Trading Psychology : The logic of taking risk - Taleb

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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Euler
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Mon Aug 28, 2017 6:32 pm

The Logic of Risk Taking

A central chapter that crystallizes all my work. In forth. Skin in the Game

https://medium.com/incerto/the-logic-of ... 7bf41029d3

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marksmeets302
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Tue Aug 29, 2017 10:01 am

Thanks for sharing. Not sure what to make of Taleb. He's clearly very smart and has interesting ideas, but at least in my opinion he seems to contradict himself: he bets on undervalued rare outcomes, but then he underestimates the length of a streak of non-events (not seeing a black swan for a long period of time) A friend told me clients of his fund got so fed up with losing money on a daily basis they withdrew their money. That's similar to a "game over" he wants to avoid according to this article. I wonder what it's like to work with him, he seems so arrogant in his talks.

PeterLe
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Tue Aug 29, 2017 10:44 am

I must admit; I tend to agree with that. He knows the subject inside/out but in my opinion he doesnt always articulate it clearly (?)
He is obviously a very smart guy, but I find him very hard to follow. There were many times I had to read chapters in The Black Swan (and I didnt particularly enjoy it)

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northbound
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Tue Aug 29, 2017 11:11 am

marksmeets302 wrote:
Tue Aug 29, 2017 10:01 am
A friend told me clients of his fund got so fed up with losing money on a daily basis they withdrew their money. That's similar to a "game over" he wants to avoid according to this article.
I read both Black Swan and Antifragile. He advocates using only 10% of your capital on trying to catch black swan events that will have huge returns.

He never advocates using all of your money on that particular strategy. So, not sure what their clients are moaning about.

foxwood
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Tue Aug 29, 2017 11:39 am

Found that a most confusing read that didn't seem to lead anywhere - for me :/

What was interesting was the mention of Ole Peters - well worth a Google to explore some of his thinking and presentation.

foxwood
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Wed Sep 06, 2017 6:36 pm

An interesting paper that simplifies the Ole Peters work in a more everyday form.

https://www.towerswatson.com/en/Insight ... a4a11c73dc

It demonstrates how risk taking based on generally accepted overall probability can be misleading and suggests example formulae to measure risk more realistically.

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