Why Computational Finance?

Why computational finance? A friend asked recently. The surface reason as I have told myself is that computational finance is a natural extension of computer science and computing, for which I have been adequately trained and reasonably good at. But surely it can't be for the pleasure of hunting down market inefficiencies, day in and day out? My friend insisted, having examined certain elements of my business model canvas posted earlier. Now I have to search a little deeper within myself to understand my own recent career choice.

It rewards me to be truthful. The freedom to discover market truths any which way I choose, unbeholden to any entity or anyone. Anomalies, stylized facts, regularities; these are all synonyms of market truths. The ability to trade in amounts small or large as the opportunities and risks reveal themselves under dispassionate analysis, stripped of all earthly disguises and human biases. It's the joy of listening for and finding heavenly music amidst the market cacophonies; it's the thrill of discovering a grain of gold among sands. It's not for everyone. It carves out a place for me in this world and that suits me well.

It reminds me of my childhood years collecting and trading stamps with my neighbors and classmates. I seek beautiful stamps. I enjoy organizing them and rearranging them endlessly for display in my album. I trade for stamps that I want with my circle of friends, and dispose of duplicates. I marvel at beautiful graphic art the size of a thumbnail, and learn a lot about countries that I have never been. Everyone's stamp collection becomes more complete and beautiful from trading with each other. For kids at that age, discovering that individual differences can become the sole reason for trade, and changing minds encourage even more trading, is a revelation. Kids who speak a different language or dialect at home, and have different ideas of aesthetics, become my best trading buddies; they are an excellent source of coveted foreign stamps, and they trade generously for what I have aplenty. Nobody minds at all that some kids keep changing their minds from one day to the next. All that can be solved by trade backs. We don't fight over stamps, we simply trade them. And everyone goes home happy. Augmented by contributions from aunts and uncles (I have 8 total, and that's just from my mother's side), plus occasional trip to my dad's office (which has plenty of foreign correspondences), my stamp collection grows steadily and seemingly without effort. I love it. Just reminiscing about childhood makes me want to relive that time again.

 A beautiful stamp album (but not mine).

A beautiful stamp album (but not mine).

Pursuit of freedom, truth, and simple joys of daily life. In contrast to becoming enslaved body and mind within my own company, beholden to clients with their whims and fancies, a cog in the supply chain, and having no life outside of work. Took me a while to actually realize this, having spent a good part of my career as a struggling entrepreneur. But the choice is starkly simpler now. Some call it the benefit of hindsight. Others say wisdom comes naturally with middle age, but mostly on birthdays.

I may be idealistic, for I believe trading can still be fair and honest. Like it once was, for me. We just have to program it right. Truth and reward must be aligned. Traders need to be rewarded not just for discovering market truths, but also for being truthful in the process of discovery. They cannot manufacture or manipulate truths. That's how we weed out charlatans and pretenders in other scientific pursuits, and we can do the same here. The market never lies, once you get to know it better. It might try to mislead you, feign a zigzag right in front of your eyes, or throw a head fake at you. But it will never lie to you.

So I'd rather be punished daily, for the mistakes that I made within the last 24 hours, and learn to trade better the next day, than to hold my breath in suspense for long periods of toil awaiting an uncertain outcome. Only entrepreneurs are crazy enough to do that. So I salute the Steve Jobs'es of the world, big or small, for they are the real heroes of our economy. They create the beautiful stamps that make collections possible, and keep the rest of us in business with our modest role trading them. And everyone goes home happy.