skaylie

I'm a "recovering" investment banker (I'm about to get my three-year chip!) and there's a lot in this article that's very interesting. Working on Wall St. and living in NYC can really warp your perspective on life and money. When making 10 times what the average family makes in a year is considered a bad year, something is very distorted. It must seem devastating for all of the bankers getting laid off or uncertain about their futures, but once the dust settles, they'll be okay if they've lived below their considerable means. It seems that the key to financial happiness is to live within your means. Perhaps if more people did that instead of cashing out the equity on their McMansions, there'd be a bunch more happiness to go around and this guy's firm wouldn't be in the headlines every week...

As for making your living by doing your calling, you either have to make some sacrifices or be very fortunate and have your calling happen to be something that's lucrative. Unless you work for a job that is minimally demanding, you most likely will only become very successful if you truly have some calling for it. Otherwise you'll probably tread water and have to find fulfillment in other parts of your life.

You start having real problems if you work at a demanding job that you don't have a calling for. I did that for years and it could be very difficult. I was always somewhat awed by the bankers I worked with who absolutely loved it and it clearly was their calling. Often, their third wives were very happy to enjoy the fruits of their labor.

Making the switch from Wall St. was difficult and it really took a little bit of time to put the whole money thing into perspective. Now, I've found a calling creating software and am optimistic that I'm one of the lucky ones whose calling can be lucrative. Now if we can only start generating revenue...

Good point. As pointed out on the rest of this list, you should be very careful about "data mining", where simply finding a strategy that works on historical data may not be replicable. Also, some strategies work well in some markets (like high volatility) and poorly in others. I think a next level of analysis is trying to figure out when to turn particular strategies on or off.

As for the attacks on technical analysis, many practitioners probably are deceiving themselves that they've found some secret sauce. However, since the market is made of 100% of the people who transact in it, the presence of technical traders means that there must be some price movements as a result of these trends. One ideal would be to find a strategy that beats other technical analysts to the punch. A lot of people use the 12/26 MACD, but maybe the 11/25 MACD would help you eat their lunch before they entered the market...

It is all very tricky and takes a lot of discipline to avoid fooling yourself and getting into real trouble. Also, people need to make sure to focus on both sides of the trade - you only book the profit once you've actually sold the position (most people seem to be much more focused on entries than exits)

If anyone is interested in this kind of software but aren't so into learning a new language (perhaps less applicable to this group), you should check out QuantRunner Software http://www.quantrunner.com. In full disclosure, I am the CEO of the company, but we really focus on making this kind of back testing analysis easier for people to do without programming experience. We also have some novel tools for helping people actually improve their strategies, rather than simply iterate tests. If I had the true answers on the best strategies, I probably wouldn't run a software company. All we hope for is to make it easy enough for people to do their homework without having to worry about coding errors as well as poor strategies.