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Hedge Fund Strategies
- Thread starter dima777
- Start date
Quote from chvid:
TraderZones - what is your point?
What are you trying to bring to this thread other than stating that you have worked for two investment banks?
Given the arbitrary and secretive nature of this I don't think any single individual have a full picture of what is going on strategy-wise at hedge funds.
I found that some litterature gives hints to what strategies are used: I.e. Richard Bookstaber's A demon of our own design mentions reversal to mean pair trading.
Andrew Lo's paper on why did quants blow up last august uses a reversal to mean model as well.
Also I imagine portfolio diversification techniques are commonly used.
As for phds - option pricing requires a fair bit of math so a sciences background is certainly relevant.
And it is probably a good selling point for a hedge fund being able to say that your staff consists of super smart chess playing russian phds.
Remember a hedge fund lives off fees not returns.
Eventhough the two are related they are not the same thing.
Good yearly returns and fees may hide a systemic risk of an catastrophic event - leaving good returns and fees for say 5 years and then a single catastrophic year with zero fee resulting in plenty of fees but a compounded return of -100%.
The point is, that I would put my programming experience and many meetings with the algorithmic and system designers at 2 IBs over your "I think, I read the literature, Probably" statements...
Quote from overspool:
They do not get rid of technicals, SAC Capital admits to using technicals in their strategy. Even IB's use technicals and have fancy titles like "chief market technicians."
since you are such an expert because of your readings, why don't you tell the OP how the hedge funds do it. You can start with a detailed statement of the exact "technicals" that SAC uses...
TraderZones has worked for 2 IBâs in algo trading and knows so much more then every one else here. Yet he does not want to share any his VALUABLE information and has had the time to post 1280 times since march.
Here is a formula for everyone TraderZones=ET Troll
:eek:
Here is a formula for everyone TraderZones=ET Troll
:eek:
Quote from Frank Thomas:
TraderZones has worked for 2 IBâs in algo trading and knows so much more then every one else here. Yet he does not want to share any his VALUABLE information and has had the time to post 1280 times since march.
Here is a formula for everyone TraderZones=ET Troll
:eek:
thank you all for your replies...I think it is unrealistic to expect someone to give full disclosure of the methods used by the hedge funds if he has experience working with them....I am interested in general description...and maybe a couple of simplistic real-life examples....not anything absolutely proprietary...
Do hedge funds use support and resistance levels?
Dima777,
I agree with you, I donât expect anyone to share anything proprietary either. I think the thread you started can make for an interesting discussion for informational purposes. The stuff hedge funds do for the most part can not be easily replicated any way. Those guys spend fortunes on their infrastructure alone in oder to trade their strategies.
It just seemed to me that TraderZones was just flaming. âlook at me I work for IBâs and know more then any of you and I am not sharingâ. It just seems to me if a person worked with a âbigâ algo trading operation and happened to be here on ET, they would throw in their .02 on the subject or just be a reader and keep their thoughts to their self.
Anyway, from what I know about hedge funds (which is not very much) is that they really like trading strategies that are based around some sort arb strategy. In general they do not trade the direction of price. Some people I met a while back who ran a small fund traded a lot of yield curve spreads and would try and sell different option spreads against their positions. I know they were doing pretty good with it 04-07 donât know how well they were able to adapt when things changed last yearâ¦..
I agree with you, I donât expect anyone to share anything proprietary either. I think the thread you started can make for an interesting discussion for informational purposes. The stuff hedge funds do for the most part can not be easily replicated any way. Those guys spend fortunes on their infrastructure alone in oder to trade their strategies.
It just seemed to me that TraderZones was just flaming. âlook at me I work for IBâs and know more then any of you and I am not sharingâ. It just seems to me if a person worked with a âbigâ algo trading operation and happened to be here on ET, they would throw in their .02 on the subject or just be a reader and keep their thoughts to their self.
Anyway, from what I know about hedge funds (which is not very much) is that they really like trading strategies that are based around some sort arb strategy. In general they do not trade the direction of price. Some people I met a while back who ran a small fund traded a lot of yield curve spreads and would try and sell different option spreads against their positions. I know they were doing pretty good with it 04-07 donât know how well they were able to adapt when things changed last yearâ¦..
Why would you have to use either? Stat arb, etc. pure math, Stand Dev. and such forth ... only a sample of the universe on how to see the market. what is right? no clue, dont care. use what works for you ... and what level of trader you are ... this game is a never ending game of change and progression!Quote from dima777:
a system mean it has to draw upon the technical or fundamental analysis...if it doesn't use techs it uses funds exclusively...correct?