I've been using Livevolpro for over a year. its very good for analyzing skew amongst other things. yet you need to have been trading a while before it becomes practical for you to use- its $100@month. if someone is new to trading and is barely scraping by, they're not going to have the money for it
From the front page of the business section - I start with stocks/commods who's tickers are in heavy rotation in journalist land.
=========== Mainly; carefully consider the difference between stocks, derivatives,cash/commodities; to make a long story short. Trend study/Big Trend -study[the book named that also] for years ; helps a bunch also.
Look into variance ratios. A more "academic" way to check for mean reversion/trend in data. Although the math behind it reminds be much of the math behind RSI/stochastic etc...
It is not possible to know if a market temporally or spatially will reverse, although all markets change directions. At some point. Can you be more specific with your question about hedging gamma? A question such as, "Are you guys gamma neutral?" is not answerable, other than with an unhelpful, "no."
I asked if gamma neutral or other strategy is taken (with regards to predicting a regime change) . It wasn't simply if you are gamma neutral. I also did say I didn't even know if the question I was asking was the right question. So I guess if people don't test for a change in market direction then the whole answer to my question is a no. haha Id like to hear from other traders too...
Predicting a change in direction of the market, an individual equity or vol has caused more losses than any another strategy. IMO, go with the trend, when it ends, take a small loss and hop on the other direction.
Ahh, then no. I don't neutralize gamma, or any other greek for that matter, based on my impression of whether the market will turn. I adjust those based on the degree of risk imposed by a move in the market adverse to my position. Sometimes I lean intentionally, but more often my positions simply migrate with time and trades. Maybe others are more discretionary with regards to predicted direction, but I've not looked at trading in that fashion. If you wanted to explore whether you could determine a reversal, why not use a form of "messy data" analysis? Although this is a significant endeavor even for a statistician, the basic elements are to find examples of reversals you'd like to capture and then explore the circumstances that led up to the reversal. Of course, this only generates a hypothesis, it does not test the hypothesis. Next, take out-of-sample periods of your static data set and see if your model is predictive within some arbitrary boundary conditions. You must be brutally rigorous during out-of-sample testing because if not, you'll waste valuable effort. Finally, test your model in real-time. That this last step will be profitable is not a given, even if you have a model that consistently performs well in your data set. So trade small initially. Size comes later. Issues like liquidity, transaction costs and slippage are difficult to model and are often the difference between success and failure. This last point is one of those inconvenient truths about trading.
Without "glancing in the rear view mirror" why do you say "the market is long overdue for a correction" ? That's a very tough question to answer.