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Philosophical argument about knowledge, based on work from Jim Keller.
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"Most people don't think simple enough."
Do you know the difference between a recipe and understanding?
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"Most people don't think simple enough."
Do you know the difference between a recipe and understanding?
/1
Imagine you're going to make bread. You follow a recipe. Get flour, water, yeast, mix, rise, throw it in a pan, in the oven.
Understanding bread requires physics, biology, supply chains, yeast, thermodynamics, etc. There are so many levels of understanding there.
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Understanding bread requires physics, biology, supply chains, yeast, thermodynamics, etc. There are so many levels of understanding there.
/2
If you have a really good recipe for making bread, you won't know shit about how to make an omelette. But if you have a deep understanding of cooking... then it doesn't matter: bread, omelette, sandwich.
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Most people are just executing a stack of recipes. Recipe: asset. For trading, it can also be very simple: Recipe: entry. Recipe: target. Recipe: stoploss. The problem with that is the recipes all have limited scope.
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Having an understanding requires understanding a huge swath of topics. Flow of information, who you're trading against, the venue you're on, market conditions, liquidity levels, liquidity gaps, slippage, LP's & their expected behavior, Macro events, etc.
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When you become an expert at something, you're hoping for deeper understanding instead of just a large set of recipes to execute.
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