Trading Like A Hedge Fund

Discussion in 'Trading' started by CoolTraderDude, Nov 20, 2012.

  1. What's cooking? You arse on fire?:p
     
    #21     Nov 26, 2012
  2. in real time, years ago that trade became so effiecient that there isn't even a crumb left over for you or me.

    Yes, you can improve the spread by averaging down one side and closing at BE, but what's the point? Now you have a wide spread on something that is just going to move point for point.
     
    #22     Nov 26, 2012
  3. So we have a stock say XYZ with low correlation to the Dow under a week... Say daily movement... But after... on a weekly time frame it will do what the Dow does... XYZ rises slowly with the Dow but also falls slowly...

    Now I don't have much experience with this kind of trading as I've only started looking into it.

    I'm not sure what other factors there might be...

    Let's say you see the Dow rising... You wait for it to stop... You buy XYZ which lags, and sell Dow... If the the Dow falls then it should fall faster than XYZ... So you should make money... If the Dow rises it should rise faster than XYZ but you will be hedged as XYZ will correlate on a longer time frame...

    That's how I'd look at it...

    Errrr... I'm going to go with their stochastic drift...!?

    I don't think so...

    Yes... But only if you find the ones you want at a good price.

    There's also the problem that regression analysis is hardly a good tool for predicting future volatility... What if your beta changes on one of your securities...?
     
    #23     Nov 26, 2012