Friends,
This is a follow-up letter I wrote to someone who called me interested in learning to trade. Look, trading is a neat career for many reasons (I discuss that at the end of my chat with John). But if you don’t enjoy the material below, it’s probably not a job you’ll like or excel in. Finding that out alone is worth diving into this. From the outside, it’s easy to get a mistaken impression of what trading is. It’s also easy to conflate it with investing.
None of the below material is technical. If you consider it technical, you’re a little bit behind but not drastically if you enjoy the material because that means you can catch up quickly. If the thought of learning this basic stuff sounds like a chore, really, just leave now. No judgment.
[Just as a matter of calibration. If you read this letter regularly, you can use me as a benchmark. I’m not technical by the standards of trading in 2025. I was more on the technical side of traders about 15-20 years ago. If graduating today, my education is too general to get hired as an assistant trader at a prop firm. You can still differentiate yourself by demonstrating an exceptional proof of work in the form of projects, entrepreneurship, leadership or competitiveness. But the bar is high.
Technology is leverage. 99.9%-tile is 1 in a 1000 while 99.0% is one in a hundred. In winner-take-all games, you want mutants not common valedictorians. At this point, my experience is what makes me valuable. My aptitude is average for this field, and below average, for many of the directions it’s heading in.
Luckily in America, how much signal you are doesn’t decide your prosperity. There are a lot of rich idiots because randomness is blind. The less skill you have, the more you want to play roulette not chess. Crank the vol. If you look at the trading or asset management worlds, can you capably classify which jobs are roulette and which are chess? Look at the winners in certain investment-related jobs and you can start to figure it out. This is called being strategic about what you should do and comes way before “I want to be a trader”.
A recurring theme: calibration is everything. Knowing where you are in a pecking order and choosing your actions in light of that is a life skill. You don’t need to be especially smart to do that, but you do need to be self-aware. That means interpreting feedback without your defensive ego scrambling the message.]
In short, trading is competitive. You need a genuine interest to maintain the required persistence when the going gets tough, which it always does. This is true of every competitive field.
Anyone promising easy returns is either:
- inexperienced
- stupid
- lying
In other words, running a grift or flattering an ego gassed up by luck.
If I haven’t deterred you, enjoy the letter…
[name redacted],
As promised, here’s a short list of resources I think you’ll really enjoy if you’re interested in markets, decision-making, and risk. These cover a mix of foundational ideas, practitioner insights, and a few of my own essays.
Trading starts with a general way of thinking -- what service does the market need that it offers a return for? Think of these resources as the mental operating system on which the tactical labor runs.
Remember, while investing is compensation for patience and risk tolerance, trading is compensation for research and labor. Work. And that work must outmaneuver the work of the competition. It follows that this will lead you to look for easy games where the best competitors are less likely to look (in fact understanding their barriers will be part of your prospecting).
If you google “trading systems” or anything related to making money from the comfort of your home, there is a high likelihood it’s the equivalent of house-flipping seminar lead gen. It’s a space rampant with unserious grift and marketing.
There is no shortcut. This material is groundwork and since it’s not project-based, should be done fairly quickly (I give some roadmap below). One of the primary benefits of working through this material is seeing if these ways of thinking resonate.
If it’s a drag, you’ve learned a lot about what you’re not interested in, and this is valuable, time-saving knowledge!
Books
- The Most Important Thing — Howard Marks’ lessons on second-level thinking shines because it’s so approachable. The Gladwell of professional investment writing.
- The Laws of Trading — Agustin Lebron connects adverse selection, psychology, and rational decision-making. If Mark’s book is a 101, this is the 3rd-level thinking grad course without being formal or technical.
- Thinking in Bets -- Poker player Annie Duke emphasizes one of the hardest but most fundamental principles in decision-making - restraint from judging outcomes by whether they worked. She teaches you to separate decision quality from result quality, embracing probabilities, updating beliefs, and thinking in expected value rather than absolutes.
- Superforecasting — Philip Tetlock’s research on probabilistic thinking and what separates great forecasters. It’s a manual for improving accuracy and something even more important — calibration.
- Fooled by Randomness — Nassim Taleb’s classic on luck, risk, and the illusion of skill.
- Adaptive Markets -- Prof. Andrew Lo on the evolving predator/prey dynamics in markets.
- Retail Option Trading — Euan Sinclair and Andrew Mack’s practical look at option trading frameworks. Although focused on options, the messages are delivered in the context of general principles you must internalize. So think of it as “how they apply the OS to options”. You want to focus on the application more so than the option details.
- Books by Andrew Mack — worth exploring if you want to dive deeper into what research looks like
- Poor Charlie’s Almanac — Slipped this in just because. Even middle-schoolers should read it.
