The stuff you are posting out of some options textbook... Has been common knowledge since the 80s. Yawn 1,000,000 times. And the last sentence applies ONLY to unhedged or poorly hedged positions. Why don't you do 100,000 trades... And then come back and post something useful.
The most of pro players really work on arbitrage but i m not sure every individual trader can afford this kind portfolio. My arguments apply to both kinds. Such approach in any case includes statistical inference based on some sort of correlation or other way to establish dependency pattern between trends in selected securities pair. Forecasting as such is not ultimate aim of modeling, of course, but you also rely on expected (forecasted) balance in up and down trends. Your reply was very constructive. I have tried to clarify point in the next post. Thank you. I am not sure that everybody here makes millions of trades. Techical indicators are very widely used. And text book citations about their inconsistency are quite rarely remembered. So I hope reminding these points was anyway useful.
Having to hedge every trade I make is like having to stick a little bit of everything I eat up my ass. :eek:
You are confused in every conceivable way. "Hedge funds" are not "pro trading operations". Most "hedge funds" are skimming operations... That have no viable money making strategy... But only a business model designed to profit from the ** huge fees ** they charge. Only a minority of "hedge funds"... Could be considered a "pro trading operation"... That would be capable of maintaining market-neutral positions. In spite of that... The hedge fund industry vastly outperformed the S&P 500 in 2007... Probably because many funds made a killing off all that volatility. http://www.finfacts.com/irelandbusinessnews/publish/article_1012323.shtml My firm's profits were TRIPLE normal in 2007.