What style of trading would you teach your son?
- Thread starter David's faith
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nah, my man. You become MM out of necessity or because you have an infrastructure advantage but believe me, making markets is a pig job
I highly second that. I would even say that knowing the difference between value and price is such a required skill that 90% of traders do not know.
And it doesn't matter if you evaluate a business, the micro price in the orderbook or a synthetic forward rate. If you don't buy below value and sell above value you'll find it pretty difficult to make money.
I didn't have a lot of mentees but the ones I took under my wings always had to start scalping craigslist or eBay. Keep track of offers and sale prices on each platform, calculate fair value including freight and insurance, learn to build a non - correlated portfolio (aka don't flip PS5 and PS4 games), find a niche and be efficient with your cash.
No charts, no machine learning hogwash, no backtesting just common sense. Risk premium and alpha. Learn how to spot it and how to tell the difference.
You don't need to become a milionaire (and you probably won't) but you'll learn what it takes to be a trader AND you'll learn why financial markets are so much better when you are profitable.
When they transitioned from craigslist to derivatives after 3 months it took most of them just 6 month on average to turn a profit
if you own the machine, it's the best way to make money. if you are a cog in the machine, it's not an optimal place to be... highly specialized, only a few employers, beholden to the volume and volatility of the market, and always arguing for your value contribution vs the inherent seat value.
How to run the library of Algos he will inherit.
No question... intraday and short term... self-reliance as long as government regulation "allows". That's part 1.
Part 2 is putting excess to work with a passive bent, akin to a Ramsey investment plan, but not Ramsey's plan.
Part 2 is putting excess to work with a passive bent, akin to a Ramsey investment plan, but not Ramsey's plan.
Modern Portfolio Theory (MPT). Although from 1952, and not so “modern,” it requires the investor to understand fundamentals of a spectrum of markets. It earned Markowitz a Nobel prize in Economics. Basically normalization of portfolio returns via diversification across asset classes.
It will expose him to all the major markets, and form a solid basis for specialization into securities of interest.
Have them set up a balanced (paper) MPT portfolio with stocks, bonds, fx, options, futures, foreign stuff, crypto, etc. Have him learn the basics of all these asset classes, and see how it performs.
https://en.m.wikipedia.org/wiki/Modern_portfolio_theory
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