Your Adjacent Possible
Wednesday, April 13, 2011 at 2:17PMInspired by Steven Johnson
Two weeks ago, I had the opportunity to discuss trading with a seasoned trader at the Four Seasons hotel located in Midtown Manhattan. He and I approach trading from very different angles. He trades growth stocks with solid technical characteristics. I focus on algorithmic trading. We don’t have much in common. Period.
Not so fast. Something was very enlightening about our discussion. He told me he has a knack for discovering, before the market does, technology companies experiencing an overnight change in their business model. He described a few examples that happened in the past and some that are happening now. It all made sense to me.
I could not help but think that if I had this information, I could incorporate it into our volatility trading strategy to gain an additional edge.
The adjacent possible is the vast reservoir of untapped trading opportunities created from the mash-up of different trading ideas and insights.
Have you ever explored it?
Written by Michael Bigger, author of How Traders Achieve Creative Flow.
Reader Comments (4)
Michael,
A few months ago I met a prop trader from one of the best firms in the US. We both trade very different styles but came together because we were interested in learning multi-day swing strategies. At first, we e-mailed daily and exchanged instant messages but that type of collaboration was a bit fragmented.
A month ago, I put up a private blog for both of us to use. It became our "creative space". Every day we each blog an idea, trade or anything that was on our trading minds. We each began to see the same trades in different ways and explored different trades using each others methods.
The trader I am today is very different than the trader I was a month ago. This is my adjacent possible.
Awesome Eric. I like how you built your own. I would like to learn more about how you go about your multi -day swing strategy?
I am a member of www.stockbee.blogspot.com which is a website to learn momentum trading. Many ideas I have originated from there.
The core strategy that I am focused on is capturing 3-5 day followthrough from momentum bursts. Through my second brain and listening station on Twitter I have found it more profitable to modify the strategy to focus on trading stock market momentum leaders such as LULU, MCP, CMG, BIDU etc. I say leaders because these are stocks that are making new highs when the market is looking extremely sluggish. Because this market is currently not supporting breakouts on a broad scale, stock selection and risk management has been key. I have experienced upside with this strategy and my drawdowns have been controlled very well. I am very happy with how it is working out and the adjacent possible fosters creativity and change where it is needed.
Interesting.