tactical trader

As my former secondary school teachers will readily testify, the subject of mathematics and me are not comfortable bedfellows and as a result I try and steer well clear of anything to do with the subject. This may strike you as odd from a trader where maths in an integral part of the daily job but I have a secret weapon in the shape of my business partner who studied maths at University level. He deals with the number crunching so that I am free to flip the coin and make my trading decisions.

Despite my reluctance to actively embrace the subject there can be no doubt that a good understanding of numbers, and in particular how to apply them, is an essential part of our trading toolbox. This is especially true when we take a look at the many systems and processes offered to us by the vendors of methodologies with numbers at their root. We are told of the power of Fibonacci, the importance of the golden mean, the hidden significance of Elliott Wave and so on and so on, a quick flick through the pages of this magazine will only serve to reinforce this point.

It is for this reason and my own reluctance toward the subject that I was particularly interested in this book. There is no way that anything with ‘mathematics’ in the title would normally ever grace my bookshelf but I was intrigued by the subtitle of this one, “he figured the odds, and they still beat him” and decided it was worth a closer look.

The basic premise of the book is that being a very clever person and in particular having a tremendous grasp of how odds work is still not enough to guarantee success in the markets. It should be a huge asset and certainly provide the edge that traders are constantly seeking.

Unfortunately it is no such thing and one of the most interesting reasons given for this is that, once again, success and failure come back to the one thing that cannot be made into a formula, our own psychology.

Paulos writes with a frankness and degree of self deprecation that is quite rare in a trading related book and he certainly is not pushing the dream like so many authors do in the interests of selling as many copies as possible. So, with this reassurance and the fact that it seemed to offer the mathematical material in relatively bite sized chunks I decided to work through it…