Astral Codex Ten Podcast Your Book Review: The Laws of Trading
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Jul 30, 2023 Delve into 'The Laws of Trading' by Agustin Lebron, a unique blend of trading narratives, philosophy, and decision-making. Explore the competitive nature of financial markets and the importance of adaptation. Learn about Bayesian reasoning, risk management, and the trade-off between liquidity and relationships. Discover insights on trading strategies, model development, and the challenges faced by autodidacts in the trading world.
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Motivation in Trading and Life
- Know your motivations before making any trade, including time trades.
- Someone with intellectual honesty will outperform those lacking self-awareness.
Adverse Selection is Inevitable
- Financial markets aggregate information through Bayesian belief updates between participants.
- Adverse selection is inevitable; you'll always have trade regrets, regardless of profit/loss.
Hedging Risks
- Hedge avoidable risks in trading and life, like stock compensation or correlated career bets.
- Consider counterparty, liquidity, and political risks; healthy paranoia is essential in markets.