Some "Bright" strategies...

(I am going to post this to 2 different sections, since I am looking for suggestions below)

OK, as I mentioned above, I am willing to admit when I need to get "up to speed" on an aspect of the market, and I thank those of you who offer me some respect for longevity if nothing else. To Turok, I value your input and I value the others who brought to light my reference to attempts at hitting MM's, the time-outs, and the faded bids.

To DatTrader, I think that your review shows a good understanding of the platforms, and I thank you for your clarifications.

I am in a somewhat awkward position at times...let me explain: I may do things much differently if I was simply trading for myself, as an individual via a broker or even as a B/D. I do have to maintain a stature of full compliance with all the complex issues that come about from a regulatory standpoint, and therefore have to "tread softly" at times when it comes to market access issues (I would have a hard time explaining to regulators that "gee, I didn't know I couldn't preference a certain MM, or I didn't know I couldn't hit downticks," or make some excuse for mistakes in trading practices. (I hope that makes some sense, I am a bit tired...a long week of trading, training, and "biz development" with the "big whigs")....

I am setting up two seperate trading platforms next week (my brother is going away for 2 weeks), so I can actively trade a couple of new strategies and at the same time "get up to speed" (real time) with all the latest bells and whistles (hot keys, automated trailing envelopes, and all the cool stuff we have been working on). Since I have had to "authorize myself" for all the market access capacities (futures, SS, "montage direct" (which I think is like our old Level 3 specific routing)...and would appreciate any suggestions you all may have, or access that you may want tested or compared. Some of the results will end up in the magazine, and I will hope to be as close to 100% as possible in a couple of weeks.

Right now I have to analyze all my "year enders" to see how the tax strategies are coming. Have a good weekend!!
 
Originally posted by Don Bright
I am glad to see that you have seen clear into my soul, understand my motives, and have the ability to determine that others "are mistaken." Let me know when you're holding your next "seance"...:-)
More...


Thank you Don, your point is noted and I apologize for assuming to know your "soul" and motives. I will let my original point stand which is to say that, IMO, Bright Trading has a reputation for diluting their trader's strategies.

Your input on this board is valuable and I look forward to reading future posts.

Fletch
 
The concern with dilution is a valid one however I think that it is bound to happen with any strategy. I'm not sure how easy it would be to dilute the pair trading strategy to the point that it would become unprofitable. The strategy does not work for everyone..... even if you show it to 10 people I would bet that only 1-3 would have the discipline to stick with it. Also, there are an infinite number of combinations of pairs and strategy variations. KO-PEP is a popular pair in our office and they are not even highly correlated (if at all). I personally don't like it but others do.

That said, it is possible to notice a difference in the way a spread behaves when you have a large # of individuals playing it. This often happens when someone comes up with a new pair that trades nicely. Everyone jumps on board and it becomes more difficult to establish positions at key levels. But usually after a period of time the spread will do something new or move to a new range. Then the crowd become less comfortable with playing the spread for a while. The first people to adapt have an excellent opportunity to profit before the crowd returns.

Pair trading is not a "holy grail" strategy. Spreads can do crazy things and move against you very quickly... COF-PVN for example. It is important to share new ideas just as it is important to share your profits with those who are less fortunate. There are always new opportunities appearing every day.

One last comment..... I noticed a few negative threads posted in regards to REDI+. I am about as green (new) a trader as they come, so I don't have a lot of experience to draw from, however, I have nothing but good things to say about REDI. I don't think our office suffered a single outage all month. On average we may have 2-3 short outages per month but all we have to do is pick up the phone and call the floor. In the event that the phone does not work, I accept that risk when I click the Buy/Sell button. Slowness is also rare except during extremely busy times... still nothing compared to my old retail broker. Personally, I find the system is simple to use and when set up properly, it is very efficient.

This is my first post here and it's great to find a community where we can all share our ideas and thoughts.


Daryn
 
You are correct about Pairs not being a "holy grail"...and I might add that there is no "holy grail" "magic bullet" or "system" that is fool proof. Your COF/PVN example is valid, and we had a few who lost on it, but most expect to have losses once in a while with any strategy. That is where personal risk control comes into play. We encourage a level of diversity in pair trading, and we also encourage the intra day trading of them to lock in profits whenever possible.

Welcome aboard!
 
There has been concern about the dilution factor of sharing some of our strategies. I just wanted to assure all of our traders that we never mention specific stocks or pairs (except perhaps my own personal trades) in any forum, including our school (btw, we had record attendance last week of 74 people here in Vegas).

One concern revolves around many people participating in opening plays, and though valid to a point, we have found that even though many are doing it, the exit strategies actually help the experienced trader. Newer people tend to get excited about making money so quickly that they exit to soon...or they lose sight of (or aren't ready for) matching the opening trade with M/A or a pair.

Additionally...there are thousands of stocks to use this strategy on, and the people who do their homework are finding the ones that work consistently. Good Trading!!
 
i don't have a problem with bright's sponsorship.....but i did notice that some of the "ratings" on the broker page were removed. i'm sure that there was a methodology employed for choosing which post to dismiss which was fair, but the cynic in me would bet heavily that this move was inspired by the revenue generated from the sponsorship. just my 2 cents!!! :eek:
 
I just thought I would throw out some stuff about SSF stategies for your perusal. You option traders have to be anxious for them to get trading (we will hope for some initial liquidity). Since all option strategies should use the conversion valuations of each strike price, there should be some pricing disparities from the "long" vs. "short" interest valuations. Since we can now sell the SSF rather than sell the stock short it there will be more "players" in the game.

Initially, I would assume that the institutions who are looking for some interest on short stock should be selling option reversals (reverse conversions) and buying conversions using the SSF's.

Anyway, just thought I would try to get some input from the board. Whaddya have planned?
 
Don,

New thread for SSF's would be a great idea. I would like to see your last post re conversions, etc explained more fully. Lot of disagreement as to whether this will be a viable product. I think it will come down to whether they try to ream us for the data, whether there is liquidity like with the futures or are they dead like most equity options and how friendly the trading platform is. Personally, I have enough to trade without them, but I would like to trade them if they offer clear advantages. If it appears the exchanges and MM's are up to their usual game, I and I suspect many others will just say why bother.

It is not clear to me when they will start trading either. First it was January, now they say later because of 9/11.
 
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