Trading seems dauting, especially when your competition are HFTs and huge firms, but there are even very simple patterns that can be profitable, that does not require any advanced coding, APIs, huge troves of data, quant formulas, etc.
Once such simple method, which still works, is to short BTC and go long QQQ/SPY during market hours if there is relative weakness of BTC before the market open, whilst going long QQQ/SPY. Both legs are exited at the market close.
This has been very profitable. Even the most advanced firms are bound to miss easy strategies. Pattern recognition, intuition are more valuable when to comes to trading than having more data or better tools.
As soon as your write about a successful strategy and publish it, it no longer becomes profitable. Trading pairs of stocks is one such example, firms made money from identifying stocks that have a negative correlation with one another. This went on for some time until someone published a paper on it and then it became unprofitable.
Dennis reasoned that even though he could publish all the rules in a newspaper, only a few traders would heed them since most traders tend to avoid following rules rigidly. He mentioned that most people only follow the trading rules as a method of improvising when they deem it necessary and that deviating from the rules can affect the performance of the trade.
>Pattern recognition, intuition are more valuable when to comes to trading than having more data or better tools.
I have a few friends in the equities business and this topic always comes up over drinks. It would seem that in the age of GPU farms and open source ML tools, are we to a point where patterns are so subtle or short-lived that only a machine could pick up on them?
By the relative weakness do you just mean price drop?
And how can SPY be hedge considering bitcoins incomparable volatility. Are position sizes proportional to volatility or something like that?
The US market opens at 6:30 AM PST. In the 30 minutes before the market open, BTC and the SPY/QQQ futures tend to be highly correlated, but let's say NQ (which is a futures contract that tracks the Nasdaq) rises .5% but BTC only rises .25%, then this would be relative weakness on the part of BTC. The trade would be to short BTC and go long QQQ in equal size.
Once such simple method, which still works, is to short BTC and go long QQQ/SPY during market hours if there is relative weakness of BTC before the market open, whilst going long QQQ/SPY. Both legs are exited at the market close.
This has been very profitable. Even the most advanced firms are bound to miss easy strategies. Pattern recognition, intuition are more valuable when to comes to trading than having more data or better tools.