How to Make Better Long-Term Decisions | Todd Simkin | The Knowledge Project 119 | Summary and Q&A

TL;DR

Traders at Susquehanna Investment Group (SIG) utilize a process of decision making that involves avoiding biases, updating information in a Bayesian way, and actively seeking feedback to improve their decision-making process.

Key Insights

• 💄 Traders at SIG focus on the decision-making process instead of outcomes to improve their trading decisions.
• 💄 Communicating and collaborating with peers is crucial for seeking feedback and improving decision-making skills.
• 🤔 Thinking probabilistically and avoiding biases are essential for making informed trading decisions.
• 🥺 Constructive feedback and a culture of learning can lead to continuous improvement in decision-making.
• 💁 Training traders to model the decision process and consider all available information helps them navigate uncertainties and make better decisions.
• 💁 Seeking external research capabilities and diverse perspectives helps traders mitigate information asymmetry and make more informed trades.
• 🤗 Traders should be open to feedback, willing to change behavior, and actively seek out disconfirming information to improve their decision-making skills.

Transcript

one one important thing that we don't do is look at the results of the trading that they've had and say well if they're winning then they've got it and we can leave them alone and and and assume that they've figured things out and if they're losing then we need to step in and intervene um annie duke another one of your former guests talks about tha... Read More

Questions & Answers

Q: How does susquehanna Investment Group (SIG) handle information asymmetry in trading?

SIG uses external research capabilities, but the most important step is updating opinions and considering all available information in a Bayesian way. They analyze information from different sources and rely on the insights of more knowledgeable others to make informed decisions.

Q: How does SIG foster a culture of learning and improvement in trading decisions?

SIG encourages traders to discuss their decisions with peers and experienced traders, shielding feedback providers from trade outcomes to focus on the decision-making process. They model the decision process, ask questions, and provide constructive feedback to help traders improve their decision-making skills.

Q: How does SIG train their traders to make better decisions?

SIG starts with an open outcry environment, teaching traders to communicate and think probabilistically. They gradually transition to electronic trading, where traders make parametric adjustments to models based on their decision-making process and understand the underlying risks.

Q: Why is it important to avoid biases in trading decisions?

Biases can hinder objective decision-making and lead to poor outcomes. By avoiding biases like confirmation bias and anchoring and actively seeking disconfirming information, traders can improve their decision-making process and make more informed choices.

Summary & Key Takeaways

• Traders at SIG trade various financial products, such as equities, fixed income, currencies, and commodities, using information from multiple sources to improve their decision-making.

• SIG focuses on avoiding biases and information asymmetry by seeking external research and feedback, shielding feedback providers from trade results, and focusing on the decision-making process rather than the outcome.

• Decision-making training at SIG involves modeling the decision process, communicating and collaborating with peers, and continuously learning and updating one's understanding of risk and probabilities.