i know they are trading power and weather derivatives, but it's not ACD based. perhaps that is what he meant. their trading operation is not a sophisticated as you are probably thinking
No. What he means by derivative is the idea of capturing a change before another change takes place. Think of it kind of like front running. The word derivative is a measure of change, it is mathematically represented as a slope. The slope measures the change in Y for a given change in X in relation to X. Since most of you are familiar with options take gamma for example. Gamma is the first derivative of delta. So gamma tells us how much the delta will change given gamma. So by analyzing the gamma, you can tell ahead of time how much the delta will change. The purpose of derivatives is capturing the 2nd and third order effects before the first order effect. So when Fisher is talking about 3rd derivatives he is saying you need to be faster. You can't wait for price. You have to capture the value earlier and earlier. I caught onto this very early on in my ACD development. Almost all my ACD is now based on derivatives and not absolute values.
Yeah I concur with this. I think Fisher knows the right things to say on TV but he definitely is not that this sophisticated.
thanks Mav, I am sure we could benefit from discussion of the curve in oil I feel pretty clueless about it. It doesn't look linear to me.
Thanks King The Collect, Analyze, Decide and Implement became my partner and CADI for making decisions a long time back.
My DIA number line tonight was created from an A Down, C Up and then a D Point for a big fat zero. Very rare.