pairs trading

[GGSAE]

I was a Bright Trader that benefited from the long hlt/mar spread...aside from what Don mentioned the spread was hitting a new 10 year high the day before it jumped on the buyout.

I remember telling a trader in my group to hold onto it because it had trended to new recent highs and just sit tight for the time being...technicals are still important in pairs, you should never be fading something as it's breaking through a big level like that.

 

[GGSAE]

Quote from atticus:

Don, can you provide any proof that your traders' expectancy on these strategies exceeds the rake? I am referring to the strategies you pimp with great regularity; OO, pairs and merger arb.

What kind of question is that? Do you think Don is going to disclose personal information about any trader's methodology or their account NLQ? You seem to post a lot, do you even trade?

 

[atticus]

Quote from GGSAE:

What kind of question is that? Do you think Don is going to disclose personal information about any trader's methodology or their account NLQ? You seem to post a lot, do you even trade?

Only if I can fit it in between posting. I was asking for firm-wide profitability and have talked to Don.

 

[GGSAE]

Quote from atticus:

Only if I can fit it in between posting. I was asking for firm-wide profitability and have talked to Don.

Firm wide profitability is a terrible measure...some guys do great at pairs, others don't, whose fault is that? I also feel i've divulged on ET a lot more than what most traders would...in fact, aside from mschey, i don't even know if there are any regular bright traders on here...

 

[Don Bright]

Quote from GGSAE:

Firm wide profitability is a terrible measure...some guys do great at pairs, others don't, whose fault is that? I also feel i've divulged on ET a lot more than what most traders would...in fact, aside from mschey, i don't even know if there are any regular bright traders on here...

I think we're all good about all this, trading is an individual business, and yes, Mr. Atticus and I have communticated well today.

All the best,

Don

 

[reg]

Quote from Don Bright:

From my research department:

We were long HLT against MAR because while their P/E and Market Cap were pretty comparable, HLT's price to book displayed a 75% better value than MAR's.

That's all I can really say about that....

Don

Does your research department share this type of info with all the Bright pair traders or do the traders have to be affiliated with Pairco to gain access to this type of research?
Thanks.

 

[Don Bright]

Quote from reg:

Does your research department share this type of info with all the Bright pair traders or do the traders have to be affiliated with Pairco to gain access to this type of research?
Thanks.

Sort of joint efforts. "My" research department is my niece and CFO Christy...she uses the PairCo (extremely detailed and valuable) database, along with other research tools...she and one other niece do the research for the Family. The people at PairCo, depending on the relationship (professional connection) with individual traders will either share, or offer access for a few bucks a month. Some traders do it al themselves.

Don

 

[yobo]

Been following this thread and find it very relevant to the recent volitility in the market over the last few days.

Many rumours floating out there that some of the big quant hedge funds that trade pairs based on all the historical data from the past 45 years on companies have been blowing up.

Relationships just not acting properly. In otherwords, long positions keep drifting lower and short positions keep going higher.

The firms that are having some of the problems tend to be billion dollar funds trading with a black box.

CNBC/David Faber has been reporting this for a few days now. I think he mentioned Renniasance as one firm rumoured to be selling and deleveraging. Obviously they are not the only firm in trouble.

So the lesson is...nothing works all the time only some of the time. Problem with any trading strategy is that there is always someone else trying to beat it. Strategies often need to be changed and adjusted.

Simple Game theory. For every action there is a reaction.

Kind of like sitting at the black jack table with five other experienced players that are playing by the "Book," and you happen to be a novice so when the dealer shows a six and you have a 15 you decide to take a hit instead of seeing if the dealer will bust. All the other players get upset because you disrupt the card flow. But you don't care because you are dealt a six. The dealer now takes a hit and gets a four. He shows a total of 20, you have 21 and win. Everyone else loses because they are betting the dealer will bust.

That my friends is the environment we are in today. Markets are chaotic and patterns are being broken. Stay nimble.

 

[Hooked2000]

Quote from Don Bright:

I think we're all good about all this, trading is an individual business, and yes, Mr. Atticus and I have communticated well today.

All the best,

Don

Don,

Thank you for responding to my analysis...

So we can all agree this was not anykind of technical reversion trade. 100% fundamental and/or trend following trade...thats all

 

[GGSAE]

Quote from Hooked2000:

Don,

Thank you for responding to my analysis...

So we can all agree this was not anykind of technical reversion trade. 100% fundamental and/or trend following trade...thats all

There's a lot of pairs just trading the trend would work very well...regardless of fundamentals.