I've heard the term "dispersion trading" alot lately. Can anyone tell me what this refers to and briefly explain the process? Thanks
Yes, that is when the funds in your account are quickly dispersed to other traders. This is a term you will hear most frequently among day traders. The flip side of "dispersion trading" is "accumulation trading", whereby funds accumulate in the account from the losses of the very same day traders. This is most freqently experienced by swing traders and those with a longer term perspective.
that's pretty funny. you're probably one of those traders whose capital is frequently dispersed. thanks for the insight. anyone else have something meaningful to offer.
Basically (very basically), while there are various permutations, its an arbitrage strategy that involves selling volatility on the broad market while buying volatility on specific low vol, higher beta names. There are tons of Phd types trying to raise funds with purported proprietary dispersion models. However, I've yet to hear of any of them actually making money with them. Still, I use a quasi-dispersion strategy in my own trading. Regards, HD
http://atlas-conferences.com/c/a/i/m/18.htm As I usually do, when I read a term I am unfamiliar with, I do a Yahoo search. Very handy.