company.
It is also worth
noting that 15Five feels like a separate tool. Because of that, I suspect people respond differently to it than they would
to a simple email or a discussion thread on the corporation’s private intranet.
Ultimately, this
process is something that people like better and gain more value from as they
do it more and do it better.
Bottom Line: It
clearly adds value. Give it a try.
In addition, he has been talking with great traders and thought leaders about a wide range of topics. I'm honored that he chose to talk with me last week. Here is a link to the Interview.
We talk about the business of systematically finding edges through all sorts of different approaches – not only trend following. I like to think of it as finding more ways to win.
And we talk about a broader range of topics as well. For example, we discuss the "E-gene", and how entrepreneurism is at the core of what we practice.
Other topics include:
how hunches can be dangerous;
turning your hobby into your business;
recognizing patterns;
thinking big;
the "three levels of mastery" – cognitive, emotional, and physical;
how minimum standards can define your life;
how systematic trading can define your minimum standards; and
controlling emotions through automation.
We also discuss the importance of the world outside America, and which area both of us agree is important to keep an eye on.
There is a lot of good stuff in the interview. Hope you enjoy it.
Small distinctions separate wise men from fools. Perhaps one of them has to do with what the wise man deems important.
Socrates' Triple Filter.
In ancient Greece, Socrates was reputed to hold knowledge in high esteem. One day an acquaintance met the great philosopher and said, "Do you know what I just heard about your friend?"
"Hold on a minute," Socrates replied. "Before telling me anything, I'd like you to pass a little test. It's called the Triple Filter Test."
"Triple filter?"
"That's right," Socrates continued. "Before you talk to me about my friend, it might be a good idea to take a moment and filter what you're going to say. That's why I call it the triple filter test.
The first filter is Truth. Have you made absolutely sure that what you are about to tell me is true?"
"No," the man said, "Actually I just heard about it and…"
"All right," said Socrates. "So you don't really know if it's true or not. Now let's try the second filter, the filter of Goodness. Is what you are about to tell me about my friend something good?"
"No, on the contrary…"
"So," Socrates continued, "You want to tell me something bad about him, but you're not certain it's true. You may still pass the test though, because there's one filter left. The third filter is Usefulness. Is what you want to tell me about my friend going to be useful to me?"
"No, not really."
"Well," concluded Socrates, "If what you want to tell me is neither true, nor good, nor even useful … then why tell it to me at all?"
How Does That Apply to Me or Trading?
The concept of Socrates' Triple Filter applies to trading as well.
As a technical trader, rather than looking at fundamental data and scouring the news daily, I focus on developing dynamic and adaptive systems and processes to look at the universe of trading algorithms to identify which are in-phase and likely to perform well in the current market environment.
One of the arguments in favor of technical analysis is that fundamental data, news, and sentiment are already built-in to the chart.
Filter Out What Isn't Good For You.
In contrast, there are too many ways that the media (meaning the techniques, graphics, music, etc.), the people reporting it, and even the news itself, appeals to the fear and greed of human nature.
This is the main reason that I don't watch CNBC during the trading day. Even though I like it on several levels … I don't think it helps me. So I filter it and get the news in other ways.
Likewise, I don't watch TV news anymore either. It seems like story after story is about terrible things. For example during a recent visit with my mother, I listened to her watch the news. There was a constant stream of "oh no," or "oh my," and "that's terrible". You don't even have to watch the news to know what it says.
Focus On What You Want.
Instead, I get the news I need a different way that is more efficient and productive for me. I subscribe to certain things via e-mail, and other things via RSS feeds. Then I supplement those with a series of search services that alert me to items that match the criteria I set. An example would be Google Alerts. Two other nice alert services are from the Financial Times and the New York Times. Recently I've also been using two great iPad apps – one is called Flipboard, the other is called Zite.
Check them out. It will save you a lot of time and effort.
Personally, I care about the source of my news. It helps me identify and account for potential bias. So using subscriptions, feed readers, and alert services help here too.
Another reason I like these tools is that I can use different filters for different purposes.
What's The Purpose Of News For You?
My purpose changes what I'm looking for and the amount of attention I pay to different types of information. Am I reading or watching the news for entertainment, to learn something new, or to find something relevant and actionable?
Getting back to Socrates' three filters and the business of trading, I ask might: is it important, does it affect our edge, or can I use it as a catalyst for innovation?
This is a good one. It hit home for me. Hopefully you'll like it too.
Nail In The Fence:
There once was a little boy who had a bad temper. His Father gave him a bag of nails and told him that every time he lost his temper, he must hammer a nail into the back of the fence.
The first day the boy had driven 37 nails into the fence. Over the next few weeks, as he learned to control his anger, the number of nails hammered daily gradually dwindled down.
He discovered it was easier to hold his temper than to drive those nails into the fence.
Finally the day came when the boy didn't lose his temper at all. He told his father about it; and the father suggested that the boy now pull out one nail for each day that he was able to hold his temper.
The days passed and the young boy was finally able to tell his father that all the nails were gone.
The father took his son by the hand and led him to the fence. He said, "You have done well, my son, but look at the holes in the fence. The fence will never be the same. When you say things in anger, they leave a scar just like this one. You can put a knife in a man and draw it out. It won't matter how many times you say I'm sorry, the wound is still there." A verbal wound is as bad as a physical one.
My Note:
Sometimes I am harsh, and more hurtful than I intend. Anger and fear cause some of it. Sometimes it happens because I want to be funny (even at someone's expense). Other times it happens because I want to help someone — and I choose to be direct — regardless of how they will "feel it" when I deliver the message.
For the most part, I never intend to leave a "hole". This story was a good reminder to be mindful of cause and intent. Hope it helps.
I was showing my son a web video — and in less than a minute he was texting someone.
Let me make that more clear … it was Less-Than-A-Minute! … while he was standing with me … and he did it without hesitation, apology, or sense that shifting his attention to the phone was in any way a bad thing.
I know "get over it". He was probably texting before we spoke, anyway; right?
You're probably seeing similar behavior more often too.
It is scary to realize how easy it is to focus on a phone, iPad or e-mail rather than a person.
Upon reflection, we spend a lot of time alone together.
There is a difference between physical presence and being present.
Focus can be pretty fragile if it isn't a conscious choice.
To demonstrate this, here is a seemingly easy challenge … simply listen to a favorite song.
The challenge is how you can truly do that without losing focus and having other thoughts intrude (for example, without thinking about your to-do list or other songs that you like, or who you're going to meet with later in the day, etc.)? For me, the answer was not that long.
Sometimes it feels like modern life causes attention deficit disorder.
Attention Deficit Can Be Dangerous If You Aren't Aware of It.
Yet, losing focus while trading, in business, or even during a simple conversation – can have serious consequences.
When you are not aware of your focus, I bet it wanders. Mine does; I get distracted easily.
It didn't take long for me to realize that this happened to me while talking to my wife, while listening to a telephone call, even when ordering food at a restaurant. How can I lose focus on the waitress while I was ordering? Apparently, quite easily.
How about you? When you're listening to someone talk to you, are you really listening to them – or are you checking e-mail, texting, browsing a website, watching TV, playing a game, or thinking about what you're going to say?
Be honest with yourself; how often are you fully present? For me, the answer was not nearly enough.
Here is an example. Many people consider the stock market to be random. Nonetheless, there
