Monday, July 18, 2005

The Right Tool For The Job

When I was 10, my Parents purchased a then state-of-the-art IBM AT Compatible 80286 computer with the 80287 math co-processor for our family. I was fortunate at that age to have a computer. I was the only kid I knew actually who had a computer. Back then Intel CPU's couldn't do floating point calculations natively. The calculations had to be emulated in software which was very slow, unless you had one of the expensive x87 math co-processors. The 80486 was the first intel CPU to include a floating point unit built in.

Why back in oh 1989 did we need such a high-end computer? My Father was a statistician, and needed to run a statistical programming package called SAS on our computer. It required a math co-processor. My Mother was a CPA and needed to run a program called LOTUS 123 on our computer which didn't require a co-processor but it benefitted from one.

In 6th grade, my math teacher was really into computers, and believed that it was important for our education to know how to use them. His classroom was full of those old style Apple computers. (They were hardly ever used for anything other than playing "Oregon Trail", and "Where in the World is Carmen Sandiego".) At one point, he tought us how to use a spreadsheet on those Apple computers, and after that point we were allowed to do all of our math homework using spreadsheets if we wanted to. I was actually the only kid in the class who took him up on this. I had my mom show me how to use Lotus 123 on our home computer and from that point on I did almost all of my Math homework in Lotus...which made it pathetically easy. I didn't learn much math for the rest of the year (which hurt me in 7th grade), but I did learn how to use a spreadsheet pretty well.

In my Freshman year of college, our chemistry lab instructor encouraged us to do our Chemistry labs using spreadsheets. Despite the fact that I knew spreadsheets backwards and forwards, for some reason I never did use a spreadsheet for my chemistry labs except for the one or two labs for which it was explicitly required. I recieved a barely-passing D+ my second semester of General Chemistry. ("D's get degrees!") During my sophomore year, I took physics. The physics lab-instructor also encouraged us to use a spreadsheet for our lab experiments. For whatever reason, perhaps because I liked my physics lab instructor better than my chemistry lab instructor, I listened to his advice, and did all of my labs using Microsoft Excel. I enjoyed the Physics labs, and I got A's. It was great, but it also sucked because I realized that if I had been using Excel my freshman year (which was very tough for me) I would have had so much more free time, so much less stress, and I know I would have learned more and recieved a much better grade in Chemistry. The lesson was learned, and from there-on, I always did the calculations for my labs using Excel.

My Chemistry advisor and my math professors started to encourage their students to learn to use a program called Mathematica during my Sophomore year of college. I never really bothered. By the time of the second semester of my Senior year, I only needed one more class to complete my Chemistry degree: Quantum Mechanics. The class happened to be taught by my Chemistry Advisor. He basically required that we use Mathematica for our assignments, labs, and tests, so I became fairly proficient in the use of Mathematica. With Mathematica, Quantum Mechanics was intresting and fun, and I did well in the class. However, I had the same feeling of regret that I had experienced my sophomore year when I realized how easy Excel had made my lab assignments: "Arrrggghhh! Why didn't I learn to use Mathematica sooner!" What a shame. It would have made allmost all of the classes that were hard for me easy, and would have freed up so much of my time.

I've noticed that as I study option trading, statistical calculations are usually required. Hopefully if I learned anything in college, it was to not make my life harder by refusing to learn and use software tools that are readily available to me. So in that spirit, I have decided to learn to use a statistical package called "R". R is an open-source implementation of a statistical programming language called "S". This is very much similar to the program SAS I mentioned earlier that my Dad used to use when I was younger. I ordered the book Introductory Statistics with R from, and I am currently working through it. Assuming I am able to easily access my data, I think this will turn out to be an excellent platform for experimenting with options trading systems.


At 1:37 PM, Blogger Alien Shaman said...

I think it was the teacher, not the concepts that made math difficult in 7th grade... Although, learning the mathematical short-hand notation was useful in college.

At 7:25 PM, Blogger X-Bar said...

I hated Math in gradeschool up until the 5th or 6th grade when I discovered a children's book on the History of Math by Lancelot Hogben. Iwas fascinated and Math became one of my favorite subjects in Jr High and High School. I did a BS in Math and more. But I still think I like the History of Math more than Math itself.


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