How to become a successful investor/trader?
Investing is an art, identifying what not to do, is often as paramount as what to do. Great investment ideas involve a lot of preparation, hard work, diligence as well as patience.
Reading primary sources and annual reports, learning from others is important.
Build a watchlist of companies and wait for the market to generate a price, which involves a lot of reading and patience. It has long been known among investors around the world that systematic and quant based strategies have become the most successful way for international investors to extract returns from the market. Great investments come from great businesses. The longer your holding period, the more critical it is to hold quality companies. Trading can be an important part of your life, once you get to know how it’s done in a proper manner.
The below-mentioned information about Jim Simons will help you learn how you can trade better and faster.
JIM SIMONS
James Harris Simons is an American mathematician, the greatest modern day money maker, the world of finance has seen. He’s a trader and an investor, the most secretive about all his next steps, the Wall Street has ever seen.
How did he manage to get a 66% return?
His returns are outrageous, i.e., 66% a year on average since 1988. In his funds, he decided to go all in for a certain type of trading, which is the kind of approach that everyone is embracing today “quantitative” using a rule based system as opposed to intuition and judgement. He did a lot of technical analysis in the initial stage. In the late 80s, he said that he and his team will build mathematical models to make predictions of where the market is going to go. But it didn’t work, partly because the computer power wasn’t good enough at that time. Since they weren’t doing a great job, he shifted to a more traditional type of investing. Obviously, he made some money but lost some too and couldn’t deal with it. So, then he came back to building models and yes, this time computers got a little more powerful. He went back and forth for years and finally, in the late 80s — early 90s, settled on this approach of short term trading (average holding period of a day or two). He broke the day up into bands of 5–20 minutes and went on.
Machine Learning
He was the first to apply machine learning which has progressed during the recent 5–10 years. He was able to get these returns even before this technology existed. They built a model that taught itself. The model used to do things on it’s own, which sometimes led to the situation of confusion and panic.
Instance: In 2000,when the NASDAQ market collapsed, there were several days they suffered losses, without them knowing the reason.They had a really good system of track records. So, as mentioned earlier, the model had taught itself to buy more NASDAQ stocks. This was the reason for them suffering losses.
Simons and his colleagues avoid predicting pure stock moves, what they do is, they try to anticipate how stocks move, relative to other stocks, factor models or to an industry.
CONCLUSION
The aforementioned paragraphs will incite you about how Artificial Intelligence (AI) is important in trading and can give high returns. In today’s contemporary world, where everything is getting digitalised, it is crucial to take trading to that platform too. Now, with advanced technology, people have started relying more on machines, instead of manual work, which has led to success.
Therefore, the purpose of artificial intelligence is to re-engineer the human mind and to make your life easier!
