Acting in my own best interests! The diverse life of Dave

19Sep/080

At one with mathematics

maths2Until recently, I was of the opinion there were two types of traders, technical or fundamental. However I have discovered there is a third, the mathematical trader. I define a mathematical trader as someone who has no care for fundamental changes, price patterns, technical indicators, or even trends.

A mathematical trader is driven by algorithms, and yet simplicity of approach. I consider grid style trading as a mathematical approach as it has no concern for trend direction, patterns or fundamentals. Some may argue with me about this distinction however I have been trying to apply technical trading for the last 10 years and am yet to discover the comfort levels I have with any other methodology or approach. It feels distinctly different to me.

'Feel' might be a fuzzy word on such an intellectual undertaking but any trading psychology book implores its readers to choose a style that suits them and their personality. I guess I have found it.

Another degree of separation between technical and mathematical is that your methodology doesn't waver during changes in market styles - trading or range bound, quiet or volatile. I am not saying you can always expect a linear equity curve (nothing is without risk), however I am saying that you can expect consistency. To that end, I am confident that this approach will trade it's way out of any draw down with the right risk management.

Note that mathematics plays an equally significant role in money management and position sizing as it does the execution of the trade.

I have reach unparalleled levels of zen with my trading since commencing project rigor.  Combined with my new skills learnt in how to analyse business decisions and risk, I feel like it's not long now... bring on the 3 year plan!

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