The Quality of Your Questions, and Questions of Quality
From chart-reading and trade ideas to market profile, disconfirmation, negative capability and the cognitive frameworks of accomplished traders.
Dear Practitioners,
My writer-in-residence role continues at AXIA’s Cyprus office, and this instalment is very much born out of the continual refinement of various ideas, threads and observations, some of which predate even Traders of Our Time. The concepts themselves are vast and deep, and this piece is but one execution of them. Nevertheless, it is a more organised attempt to articulate many of the things I have been discussing, particularly with the younger traders on this floor.
Yet if these ideas prove useful to them, they are likely to prove useful to any practitioner. After months of Iran–US-driven volatility demanding fast-twitch reactions and trading on the headline, there is value in revisiting a different set of muscles: observation before conclusion, questions before answers, and the slower process of trading between the headlines. Those muscles have not been exercised particularly often of late. This piece is a reminder that you still have them.
Good trading to you all,
Bogdan
Observe enough traders across enough years and a pattern begins to emerge. The trader with a future asks questions and those without one tend only to accumulate answers. A trader’s relationship to questions and answers is one of the most important dynamics in a career. It is as diagnostic for mastery, or lack thereof.
Consider the all too common novice: they trade with all the answers. This, singular, tangible thing, you see, is why they have ‘edge’. They seek only answers from others, shunning those who refuse to promise them, instead embracing those who provide the certain singular simple answer. In one image: they seek to ‘answer’ the market in whatever it is doing, as though they could speak for it. Indeed, they approach it as though it were some stubborn riddle awaiting the correct solution, a crossword puzzle to be completed, a mathematics examination for which there exists somewhere the right answer. This is the default operating mode for the vast majority of new entrants, and those who remained blocked in developing a viable career. And they also assume all trading is done this way.
Few things should be more dangerous to practitioners who navigate a complex, ever-changing, uncertain, ambiguous domain. At all levels, from the minutiae of day-by-day trading, to periods of reflection and review, the vast majority of novices are forever compelled to answer. Yet it is precisely here that the difficulty emerges, for answers possess a tendency to outlive the conditions that gave rise to them. The habitual becomes assumed, and before long the trader is no longer observing the market so much as negotiating between the market and the accumulated weight of prior conclusions. An answer may be useful, necessary even, in one environment, only to become an obstacle in the next. The trader who cannot relinquish yesterday’s answer eventually finds himself arguing with today’s market.
Yet observe the traders who have crossed this threshold. The emphasis moves toward the primacy of asking questions, and asking better questions, then asking questions on how to ask better questions. The trader discovers that the problem was never the quality of the answer, but the assumption that the market was the sort of thing that could be answered in the first place.
This is a profound reorientation in how one relates to markets, uncertainty, and ultimately oneself. Answers are temporal and mostly disposable. Their value lies in their usefulness but once expired so too should the answer. Indeed, they should be so because the permanent answer renders a trader immovably resistant to change. In short, one improves by asking better questions. This is at the root of Asymmetrist itself because it is the reality of those who remain on the cutting edge of their trading, and the select few to decide how far they would want to go in this domain.
That is partly because questions are one of the most reliable mechanisms through which new conceptual and cognitive dimensions are developed in the first place. Every meaningful question introduces the possibility of a new way of seeing. It establishes a fresh axis along which information may be organised, compared, related and ultimately understood. In the immediate sense, this is one of the most powerful ways to funnel and tie together disparate information, much of which often has very little to do with charts. Much of which, incidentally, sits well beyond the chart itself. In the longer term, however, the implications run considerably deeper, for questions expand the space within which knowledge itself can be organised. They allow seemingly unrelated experiences, observations, skills and intuitions to be recombined in ways previously unavailable to the trader.
Indeed, questions rarely arrive alone. The right question has a tendency to generate three more in its wake, each revealing some previously hidden assumption, relationship or contradiction. Yet unlike confusion, which multiplies possibilities while obscuring direction, these questions often possess the opposite quality. The field of inquiry expands, but the trader’s understanding simultaneously becomes more coherent. One sees more, not less. There emerges the strange sensation of travelling further into complexity while somehow arriving at greater clarity. In this sense, the generation of further questions is often not a sign that one has become lost, but that one has begun to locate the deeper structure of the problem itself.
With these traders, conversations become noticeably different. There are fewer declarations and more investigations. Fewer certainties and more attempts to understand what has changed. One leaves such conversations with fewer answers than expected, yet somehow with a better grasp of the problem itself. Tell me your language and I’ll tell you your trader. Somewhere within that language one can glimpse the contours of their explicit, implicit and mostly tacit framework. There is no better way to chart a trader and their development than through the quality of their questions, from the large, reflective questions that shape an entire career, down to the quality of their inquiry in the midst of a single day, market or trade.