$9: Avoid acting too rational or too stupid. Always trade in the zone between rational and stupid.

If you act rational, you also act predictable. If your actions can be predicted, then other parties, who have way more money than you, can predict your behavior and profit from it. So you will lose all you have.  If you are acting stupid, of course you are going to lose everything you have. So only trades that are in the zone between rational and stupid are good trades.

Command $9 is: avoid acting too rational or too stupid and always trade in the zone between rational and stupid.

The first method of getting into this zone between rational and stupid is to use as little variables as possible in your Bayesian models, as per command $10. 

The second method is using a trading strategy where you don’t know whether it is good or bad if the market goes up or down. When we use our trading strategy to expose ourselves as long as possible to risk, we make more money short term when the market goes up, but at the same time there are less trading opportunities. While it costs us money short term if the market goes down, much more long term trading opportunities arise. So it is always a mixed feeling when the market goes up or down for us. Due to our trading strategy we prefer the market to go sideways. But being conflicted about whether it is a good or a bad thing if the market goes up or down, is a clear sign of trading in the zone between too rational and too stupid.

The third method is trading the expectation of the expectation ad infinitium as per command $8.


Posted

in

by

Tags: