Mercenary community member Jeff C. writes:
If you haven’t read it already, may I suggest “Streetlights and Shadows Searching for the Keys to Adaptive Decision Making” by Gary Klein? You probably know, but Klein is the researcher whose work informed Gladwell’s “Blink,” especially Klein’s “Source of Power.”
Thanks Jeff. Ordered the book on your suggestion via Amazon one-click. (We are one of those who happily contribute to Bezos’ fortune.)
The description sounds excellent:
In making decisions, when should we go with our gut and when should we try to analyze every option? When should we use our intuition and when should we rely on logic and statistics? Most of us would probably agree that for important decisions, we should follow certain guidelines–gather as much information as possible, compare the options, pin down the goals before getting started. But in practice we make some of our best decisions by adapting to circumstances rather than blindly following procedures.
In Streetlights and Shadows, Gary Klein debunks the conventional wisdom about how to make decisions. He takes ten commonly accepted claims about decision making and shows that they are better suited for the laboratory than for life. The standard advice works well when everything is clear, but the tough decisions involve shadowy conditions of complexity and ambiguity. Gathering masses of information, for example, works if the information is accurate and complete–but that doesn’t often happen in the real world. (Think about the careful risk calculations that led to the downfall of the Wall Street investment houses.)
Klein offers more realistic ideas about how to make decisions in real-life settings. He provides many examples–ranging from airline pilots and weather forecasters to sports announcers and Captain Jack Aubrey in Patrick O’Brian’s Master and Commander novels–to make his point. All these decision makers saw things that others didn’t. They used their expertise to pick up cues and to discern patterns and trends. We can make better decisions, Klein tells us, if we are prepared for complexity and ambiguity and if we will stop expecting the data to tell us everything.
There is certainly no substitute for wisdom and experience in trading. There are too many instances where nuances and subtlety make a critical difference at the margins.
With that said, trading success is built on a foundation of logical process and strong analytical capability. It isn’t all shooting from the hip and responding to fluid dynamics. Your foundations in the concrete – the math, the process, the protocols – allow the strength to flex and bend intelligently.
Which ties in nicely to our next topic…
Within the Mercenary Live Feed, we continue to get great questions on the fundmentals of our trading process. How do we size positions? How many positions should be taken? How do you approach portfolio balance? When do you pyramid? And so on and so forth…
We think these questions are great — and in fact we are hoping to get lots more of them. That’s why we are bringing back the Mercenary Driver’s Manual as a new, accessibly priced educational product this fall… and will be creating significant incentives for those who contribute to making it great…
Here is the gist of how it will work:
- This fall, the Driver’s Manual will be introduced as a standalone subscription product.
- The goal will be simple: Teach Mercenary community members how we trade.
- The Driver’s Manual will be presented in content modules… a new module each month.
- This module could be a web video, a podcast, a PDF report, or all three…
- The content of the Driver’s Manual will thus build cumulatively over time.
- All topics will be covered…
- Videos, PDFs, excel sheet formulas, podcasts, step-by-step instructions…
- All in a permanent archive for you to access at any time.
But here is the really cool part:
- All Mercenary Live Feed subscribers will have access to the Driver’s Manual for FREE.
- Complimentary access will be built in to the Live Feed (quarterly or annual subscrip).
- Not only that, but we want to enlist the help of members in making the DM great.
- This means taking your questions… discerning what you want to know about the trading process.
- To this end, we will select a “question of the month” from the pool of Live Feed inquiries…
- And give the contributor a credit for three extra months of Live Feed access, free.
Mercenary Trader was founded by traders, for traders, and is owned by traders.
But in a very real sense, there are more than two co-founders that own it. You own it too… as a Mercenary community member, and someone who provides valuable feedback and insight into what you want to see here… the direction you want us to go…
That’s another key reason we are excited about the Mercenary Driver’s Manual.
What you keep telling us is that you want to know, inside and out, what it really takes to succeed as a trader, from whatever level – absolute beginner to seasoned semi-pro to current money manager looking to take assets from $4 million to $100 million… wherever you are, we want to meet you there, and you can help us do that…
We realize that the Live Feed is not for everyone. It takes a certain capital base, and level of operational freedom, to trade the way we trade.
But this is another reason we are excited about the Driver’s Manual… because this product will be for everyone.
No matter your starting capital base – and regardless of whether you are a starving student on a ramen noodle budget or driving a truck and washing dishes to build your trading stake – getting on the knowledge path will prove a critical aspect of moving forward.
That’s why the Driver’s Manual will be available as a standalone subscription at a price even students can afford (two or three months of iPhone service… or a semester’s worth of lattes at Starbucks… at what price education and freedom?).
With the above said… if you aren’t capital constrained, e.g. you are in the markets now and seeking high quality trading ideas… and you are ready to take your trading to the next level… why not give the Live Feed a try?
That way you can send us your excellent trading process questions directly – and potentially get valuable credit for them (in the form of three months free)…
On another note – Vegas Baby! October is finally here (and holy cow 2012 has gone by fast)… which means it is almost time for the 2012 Alternative Asset Summit, to be held at the Wynn October 17th – 19th.
This should be a very cool event. In addition to giving a presentation, we look forward to attending the hedge fund managers’ bootcamp, taking notes on the many other excellent speakers, and rubbing shoulders with accredited investors, fellow hedgies, and Mercenary community members. (Not to mention dragging a few huge pots at the Wynn, Venetian and Aria poker tables…)
If you can make it out, don’t sit on the fence… do it! Come hang out with us – while potentially picking up some valuable knowledge and excellent new contacts in the process. Go here for more summit details.
And finally, as most of you know, we love hearing from you… on any topic at all… and you can write to us via jack@ or mike@, or simply hit ‘reply’ if reading this via email. Thanks for being a Mercenary community member!
To Your Trading Success,
J&Mp.s. Like this article? For more, visit our Knowledge Center!
p.p.s. If you haven't already, check out the Strategic Intelligence Report!
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