Sunday, 15 November 2015

A sunny life trading?

14:24 Posted by The Thalesians (@thalesians) No comments

Let me take a guess! You're sitting in America reading this? If you are, I hope you're not too far from a burger joint I'd like to visit one of these days! Well, it's probably a fairly good guess, given the Internet traffic that comes to this website, is mostly from US IP addresses. However, wherever you are sat in the world, you'll see the same article, the same text, the same photos in front of your eyes. True there might be a marginal delay in how quickly, the webpage reaches you because of where it is hosted, but that's about it.

First, there was world of mouth, then the printed word, then the telegraph, then the telephone and now all manner of electronic ways of communicating. News now travels quicker to their destination.
For markets, it opens up the question of where should I trade? Before you had to physically be near to an exchange. That is now irrelevant, you can collocate a server physically at an exchange and login from a different continent.

So from a technology point of view it seems irrelevant where you create a trading operation. You can choose a place that is more in keeping with how you want to live. No longer does it always have to be in London or New York, the traditional financial centres. It can be in warmer climes and indeed cheaper places to run a business, like in the photo above.

However, this ignores the point that trading is still very much a human operation, whether you trade in a more discretionary or systematic way. A quantitative trader is still a person at the end of the way, a person tapping away code into a computer to make it trade. They need to be recruited somehow. Where you are based will impact the pool of talent available to you. Some colleagues can of course work remotely. But even then, do you want every one of your traders to be working remotely? The flow of ideas can be aided by technology, be it through Skype and Twitter, as examples. Yet, this approach cannot fully dispense with human contact. I've worked remotely on client projects and it has been successful, but being able to sit down and have a chat about how a project is to be put together makes the process so much quicker and easier, even when compared to using Skype (and certainly when compared to using a phone or email).

When I've presented my work to a real audience, I get far more interaction than I do sending out work via email. It's obvious why: it's just easier to respond, when the person is sitting next to you. Furthermore, being able to gauge people's expressions as you are presenting, can be invaluable in allowing you to adjust your message (if they seem puzzled, it's your job as a presenter to fix that!)

In a bigger city, the number of random interactions you have can be exponentially more, than in a small city. One thing I consider is that whilst luck is an important in trading, the luck of meeting the "right" people is potentially the most important form. I've been lucky enough to work with very smart folks in banks, and after I started working full time at the Thalesians, I've tried to make an effort to keep going to industry events, whether it is conferences or more informal Meetup groups (including the Thalesians!) to keep in contact with the market. It's been an invaluable way to compliment the more "new" ways I try to stay in the "market's loop" like Twitter or LinkedIn. Ironically as useful as Twitter or LinkedIn have been, it's been as a way to meet people in real life (yes, the traditional way!), who are in markets. Finance Twitter has been a great resource, filled with many smart people!

So yes, technology might make it easier to trade wherever you want in the world. Indeed, a place which might work for one fund, might be totally inappropriate for another. But it hasn't totally dispensed with the need to keep on meeting people in real life. Life would be very boring indeed if our interactions were confined to only 140 characters on a computer screen. Now, I just need to find a place to trade, in the sun and next to a great burger joint... any ideas for where?

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)

25 Nov - London - Panel - Macro Markets Discussion
26 Nov - Zurich - Thomas Schmelzer - Portfolio Optimization, Regression and Conic Programming
14 Dec - London - Matthew Dixon - Machine Learning in Trading (Thalesians Xmas Dinner)

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