On the weekend LB and I had the first meeting for this years Mentor Program and just before it was my turn to present I checked my laptop as I do to make certain everything was in order and it decided to show me nothing but a blank screen. Not a problem since I always travel with my Surface Pro I simply grabbed it and went to plug it it.and it refused to see the overhead projector…..fabulous. I have had technology fail at presentations before so its not a big deal, it is momentarily stressful but since I know my topic backwards the technology merely serves as a visual prompt to let me know where I am in the presentation. As such I can do without it.
All systems fail but complex systems fail in unpredictable ways whereas simple systems fail in a predictable way. Let me give you an example. Way back in my youth I owned a Valiant Station Wagon which was a fabulous car, it was robust, simple and big enough to lay down in when you went camping. Like all things mechanical it would occasionally have an off day and in hot weather it was prone to vapour locking which was easily remedied as it had an engine bay that was so large and had so much empty space that you could stand next to the engine whilst you worked on it. When it was having one of its off days problems were easy to fix because the mechanism of failure was predictable – with a simple checklist you could isolate any problem fairly quickly. Fast forward several decades to my current crop of European cars and it is a different matter, The failures when they do occur are so multifaceted that they are impossible to fix outside of a workshop and even then they can be a pain in the arse. My Maserati GranTurismo had the habit of sitting idle in the workshop whilst technicians stared at and repeated mournfully…buggered if I know why it wont start.
This propensity for complex systems to fail in unpredictable ways is simply a facet of complexity, there is no way around it and as you would expect it has found its way into trading. It has been seen within algorithmic trading when systems have been released into the wild without proper testing only to cause havoc but it can also be seen in simpler approaches. Recently we have been reviewing a lot of trading plans and it has been an enlightening process for several reasons but one of the most interesting has been the drift towards complexity for the sake of complexity. Where one line of code used to suffice traders will now have 50 to achieve exactly the same result. I understand why this occurs, for traders complexity brings the illusion of control and predictability. They brings this false sense of security but with an added tendency towards failure. Trading is such a simple profession and revolves around only a few key points. If it is trending up buy it, if it trending down sell it and dont bet the farm. These rules are fairly easily to encapsulate within a trading system but the human desire for complexity which in part is ego driven seems to lose sight of this message.