Brazilian Jiu-Jitsu & Trading – Shiny New Toy

A very strong parallel between Brazilian Jiu-Jitsu (BJJ) and trading is the chasing of the shiny new toy. In BJJ, we often want to learn the new submission (Peruvian Necktie or Snake in the Grass Choke) we saw on YouTube. Or the new type of guard (Lapel Guard or 50/50 Guard). In trading, this is chasing the new technical indicator or new position sizing method or new strategy we read on some blog.

In BJJ, trying the latest new thing is fun to do. For me trying a cool new armbar or triangle choke is fun but does not fit into my game of standard chokes and leg attacks. That and my body type is not suited for those moves. I must determine how will this new move be integrated with the rest of my game. It is not always clear cut if something will work out or not.

Recently I played around with the 50/50 guard. At first, I did not think it would work out but after playing with and understanding it better, I realized that it was a good transition and opened up new leg lock attacks.

The parallels to trading are very strong. How often have you read about a new indicator and just tried dropping it into a strategy?

99% of the time it does not work.

Why? Not because the indicator (maybe). But because it does not complement the rest of your strategy. You may think the new indicator will help your new strategy but maybe it strongly correlates with other indicators that you are already using.

A new strategy might give good results but you must consider how does it integrate with the rest of your strategies. If you are already trading a short-term mean revision strategy on Russel 3000 stocks, adding another one is not diversifying your strategies.

Like in BJJ, it is a balance of thinking does this new toy have potential to help me. And even if at first it does not, should I continue researching or not? Unfortunately, the answer to these questions are difficult.

In BJJ & trading, I try the new toy long enough to get a feel for it then wait for the next new toy to come along to investigate and play with

Recovery update: I am 5 weeks post-op and my knee feels great. Kneeling still hurts a little. I almost can do a full squat again. I see the doctor next week and hopefully he clears me to go back to BJJ. I am going crazy not being able to class.

I want to get back to class and focus on my game.

As Bruce Lee said “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.”