More math. There is no way around it. Notice that we are slowly creeping up on Graduate level mathematics, but this is all still undergraduate mathematics at a normal university. These videos actually give you good intuition. YOU MUST UNDERSTAND Stokes theorem and Green's theorems in order to build advanced models. The videos are here https://www.khanacademy.org/math/mu...ons/stokes-theorem/v/stokes-theorem-intuition but it helps quite a bit to understand the relation between Stokes theorem and Green's theorems:
Sorry to back-track to a sidebar from page 2... Question 1: Would you also use a basis swap (USD denominated floating interest rate swap) or a spread trade in futures (Fed Funds vs. 10-years)? Question 2: I'm trying to improve my understanding of the interrelations of International Interest Rates... Can you explain your premise for using the currencies?
The position is easy to dissect. Short 2 USD and EUR, and Long 2 AUD and NZD. Borrow cheap lend dear. You can find out the interest rates around the world as I posted here: http://www.elitetrader.com/et/index.php?threads/black-every-day.121509/page-26#post-4204771 Needless to say, there is at least three more factors that go into these sorts of spreads, IRs differentials being only one of them. Even here, the ratios probably need to be tweeked even if you felt comfortable with the position.
Understand, and be able to calculate: https://www.cmegroup.com/education/files/S-and-P-500-Implied-Financing.pdf
This could be a very interesting trading instrument http://cmegroup.mediaroom.com/2015-...-the-Launch-of-S-P-500-Dividend-Index-Futures
It is very interesting always to look at the forward curve: http://www.cmegroup.com/trading/equity-index/#usIndexes
I think the reason many of us have problems trading markets is that although we are good at reasoning and logic, we are not good at introducing beliefs into logic. There is at least one trader of each of these types. The "market" as a whole is a kaleidoscope of regimes of reasoners. Note how dangerous the Regular reasoner is: Accurate reasoner:[1][need quotation to verify][2][3][4][need quotation to verify] An accurate reasoner never believes any false proposition. (modal axiom T) Inaccurate reasoner:[1][2][3][4] An inaccurate reasoner believes at least one false proposition. Conceited reasoner:[1][4] A conceited reasoner believes his or her beliefs are never inaccurate. or A conceited reasoner with rationality of at least type 1 (see below) will necessarily lapse into inaccuracy. Consistent reasoner:[1][2][3][4] A consistent reasoner never simultaneously believes a proposition and its negation. (modal axiom D) or Normal reasoner:[1][2][3][4] A normal reasoner is one who, while believing p, also believes he or she believes p (modal axiom 4). Peculiar reasoner:[1][4] A peculiar reasoner believes proposition p while also believing he or she does not believe p. Although a peculiar reasoner may seem like a strange psychological phenomenon (see Moore's paradox), a peculiar reasoner is necessarily inaccurate but not necessarily inconsistent. Regular reasoner:[1][2][3][4] A regular reasoner is one who, while believing , also believes . Reflexive reasoner:[1][4] A reflexive reasoner is one for whom every proposition p has some proposition q such that the reasoner believes . If a reflexive reasoner of type 4 [see below] believes , he or she will believe p. This is a parallelism of Löb's theorem for reasoners. Unstable reasoner:[1][4] An unstable reasoner is one who believes that he or she believes some proposition, but in fact does not believe it. This is just as strange a psychological phenomenon as peculiarity; however, an unstable reasoner is not necessarily inconsistent. Stable reasoner:[1][4] A stable reasoner is not unstable. That is, for every p, if he or she believes Bp then he or she believes p. Note that stability is the converse of normality. We will say that a reasoner believes he or she is stable if for every proposition p, he or she believes BBp→Bp (believing: "If I should ever believe that I believe p, then I really will believe p"). Modest reasoner:[1][4] A modest reasoner is one for whom every believed proposition p, only if he or she believes p. A modest reasoner never believes Bp→p unless he or she believes p. Any reflexive reasoner of type 4 is modest. (Löb's Theorem) Queer reasoner:[4] A queer reasoner is of type G and believes he or she is inconsistent—but is wrong in this belief. Timid reasoner:[4] A timid reasoner does not believe p [is "afraid to" believe p] if he or she believes ℬx