Arbitrage for the littly guy
- Thread starter mauzj
- Start date
If you have enough buying power, then you can make what you made before. If you use enough brain power, you can as well. I guess we can abbreviate both BP, huh?
To me, arb is an evolving process like stock trading is. If you are doing anything that is "classically defined", like "classic merger arb" of course you are toast. Do you think that its just going to be that easy as put on a spread and hope the deal closes? Come on, obviously its not like that.
Use your brain to think. I don't buy the, well what I will call an excuse, that you can't make the same money, blah blah blah. The only way to do that is to use your brain and devise relationships that the world is not trading en masse. You can sit on your butt and crank out trades when its really good, but part of that time should be spent thinking forward and creating some type of new workable tradable stuff. We did this all the time when I was taught Merger Arb, and even though a lot of the new stuff didn't work, that attitude of feeling confident enough to devise, test, and trade new relationships is a key part of my current trading. It felt good also to see my ideas, as a new trader, being developed by others in a group.
One of my former bosses said to me," You know when stuff isn't working and we aren't making money, if conditions have changed, I don't go home and cry to my wife that its not working. I sit here and work like a horse until I come up with something that works." Don't sit here and cry on ET that stuff doesn't work, go out and find things that do. If you like spreading stuff, there are many combinations you can trade.
To me, arb is an evolving process like stock trading is. If you are doing anything that is "classically defined", like "classic merger arb" of course you are toast. Do you think that its just going to be that easy as put on a spread and hope the deal closes? Come on, obviously its not like that.
Use your brain to think. I don't buy the, well what I will call an excuse, that you can't make the same money, blah blah blah. The only way to do that is to use your brain and devise relationships that the world is not trading en masse. You can sit on your butt and crank out trades when its really good, but part of that time should be spent thinking forward and creating some type of new workable tradable stuff. We did this all the time when I was taught Merger Arb, and even though a lot of the new stuff didn't work, that attitude of feeling confident enough to devise, test, and trade new relationships is a key part of my current trading. It felt good also to see my ideas, as a new trader, being developed by others in a group.
One of my former bosses said to me," You know when stuff isn't working and we aren't making money, if conditions have changed, I don't go home and cry to my wife that its not working. I sit here and work like a horse until I come up with something that works." Don't sit here and cry on ET that stuff doesn't work, go out and find things that do. If you like spreading stuff, there are many combinations you can trade.
The Old-Fashioned Way:
Sit at a desk and push buttons
Sit at a desk and push buttons
There are a lot of ways to trade arbs like pairs and spreads. I personally think it is by far the best way to trade this market right now. As long as you dont have any real momentum going in the market you can benefit from that by trading pairs and mergers. I like the fact that it is a market neutral strategy. Every arbmarket is uncorrelated to the next. I usually trade many spreads and pairs at the same time, that gives me not only more opportunities but also, even more importantly, diversified risk. To trade 10 pairs is like trading 10 uncorrelated markets. To trade 10 stocks on New York is like trading only one market... Pairs trading can be pretty straightforward, most of the strategies I teach are quite easy to learn. Most people pick it up in 1 or 2 weeks.
Good luck!
Good luck!
Welcome back bro.
I agree with the above comments that arb opportunities exist, especially if you are willing to look at things from a different angle than the rest of the crowd, and you put in the work.
Personally, I find that my trading is going more and more toward pure arbitrage.
Corey
I agree with the above comments that arb opportunities exist, especially if you are willing to look at things from a different angle than the rest of the crowd, and you put in the work.
Personally, I find that my trading is going more and more toward pure arbitrage.
Corey
