Easy Pairs Trading Scalping Strategy

Discussion in 'Automated Trading' started by CyborgTrading, Oct 3, 2009.

  1. CyborgTrading

    CyborgTrading ET Sponsor

    1. Take highly correlated products like SPY/SSO, or some ETF short/ultrashort pairs.
    2. Put bids/offers out in the spread market a few cents out of market and wait for the products to get out of wack
    3. Play the mean reversion.

    The only thing this strategy requires is an autospreader fast enough to capture these small price deviations....you almost can't lose.

    Thoughts from all the pairs traders out there?
  2. Right - co-located server right next to the exchange and build a lightning fast auto spreader type of capture engine out of a low level code engine... and a very low commission vig to beat or match what some of the large houses are doing...

    major MAJOR bucks to do it...
  3. CyborgTrading

    CyborgTrading ET Sponsor

    Right, which is why institutions do THESE kinda of trading strategies...it's all about technology and the better the technology is the easier it is for them to make money. The strategy in itself can't lose...

    Makes you wonder how many other strategies just like this are out there. You can just print money, providing you are willing to invest in the technology. But then again, isn't that what trading is...and always has been about?
  4. Then I suppose you will be doing this and keeping it for yourself :D

    But seriously, it is nowhere this simple. This is one of the most basic methods of the multibillion dollar institutions use, with massive resources. And they have much lower costs.

    The little person cannot make easy money this way. So in the reality, they are almost guaranteed to lose trying this, over the long term.

    You should be careful not to misrepresent the reality to people like this. It is unethical.
  5. CyborgTrading

    CyborgTrading ET Sponsor

    I agree with you...there is certainly a barrier to entry for some strategies. Thats why only a few people can do these kind of strategies....not everyone can afford a co-location solution. You have to have the resources to invest in it...the payback is of course is the near zero risk trading strategy.

    So now the question is, how does the little guy, sitting at his trading desk compete...
  6. He inherits $400 million, becomes an institutional trader, etc.

    Otherwise, for the person with a modest account (likely 99% of those here) he does not follow the strategy you are suggesting.

    There are plenty of ways to learn trading, emulating the big boys is not for the small trader. And it is not the easy road to money as represented, above.

    Unless you plan to publish verifiable account statements and track record showing how easy it was for you on a longterm scale.
  7. CyborgTrading

    CyborgTrading ET Sponsor

    Well I really don't agree with you. With the right tools you can compete with institutions...many traders I know do it all the time.

    And in regards to co-location...sure there is a barrier to entry..it's not free, but it certainly isn't insurmountable. I've setup traders in a co-location facility and they're by no means millionaires.
  8. You are going to tell us soon, why not just tell us now.

  9. CyborgTrading

    CyborgTrading ET Sponsor

    tell you what?
  10. Dreamers


    everyone should know that any good strategy you make using their software is automatically shared with cyborg trading

    their software is set up that way, password protection is a farce designed to make you feel secure

    I am waiting for Cyborg Trading to call me a liar and then I'll post code from their own software :)

    they are not big enough to spend money on international lawyers, it would break their beginner little bank, in any case I would like them to spend money
    #10     Oct 4, 2009