John Arnold: prediction

Transcript context

…But sensing that imbalance, what do you feel is the skill you had that your other traders didn’t have to the same degree? I’ve always had a difficult time answering this question. I think part of it is, trading is a team sport for sure. I always took the view of my personality is got to either be around or get around smarter people, and listen more than talk. That’s certainly my personality. In terms of traits, here’s what I would offer as my traits. Number one is this detachment from emotion. There’s a lot of talk about fear and greed driving markets. To the extent that fear and greed change your process, the more you can remove those emotions, I think, the better. I think there is a component of first principles trading, where first principles of how you look at information. Don’t accept the information as is, but really test all assumptions that go into it. I think there is a component of being on the perfect point of the confidence spectrum. You have to be confident in order to say the market is wrong, and I’m right, that other people are wrong, because I think efficient market hypothesis is fairly true. But if you’re overconfident, you’ll blow up quickly. There is this notion of being quantitative enough to build the long-term models, but being quick with numbers in order to jump on the trades as they happen. There’s this aspect of, I think, a chip on my shoulder that kind of goes back to — Feeling you can do it better.…

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