The Three Quants In Their 20s Running A Hedge Fund Making $1 Billion Of Trades Daily

Harvard and MIT grads.

2 Likes

As you said Harvard and MIT needs strong mindset to understand lot of concepts and is not easy cake.

Today, someone posted like this in reddit:

I was thinking that this would’ve been a short review of what books I found useful during my journey of 2 years studying Trading and Finance.

The real meat is in scientific analysis. You wouldn’t start a business without proper study and research. Why would you not do the same thing with trading?

People - really, really smart people - have been studying financial markets for over a century now. First you have to take the sucker-punch: the research community doesn’t believe that you can make long-term profits with trading. Efficient Market Hypothesis, in all its avatars, makes sure it drags you back to the ground.

But if EMH was the final word, then we probably won’t see all these Hedge funds and super-secret investment firms, or even some genius individuals, make a killing, while the rest of us get sequestered in the “80% of retail traders lose their money” statistics.

You don’t need HFT. You don’t need advanced AI.

You need good ol’ statistical analysis. Proper, down-to-earth, exhaustive statistical analysis. If you really want to move to that “elite” circle of long-term profitable traders, you need to do something the rest of huddled masses are not doing. They are not pouring countless days, weeks, months, years , over learning every bit of many, many forecasting methods (EMA is a very small, and useless topic in forecasting), multilinear regressions, autoregression (ARMA, ARIMA), volatility clustering (GARCH and its many, many variants), VaR, cointegration, (maybe) fractional differencing and multifractality (and that then splits further into various types of analyses: DFA, DMA, MFDFA, MFDMA, Wavelett DFA etc.).

So wouldn’t be too crazy to suggest that you should approach your new “profession” as first gaining a proper degree in the subject.

High School

  • Evidence Based Technical Analysis by Aaronson: Highly recommend it. Restored my faith in trading. It will teach you to think in terms of the Scientific Method, and trust me, you will need it. You have one sample of whatever deep statistical process governs financial time series. You test your strategy on this one sample , and think you have a profitable strategy? In Science, we have to make billions of samples on atomic scale to at least a few hundred samples in other macroscopic applied Physics fields. And then we test our hypothesis. Finance is where you need to be “clever” and make do with a few morsels of data that trickle down your lap. EBTA is a guiding light for the greater path that lies ahead.

…more than 3000 words

1 Like

Good Essay. Could you post the complete essay or share the link?

Here the link,lot of discussions, look out for digitalfakir comments

1 Like

Lin, who grew up in Singapore

:stuck_out_tongue:

You don’t need all those. F… these success-biased comments :face_with_symbols_over_mouth:

Academics aside, on thing I agree is that EMH (efficient market hypothesis) is both right and wrong. It is true for most people, but there are people who know how to benefit from the inefficiencies of market. They are true also. So, how can a theory be both right and wrong at the same time?

You are reading like me, half way coming to conclusion. The right way =>

If EMH (Efficient Market Hypothesis) was the final word, You don’t need HFT,You don’t need advanced AI.

In short, if EMH is right, there is no fluctuation such as AAPL going down to $215 and coming to $365.
Because market is inefficient, AAPL went down from $138 to $99, by that time WB caught the AAPL.