The Repeating Nature of Markets

It’s said that some of best quant trading groups out there, think Jim Simons at Renaissance, continually make money by exploiting repeating human behaviors in markets. You may ask yourself: what does that mean?

For whatever reason, humans, with money in their hands and access to a “market” have shown to repeat the same mistakes over and over, time and time again, creating similar patterns over hundreds, if not thousands of years. Smart trading firms model that behavior and then build systems that exploit it.

Here’s the South Sea Bubble from a few hundred years ago:

Here’s, once again, the move we just saw in GameStop

It seems to never end. I mean, quick rise, quick fall, repeat – see you in a few months!

I’ve learned to run, not walk from these instances as I would prefer to not trade against the people who mapped out these patterns and programmed better trading concepts than I could ever imagine. Also, I don’t know anyone who has ever had fun doing this at the personal investor level.

Written by Stefan Cheplick, a fintech builder and writer with experience at Stocktwits and TradingView. Background and published work.