[santiagobasulto]

Thank you. I have a very close friend that has been doing this for some time, and it’s really painful to see him lose money to those “forecasts” that resemble more astrology than science. I see from your profile you’re a Quant. Is there any guidelines I could give him? Any recommendations to go to the more “scientific” side of finance, and stop looking at charts and draw arbitrary lines to try to come up with patterns.

[paulgb]

Sure, I can try. My thoughts on this actually come more from my experience in prediction market betting than my work, which is hard to apply at an individual level.

I think just properly accounting for wins and losses can be good at instilling a sense of humility; I'd recommend he calculate his track record if he hasn't already. I enjoyed the book Thinking in Bets by Annie Duke, which is about the psychology of developing some habits around making bets and the cognitive biases we have. A Random Walk Down Wall St. is also a classic that is good at instilling a sense of humility in you as an individual investor.

[jkhdigital]

You could add that even winning strategies can be unceremoniously smashed against the rocks of market execution failures, especially in an unregulated space like crypto. I had to learn from personal experience: roughly a years’ worth of hard-earned arbitrage profits were wiped out in the aftermath of the 50% drop back in March, despite holding offsetting positions, due to uncontrolled liquidations plus a DOS attack on an exchange.

[GoblinSlayer]

https://www.cnbc.com/2020/03/09/bezos-loses-7-billion-overni...

[lottin]

Basic economic theory and econometrics. Finance theory is just a thin layer on top of that.

[hutzlibu]

What is a "quant", when referring to a person?

[pizza]

Quantitative analyst https://en.wikipedia.org/wiki/Quantitative_analysis_(finance...