Trade like a Fish

PrestwickDrive recently put me on to a WSJ article Herds on the Street (PDF) which states that to become a better investor you need to think like a fish.

Here are some snippets from the article:

The scientists found, for instance, that even these experienced traders only made money, on average, from 55% of their stock trades.
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According to the Northwestern researchers, however, these firms should be tracking instant messages instead. After a burst of messages in response to a news event, the traders often acted in sync, converging on the same conclusion and executing a large number of trades at the exact same time.
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This synchronous behavior proved to be an immense advantage. Though typical traders barely beat random chance, those acting at peak moments of sync made money on more than 70% of their stock trades. They also made nearly twice as much money per trade, which explains why traders who frequently "sync up" were the best performers at the firm. (The worst traders, by contrast, were the ones who instant-messaged the least.) "These plugged-in traders have an edge that puts them in a superclass," Mr. Uzzi says. "What's interesting is that their edge comes from the crowd, from everyone else around them."

What this research is saying is probably the reason why the daily ES trading topic in the Trading Strategies and Setups forum is so popular and has so many views and so much participation. It's the one that lets you trade like a fish.