Archive

Posts Tagged ‘risk management’

The Myth Of Limited Regulation And Limited Rewards

December 17th, 2009
creativedc@Flickr

creativedc@Flickr

Looking over some of the new financial regulation proposals and listening to politicians–which I never advise doing–there’s a new vibe about money and greed in the Beltway.

Gone are the trust in markets and the notion that people can self-regulate. Now, our officials are saying our trust free enterprise has been misplaced and has been squandered into greedy financiers who pushed hard for quick bucks, at the risk of long-term growth. For proof, all you have to do is look at the economic collapse, they say.

The new theory is that people should limit their reward-seeking. Turn their attention to long-term growth. Anything else is just greed.

The question that remains is: will this new outlook be any more successful than its ideological predecessor?

Read more…

Automated Trading, Investing, Money, Online Investing AI, Success, US Economy , , , , , , ,

Automated Trading and Risk Management

June 9th, 2009

To make money in they markets, do you have to accurately predict which way the market is going to go?

Most people would answer yes, but in fact the answer is no. You do not need to consistently predict which way it goes to make money.

How is this possible? It’s possible because the factors that lead to financial success through trading are well known and largely ignored. These factors are:

  • A system with written rules
  • Risk management
  • Proper position sizing

Since Automated Trading is done through rules, the first requirement is met. What about risk management?

Read more…

Automated Trading, Investing, Online Investing AI , , , , ,

Why Most Trading Advice is Useless

June 1st, 2009

As I mentioned in a previous post, finding good financial advice is a big challenge. And, it’s probably just as hard to find good trading advice. Most people trade based on tips passed on from their friends or that they find on the internet. This is probably the worst kind of trading advice you can find.

But even better trading advice, such as analysis of technical indicators is only marginally useful. This is because trading advice can only be used effectively under the right conditions. It takes more skills than the ability to read technical indicators to become a successful trader.

financial-goals

Imagine a finely tuned Porsche. It’s all tuned up, and running well. The tires are set to the right air pressure, there is gas in the tank, and the brakes lines have been bled. It’s even washed and shining in the morning sunlight. What happens if you take someone who has never driven a car and put them behind the wheel?

Read more…

Internet, Investing, Money, Success , , , , , , ,

Exponential Growth Versus Existential Risks

January 6th, 2009

Amish speedway

There’s a business cliche that managers are trained to say, usually right before they cut your salary or move your unit into a basement cubicle farm, they say: “Embrace change.”

In our recent election we talked a lot about change and the resulting change will be overwhelmingly positive. Change is coming. Change we can believe in. America is changing. Ch-Ch-Changes.

There is no doubt that we–as in, humanity, in general–are going to face major changes. On George Dvorsky’s Sentient Development blog, you can see some of the answers to a question Edge.org asked: “What game-changing scientific ideas and developments do you expect to live to see?”

The answers, as Mr. Dvorsky points out in his blog, are overwhelmingly in tune with Singularity thinking and are, for the most part, positive. But, for any of you out there who found that “embracing change” meant being pushed to the curb, or swept under the rug, or let out to pasture, you might be skeptical.

And, it’s true, exponential growth and exotic change can bring risks. We talked about this before. For instance, what if someone uses home brew genetic change to create a powerful pathogen. What if the government uses quantum computing to spy on us? Will nanoparticles turn into some type of grey goo?

The question then is not how you must embrace change, but how we can prepare to minimize risks and overcome bad change.

There are people who are way ahead of that curve. Consider Lifeboat.com. You can read their mission statement here. Essentially, Lifeboat recognized that change is, indeed, coming and that some of that change might not necessarily be good. It’s forming a group to take preemptive actions to minimize the risks of bad change. They’re looking into methods to combat viruses and investigate the creation of space colonies, among other threats.

I had this stray thought while writing this… In previous changes between epochs, only islands of people resisted change. The Amish are a good example, but for the most part, people changed or died out. But this change may be different. The Singularity offers considerable change, but also allows people more power through intense customization.

In fact, this technological singularity may be so powerful that humans can pick and choose the types of change they want.

I’ll consider this is later posts.

Accelerating Technology, Dreams Come True, Online Investing AI , , , ,