Tuesday
Jul202010
How Traders Achieve Creative Flow
Tuesday, July 20, 2010 at 2:01PMWritten by Michael Bigger. Follow me on Twitter.
I recently came across this fascinating blog post: The Hidden Art of Achieving Creative Flow.
Everett Bogue, the author, cites “9 simple ways you can bring yourself into flow.” This is how I think about each of them from a trading perspective. I add the topics of listening and the sandbox to the discussion:
1. Pick an enjoyable, challenging activity: This is easy. I have a passion for financial markets, investing, and trading. You probably share the same passion since you are reading this post. I have a bachelor's degree in physics and an MBA in finance. Because of my background, I love to tinker with trading concepts and systems. You might be into charts, day trading, or anything else that floats your trading boat.
2. Eliminate distractions: Anyone who develops a trading system is continuously focused on the market. I eliminated market distractions by working on our strategies outside market hours. I am the most productive before 8 am. Most mornings, I am in the office at 5 am.
3. Listen and think before you do: When I first sat down to create our trading system, I thought I wanted to exploit single stock fluctuations. I was not sure how to go about it. I was stuck. I was listening though—listening to my trading beliefs, other successful traders, and hedge fund customers. One afternoon, I was spending time with Alex Perelberg, an accomplished trader and a colleague, when I stumbled onto the insight that completed my puzzle. I listened to what Alex had to say about how he trades, and it hit me between the eyes. With this insight in hand, I started building our system. I used Jeff Bezos’ iterative approach and started walking along some dark alleys with my discoveries. This led me to additional insights about Brownian motion, Levy flight, cockroach theory, ant communities, sharks' feeding behaviors, pheromones, Twitter, information theory, and things of that nature. At the beginning, I had no clue I would combine various approaches in the strategy. One thing led me to the next in a never-ending process. I came to these insights because I listened to the people I admire but also to some people I did not know much about. If it sounds intelligent and interesting, I want to meditate on it and play with it. This strategy can lead you to a beautiful insight.
4. Isolate yourself: Our operations are located in Cold Spring Harbor, NY, which is far away from the hustle and bustle of New York City. Isolation breeds artistic discoveries. If you work on a big trading floor, you must find some time to isolate yourself to waste time.
5. Let go: I let go of our expectations when creating strategies. I let go of my preconceived notions, and nothing is out of reach. I am not married to a particular idea about making money. I start from empty and I let it go. Some ideas flow out. Not all are good, but some are.
6. Sandbox: Revert to your inner child by playing in the sandbox. I’m sure you must have been able to do this at some point. Throw pasta on the wall and see what happens. Go crazy.
7. Give yourself a time limit: The listening, thinking, and tinkering part of the process is perpetual. I limit the amount of time I spend testing a trading idea in the market. Most of the time though, I incorporate the idea into a strategy on a small scale and I see what happens. If it does not work, I iterate some more.
8. Keep moving: When you are achieving, the creative flow keeps on going. Don’t interrupt the flow of creativity. Pursue it until it stops.
9. Don’t think: When Twitter user Ash Rust sent me a link about the behavior of sharks, I started jotting down ideas about the implications this had for financial markets. The ideas just flowed out of me and I wrote them down. Most of these thoughts were of no value, but the rest were quite insightful.
10. Practice: Practice regularly. Even better, just do it. Okay?
Recommended reading: Flow: The Psychology of Optimal Experience (Amazon Affiliate Link).
Reader Comments (8)
such a great piece...I had bookmarked another of your posts recently, so safe to say I dig your approach!
Thank you Derek! The credit goes to Everett Bogue for his post about Creative Flow.
Great post. Especially appreciate the point about practice. "Flow" is a skill. I'm not lucky enough to know anyone who is just born with it. Unless you're Mozart or Goethe, it takes a lot of heart to put in the effort to become a master of your art. I'm no freakin' Mozart, lemme tell you.
I agree practice is important. I am not a master but I have been very fortunate to listen to my partner at the right moment. I think listening is critical. Look at $amzn today. I made money on it but I could have done better. I should have spent one hour or two meditating in silence about it before the market opened. I had the right idea but the fallacy of vividness tricked me. I did not even think about options expiration today and how to use them for maximum impact.
Ah. That damn availability heuristic. If a guy with an undergraduate degree in physics can fall prey to misleading vividness, what does that mean for someone with a liberal arts degree? I must meditate on this -- and after, I'll meditate on the expiries and what they mean for my trading. I'm scared to death of stocks after watching AAPL on the DOM one day. So I remain ensconced in my comfy futures and FX screens. Wonder what heuristic traps I'm falling into now. Oh, nevermind.
You have a nice blog here. Nudges me in new directions and makes me think.
Have a good weekend. Cheers
Thanks Jay. Let's do this together.
Aw, this was a really quality post. In theory I'd like to write like this too - taking time and real effort to make a good article... but what can I say... I procrastinate alot and never seem to get something done.
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