Developing an edge in global macro trading - Please shed some light
Hi all,
Having been working on systematic global macro commodities prop trading at a shop for a while, I would like to hear your thoughts about developing an edge in trading. Do you think digging deeper into the fundamentals of the energy trading world will lead to an edge? On the other hand, I can of course stay at the systematic/technical/quant level - there, what I learned are things like backtesting trend-following, mean-reverting, stat-arb, pairs-trading stuff. These techniques are okay, but will I be able to improve my edge if I gain deeper understanding about the refineries, pipelines, chemicals, etc? My background is half economics and half quantitative science and I have lots of interests in both the fundamental and quantitative worlds. I just wanted to know where I should better spend my time studying... The oil traders I've chatted with seem to care more about sentiment and flow, gained thru social, drinks, parties and chatting with their fellow traders.
In order to be specialized in energy trading, shall I look for positions that allow me to work with an energy trader?
Please shed some lights on me. Thank you!
IMO a true edge is developed through idea generation. If YOU think by digging in the fundamentals will help you find an opportunity to exploit the energy complex so be it... No one can tell you how to be Paul Tudor, you just craft it through trading the market.
Good Luck Trading!
If you're looking to be more fundamental, then read, read, read, and then read some more.
I'd say that knowing more fundamentals definitely can't hurt...
Developing an edge in global macro trading - Systematic global macro commodities (Originally Posted: 06/19/2011)
Hi all,
Having been working on systematic global macro commodities prop trading at a shop for a while, I would like to hear your thoughts about developing an edge in trading. Do you think digging deeper into the fundamentals of the energy trading world will lead to an edge? On the other hand, I can of course stay at the systematic/technical/quant level - there, what I learned are things like backtesting trend-following, mean-reverting, stat-arb, pairs-trading stuff. These techniques are okay, but will I be able to improve my edge if I gain deeper understanding about the refineries, pipelines, chemicals, etc? My background is half economics and half quantitative science and I have lots of interests in both the fundamental and quantitative worlds. I just wanted to know where I should better spend my time studying... The oil traders I've chatted with seem to care more about sentiment and flow, gained thru social, drinks, parties and chatting with their fellow traders.
Please shed some lights on me. Thank you!
No, right now your edge will not be improved by learning more about refineries pipelines etc, because of all the manipulation that goes on in commodities market. Once the manipulation stops, then you can gain an advantage against other traders who do not have the type of knowledge which you may. Anyways, I really don't think a true "edge" exists. I think for this to exist, you would need access to information which others in the market did not have the ability to obtain. IMO the closest thing to an edge lies in your risk management.
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