Our Trading Methodology
We take a distinctly quantitative approach to macro trading. This involves identifying statistically significant patterns in asset prices and economic data, conducting rigorous back-testing, and ensuring nuanced construction in the development of trading models. These are processes aimed at generating accurate trading signals and they form the starting point of our system-building framework.
Even as we strive to improve our quantitative processes, we understand that we cannot rely solely on the accuracy of our trading signals. Having good trade ideas is only half the battle won.
Core to our strategies is also the recognition of inherent randomness in the financial markets. Randomness is a critical disrupter that levels the playing field. Extreme volatility and irrational price action often cause large losses on ‘correct’ trades and vice versa. History has shown repeatedly that markets never fail to surprise even the smartest and sharpest players.
For this reason, developing robust methods to master randomness is a necessity for consistent profitability.
We focus on the creation of optimal payoff profiles for each trading strategy. The aim is for each strategy to be resilient on missteps and to have exponential return in targeted scenarios. This is expressed through carefully structured execution sequences that are implemented with precision by our execution traders.
In the end, randomness makes navigating the markets a probability game. Our goal is to effectively skew the return probability of our strategies strongly to the upside. If we compare the markets to a casino, this approach aims to methodically tweak the systems such that we are always playing with house odds.
As they say, “in the long run, the house never loses”.