look, i love your fear mongering but i have been spread trading for a while, on indexes, crude, etc. and i understand the dynamics. as i said, i can't speak to "pair trading" a la bright. i was mentioning spread trading.
it is not rocket science, any more than trading itself is rocket science. develop an edge, control risk, and stick to your rules and stops - ALWAYS.
that's how i trade.
and i didn't say trading a spread was easier than trading direction. i said it mostly eliminates market risk, which is true.
in trading a spread, you HAVE ot get the divergence right to make $$$, just like when trading direction, you have to get the direction right. i never said it was EASY.
it's trading. it took me almost a year of losing money before i became successful at trading, and i learned , as the columbian say "with blood". i respect the market.
but i don't care how many other quants are spread trading. i have my methodology and it works. even without 100 phd's
"OK, I need to say something here. I hear statements like this all the time and I have to call BS when I hear it. Guys, it does not matter if you are trading direction, volatility, or a spread price, there is nothing easy about trading. Trading a spread is no easier then trading direction. In fact, I will go on record and say it's harder. And let me tell you why. Usually when a spread goes against you, you have no reason why it's going against, you just know that it should trade within a certain band. You don't understand it except you believe it should. At least if you are long or short the ES at certain levels, you have an idea why you are wrong if you get stopped out.
Also, when spreads go against you, they can explode against you. They can get very violent. In fact, the irony is they are actually much more volatile then the actual indices themselves. I love how guys paint pair trading like it's so easy. It's incredibly difficult because you are driving the car but you don't know what's underneath the hood and if the car breaks down, you don't know why. You are basically driving blind."