Podcasts
- Risk of Ruin — thoughtful, narrative-style interviews with traders and gamblers exploring the psychology of edge and risk.
- Bet The Process — focused on sports betting but full of probabilistic and behavioral lessons applicable anywhere.
- Flirting with Models — Corey Hoffstein’s excellent conversations on quant finance, risk management, and portfolio design (more advanced, so this is aspirational. A glimpse of down the line.
- Founders — stories of entrepreneurs told through deep dives into biographies, rich with insights about iteration and resilience. Generally motivating. Lots of timeless, simple ideas.
Blogs
- Money Stuff — Matt Levine. Best finance writer on Earth. A daily habit of reading this will rewire your brain.
- Robot Wealth — practical, data-driven experiments in systematic trading and learning.
- Kid Dynamite’s Blog — not currently active, but the archives are incredible for plainspoken lessons from a former trader.
- Michael Mauboussin’s Essays — an incredible collection of writing on expectations, capital allocation, and decision-making.
- Newfound Research Blog — Corey Hoffstein again, blending quant research with clear, thoughtful writing.
Moontower Essays
A few of my own writings that expand on themes like volatility, edge, and how traders think:
- The Volatility Drain
- Vol Drag Is Misunderstood — Until Now
- Understanding Edge
- Distributional Edge vs Carry
- The No Easy Trades Principle
- Measurement, Not Prediction
- You Don’t See the Whole Picture
This portal will help get your brain trained to more probabilistic patterns:
Moontower Brain Plug-In
This portal introduces you to a foundational, often underappreciated understanding of investing: Moontower Money
If I had to pick where to start, I’d say:
1. Howard Marks book
2. The RobotWealth Blog
3. Laws of Trading book
4. Thinking in Bets book
5. The select Moontower blog posts including the Moontower Money portal (the Brain Plug In is more of an ongoing thing to refer back to for brain food).
That should take about a month of reading in the evenings after work ( ~ a book + 2 blog posts per week).
Then I’d read Mauboussin...there’s so much there, it’s not about reading all of it but go with what sounds interesting. His way of thinking infuses everything he writes and those are the thinking habits you are trying to absorb.
Start here:
Probabilities and Payoffs The Practicalities and Psychology of Expected Value
Then from this link try:
Untangling Skill and Luck: How to Think About Outcomes - Past, Present, and Future
From this link try:
The Paradox of Skill: Why Greater Skill Leads to More Luck
The Importance of Expectations: The Question that Bears Repeating: What’s Priced in?
From this link try:
Min(d)ing the Opportunity: Excess Returns Require the Chance to Apply Skill
IQ versus RQ: Differentiating Smarts from Decision-Making Skills
Bootcamps
If you’d like to do a course I’d recommend:
- The Robot Wealth Bootcamp (online)
- Arbor (in-person)
I’ll close with something I told John Reeder near the tail end of the Risk of Ruin episode.
John prefaces my comments with:
Despite the fact that Kris writes about how to learn the math of options and about behavioral elements of trading — and despite the fact that a lot of this stuff is offered for free — some people are just not going to get it.
My take:
It’s gonna sound maybe harsh, but I tend to think that if you’re gonna figure it out, you just kind of are. You’re gonna find what to read; you’re gonna find the right things. And it’s like, if you’re unable to do that meta work, you’re just not cut out for it.
This is competitive. If you need to have your hand held just to figure out what’s good content and what’s not — you’re already cooked. Honestly, I really do try to be optimistic, but I think the people who are capable end up finding what they should be looking at.
On average, it probably works out that the people who are going to figure it out will end up finding the people who would have been their guides. I don’t think anybody’s born knowing how to do any of this. I’m very SIG-pilled in that way — I think you can learn. I don’t think everybody can learn it. I’m not saying that. You absolutely need some sort of minimum threshold of certain characteristics.
John to the audience:
Kris told me he sees a problem that exists today — a widespread rejection of experts. And he says that really isn’t going to work if the goal is to learn. Even the very top people that firms like SIG hire — brilliant, brilliant people — still have to be coachable.
So if those people have to be coachable, then everyone else trying to learn the same material, probably without even close to the same aptitude, can’t start the whole thing by rejecting the idea that there’s anything to learn.
I close that section with:
What does SIG do as soon as they hire somebody? They humble the shit out of them. Every single person they hire is smarter than almost everybody you’ve ever met. But what do they have to do? They have to cut them down a bunch of notches and say, “See everybody else in this room? They’re all trying to do the same thing you’re trying to do. And by the way, you’re not any smarter than any of them.”
So unless you can be taken down to where you’re ready to learn — to become a sponge, to become coachable — it’s not going to work.