Posts tagged: heuristic

The hardest thing to explain to other people about the job of an Equity Analyst and an Equity Trader

By , June 12, 2017 11:27 am

For the Junior Equity Analyst, “I don’t know”.

People demand reason, explanation, narration. Connecting the movement of a public stock to a certain news makes people feel intellectual, and secured that “it makes sense”.

Or does it? There are countless reasons a stock may move. The actual driver with heaviest weight might not be the widely accepted reason, at all.

The more accurate answer to the question “what makes price move?”, sometimes, is “I don’t know”.

But are analysts spared when they reply with “I don’t know”? No.

People would rather be comforted with fabricated stories and heuristic traps.

For the Junior Equity Trader, “Why?”

Why do traders need to know why?

Their main job is entering the right position or, at worst, responding correctly to movements.

When machine trading is in place, may be some will have the time to answer why.

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