Justice "Jack" Litle

Web Site: http://mercenarytrader.com


Global Information Architecture and the Future of Trading

November 3, 2015
Global Information Architecture and the Future of Trading

PDF Version  Whew. Wow. Holy shnikes. I’ve gotten maybe six hours’ sleep, total, in the past 72 hours. This was intentional (if wholly unplanned) — for reasons I will explain… First, let me apologize for the tidal wave of ideas and concepts I am about to deluge you with. I mean, I really went...
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Mercenary Daily: The Four Philosophical Hallmarks of an Excellent Trade

October 26, 2015

PDF Version  It occurred to me yesterday that the philosophical hallmarks of a great trade can be boiled down to four things. What do I mean by “philosophical?”  I mean that these characteristics can be understood in the abstract. They are idea-based… and portable… and can potentially apply to many other areas of life...
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How Experienced Traders Die (Going Out Like Broomcorn’s Uncle)

October 23, 2015

PDF Version  There is a passage from a classical Chinese text, written thousands of years ago, that describes the plight of many experienced traders today. It’s from The Zhuangzi and translates as follows: They are consumed with anxiety over trivial matters but remain arrogantly oblivious to the things truly worth fearing. Their words fly...
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The Real Reason Passive Investors Don’t Sell (Warning, Rant Ahead)

October 22, 2015

Have you ever thought about how crazy it is that passive investors refuse to sell their stocks under almost any circumstance? Not only do they refuse to sell, the paid punditry advice-giving community reinforces this “don’t sell” message in a table-pounding way. When the volatility comes, it’s like the financial media rises up in...
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Some Clarifications on RAPT in Application to Trading

October 21, 2015

We received some quality feedback on RAPT — the Risk-Adjusted Profit Theorem. In particular, MT community member Brent writes: Interesting piece on RAPT Jack. I don’t play poker (I don’t even know what hands beat what, really), but regardless it was a very interesting read. I liked the part where you talked about getting...
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Mercenary Daily: Highlights from the Stocktoberfest Global Macro Panel Discussion

October 20, 2015
Mercenary Daily: Highlights from the Stocktoberfest Global Macro Panel Discussion

Greetings from Coronado, California (off the coast of San Diego). On Monday (October 19th, 2015) I sat on a global macro discussion panel with some pretty distinguished guys: Raoul Pal, Gary Zimmerman, and Mark Dow. It was a great discussion with some spirited debate. As a side note, the Hotel del Coronado is excellent. It...
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Mercenary Daily: Boyd’s Rule [Discerning the Primary Trend]

October 16, 2015

This is one of my favorite trading anecdotes, from the Larry Hite interview in Market Wizards: Jack had been putting out recommendations for his firm for many years. I found that if you followed all of his recommendations, you would have made money in every year. Finally, I asked Jack how he did...
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Mercenary Daily: Wal-Mart, Buffett and Just Say No to Flash

October 15, 2015
Mercenary Daily: Wal-Mart, Buffett and Just Say No to Flash

We’re getting ready for Coronado and Stocktoberfest this weekend. It will be fun meeting up with a few old friends, and making some new ones too. Maybe I’ll see you there… A few quick odds and ends: 1) Wal-Mart got smashed yesterday, which was kind of ironic… Y’know, given how they are always talking...
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Mercenary Daily: RAPT — The Risk-Adjusted Profit Theorem

October 15, 2015

As many of you know, we have a proprietary No Limit Hold ‘Em poker methodology called “Maker.” We haven’t talked much about Maker for a while. But we still have big plans for Maker — very big. There is a lot of overlap between trading and poker. That’s the reason we took interest in poker...
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Mercenary Daily: Consider the Absolutely Insane Position the Federal Reserve is in Right Now

October 13, 2015

The really hard part isn’t flying the plane… it’s landing the plane. If memory serves, I think it was Taleb who first described the Fed as pilots trying to stick a landing. Except instead of a normal runway, the Fed has to land the jumbo jet of monetary policy on an extremely shortened runway…...
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Mercenary Daily: Bet Size Implications of Equity Curve Variation, or, How Not to Be a Meal at the Shark McDonald’s

October 13, 2015

Previously we talked about mulling probability and equity curve variations. To recap, there are many paths from A to Z within the context of a system — be it a trading system or any type of system. Some of those paths have more “turbulence” than others, as represented by uncomfortable equity curve paths. Some...
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Mercenary Daily: Mulling Probability and Equity Curve Variations

October 9, 2015

At our dinner with Peter Brandt a few weeks ago, there was a point where Peter pulled out his iPad. He wanted to show us something created by a trader in his small group. (This same trader is known, in certain circles, for making the single most profitable trade of all time, in absolute dollar terms,...
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Mercenary Daily: Willingness To Look Wrong Or Stupid For a While

October 9, 2015

We got some high quality feedback on the HFTs and Investment Banks piece — the thrust was confirmed with multiple observations (from those of you on the inside) and anecdotes of direct experience. Also, apologies to anyone indirectly labeled a “house cat” — no insult intended! On a related note, Peter shared a short video...
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Mercenary Daily: What HFTs and Investment Banks Do Isn’t Exactly “Trading”

October 7, 2015

In response to How Can You Tell What Makes a Great Trader? and the capital allocation thought exercise, daily reader Brian wrote back and quipped: Give it to the HFTs (Renaissance) or Goldman — those f–rs never lose. Ha! Are you sure you’d want Goldman to trade directionally for you? They actually DO lose...
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Mercenary Daily: How Can You Tell What Makes a Great Trader?

October 6, 2015

Imagine the following scenario. An eccentric billionaire offers to let you run $100 million for five years. Your potential upside is massive. But the terms of the deal are rather unique: You can’t trade or invest the money yourself. You have to let someone else make the decisions. You can choose the traders, in...
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