How Ray Dalio Trades – He Takes Notes and Programs | Exploring Markets

How Ray Dalio Trades – He Takes Notes and Programs

In September of 2015, Ray Dalio did an interview with Bloomberg. In the interview he talked about his career in financial markets and his thoughts on the stock market. But one thing in particular stood out and it's an invaluable lesson about how Dalio trades and how the world of financial markets has changed:
"Basically, I'm mostly just interested in who's going to buy and who's going to sell and why. So the way I look at a price is it's the aggregate of purchases divided by the quantity of goods sold, whatever that may be. That may be a bond, it may be equities. And I look down there and factor by factor. So now when I'm trading at anything that's going to give me an edge on, whether it's insider buying or whatever it is, what we do is we take those rules and we have written those rules down. It came really in 1982 or '83, every time I'd put on a trade, I would write the reason I wrote that trade down on a pad. And I'd look at those rules after I closed the trade. What I discovered by doing that is that those rules could then be programmed into a computer. And when they were programmed into a computer."

And later he continues this comment on computers and how technology is changing the way trading and investing work:
"For me, the technology continues to empower me. So, but I think it — there’s no getting around the deep thought. The technology, if you put a lot of data in and you’re not spending the time with the deep thought, not thinking about how you’re going to be wrong, and you have the fundamental cause-effect linkages, it’s a dangerous tool."

At the core there are two takeaways anyone can learn from Dalio. First, have a method for your investing and trading strategy. Second, use technology to your advantage. Dalio explicitly states how computers and technology have helped him. This is the way financial markets are changing and he's been embracing it since the 1980s.