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The Small Exchange (www.smallexchange.com)


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The Small Exchange (www.smallexchange.com)

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  #61 (permalink)
 SBtrader82 
Rovigo (ITALY)
 
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SMCJB View Post
Aren't 1) and 3) contradictory?

sorry, I was not very precise in describing point 1 and 3.
Tom Sosnoff thinks that you cannot beat the market by taking purely directional trades, so let's say that my method is just going long/short NQ, GC or any other markets, according to his vision there is no way to develop an edge because market is random. Since he is a great believer in the whole option paradigma and the BlackSholes model etc... then market are efficient and you cannot beat them. (this is point 1)

However markets have the tendency to go from one state of high volatility to a state of low volatility and this creates an "asset class" (i.e. volatility) that can be traded efficiently because whenever the volatility increases then you can bet that it will contract. So you are a volatility seller. (point 3)

So if you believe in the option "world view" (I don't) there is no contradiction.

In my view trading options is like any other kind of trading, the fact that options strategies are more complicated to understand than futures does not mean that you will make money by simply building mean reverting strategies based on vol. contraction.
Also, I have the feeling that options trader often misunderstand a math hypothesis that was "assumed" (and never tested) to build an elegant mathematical model, with an absolute truth.
I read the work that gave the nobel price to Myron Scholes and Robert Merton for the BlackScholes model for option pricing. Ok, it's an elegant paper and an interesting math proof but honestly is far from reality.
The assumptions in the paper are "standard" assumption that have a long story in telecommunication engineering and they all come down to the fact that the genius of Claude Shannon applied telecommunications concepts to the markets.

I have observed throughout the years that many options trader have this myth of the options price model, but one reason for it is that they have really no formal math background. Tom Sosnoff is a genius but he is not a mathematician. I am not a pure mathematician either although I was doing an applied math Phd in the past... I am not an expert in BlackScholes r but I read the paper for what it is.
A great model, but very far from reality.

Quite interestingly if you build a simple market simulator and assume that price increase are gaussian distributed you can make money by simply taking random trades with risk reward above 1:1. The only condition is to have both stop and targets within the standard deviation. (I did this experiment).... so if the model was correct you could actually beat the market with directional bets. jajjaaj

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  #62 (permalink)
 Big Mike 
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@SBtrader82 please create a new thread so we can discuss those points.

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  #63 (permalink)
 SBtrader82 
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This is the new thread.... I hope you like the title :-)


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  #64 (permalink)
 SMCJB 
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bobwest View Post
This is a great discussion. (Too bad no one thought to move it to the new thread opened for this purpose, but that's what happens sometimes.)

Your the mod. Can't you split this thread/move the relevant posts over?

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  #65 (permalink)
 bobwest 
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SMCJB View Post
Your the mod. Can't you split this thread/move the relevant posts over?

What an idea!

It actually had occurred to me, but for some reason I let it slip my mind (didn't used to happen nearly so often....) and I forgot.

So, instead of just wagging my finger at people, I just moved all the posts over to the other thread.

If anyone isn't sure where that is, there's a lot of good discussion over at that thread now:



Thanks for the nudge!

Bob.

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  #66 (permalink)
 Silver Dragon 
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Starting Monday 2/22/21 the Small Exchange will be offering 2 year and 30 year futures along with the existing 10 year future. Click the link below for details.

Robert

2 year and 30 year details




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  #67 (permalink)
 FuManChou 
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You can now trade Small U.S. Crude Oil contracts on the small exchange. See link below for more information.

https://www.thesmallexchange.com/products/smo

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  #68 (permalink)
 futs 
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Yep, pulled off a trade on the way up to half after that drop. It was very easy to hold with the much lower risk than /CL.

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  #69 (permalink)
 FuManChou 
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I finally got the small exchange setup for live trading in MultiCharts and will be looking to trade some soon.

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  #70 (permalink)
 FuManChou 
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POT!!!!

Looks like the Small Exchange will be releasing a new product (*Product pending all relevant CFTC filings). See image below and link below for more information.


S420



https://go.smallexchange.com:443/s420

https://www.thesmallexchange.com/products/s420

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