Alpha isn’t just about finding people willing to trade at bad prices. Although that’s a necessary condition, it’s not enough. We also need to know why people are willing to buy too expensive or sell too cheap. The reasons are pretty simple: The first reason requires the existence of other uninformed traders, or what some …
In Australia, if you’re serious about getting the job done effectively and efficiently, you might say: “I’m not here to f*** spiders.” Many traders act like they are, indeed, here to f*** spiders. If you’re making soup, you first need a good stock. Stock isn’t exciting. Everyone has stock. Garnish is exciting, but you can’t …
Many beginner traders don’t realize how variable the p&l of a high-performing trading strategy really is. Here’s an example… I simulated ten different 5 year GBM processes with expected annual returns of 20% and annualized volatility of 10%. (If you speak Sharpe Ratios, I’m simulating a strategy within known Sharpe 2 characteristics.) I plotted the …
One of the keys to running a successful systematic trading business is a relentless focus on high return-on-investment activities. High ROI activities include: Implementing new trading strategies within a proven framework. An example might be to implement a portfolio of pairs trades in the equity market. Scaling existing strategies to new instruments or markets. For …
Imagine you’ve tinkered for days or even weeks, perfecting a strategy idea that’s showing a whole lot of promise. You’ve meticulously tweaked a mouth-watering Sharpe Ratio out of your backtests….it even survived costs. YES! Systems go, let’s trade it. Imagine this new strategy enters a drawdown.…maybe a lengthy one….maybe from day one! How would you …
One of the biggest wins we have at Robot Wealth is in helping aspiring traders see the markets, and profitable trading, for what it really is. Rather than utilising a tried and tested approach that has generated real money in the markets, in practice, many aspiring traders gravitate to seemingly exciting approaches with the weakest …
