I dont know about that example but I can tell you returns of 2 to 4% per month are very achievable for a skilled pair trader. With plenty of leverage around there is enough juice.
Yes, I spoken to Don on several occasions, met him in Vegas, and have trained some of his equity spread pairs traders to trade futures spreads. I would agree that he would be a great resource and that Bright is the gold standard for equity pairs trading. I would also agree that having seven or eight clients talking up how much success they are having using my futures spreads model to swing trade equity spreads during our weekly group webinars is optimistic ( at least for me ) but not truly representative. I would also agree 100% that intramarket futures spreads are the cheapest most cost effective futures leverage out there. I get all that. My only point in this endeavor is to gain some experience plying my craft in the equity space. At this point I would say that I truly know very little about equities. My background is futures of all kinds, cash fixed income basis trades, and lots of bilateral and financially-cleared OTC energy. I will say one thing: that the way I model and trade futures spreads is indeed a different approach than the way the Bright clients traded equity pairs. That could be good, or that could be bad. If I put $20K in an IB account and I lose it trading equity spread combinations then so be it. At least I will have done some equity trades unrelated to my 401 K plan.
Well, you better make that 25k or 30k. In the equity world you need to have a PDT account. Something also to think about when pitching clients. If they have under 30k they won't be able to do these with most brokerages. BTW, the minimum with Bright now is also higher, closer to 50k. Again, something to think about in your business plan.
Mav already covered the fact that futures spreads max out at 20% of the futures, yet share spreads take 10x the equivalent futures spread.. Why push this idea when you just started an (infamous) thread on the efficiencies of spreading futs?
That right there can not be overstressed. Can you give an estimate on how many guys you've seen shredded over that? And same they all said it wouldn't happen to them..
Market neutral, right? And the spread vol blows out. The only positive implication is the things are margnined so inefficiently.
I'm guilty of what Bone is talking about. I hear guys like you and Mav talk options, making circles around people. You guys are genius in all that. When I hear you guys talk on equities/options I think dang I want some of that. But I stop myself every time. I know I'd get schooled day after day and don't wanna deal with that. I've not traded an equity in years. Its just made more sense for me to stay in highly liquid futures. For now at least.. cheers
I was not mocking you; I was agreeing with you. Anyway, spreads in equities are not worth the effort unless you're trading vol, IMO.