Formulating New Ideas in Any Market Condition
April 05, 2018 – Present
-Consistency is the road to sucess
Our ideas stem from multiple sources including analyst research, general news outlets, and our own software which screens for potentially profitable trades based on parameters we have established after reviewing our successful trading history. Our medium term trades are more reliant on fundamentals than our short term trades, which tend to be driven by near term catalysts, such as earnings announcements or other expected corporate news, the involvement of activist investors, or technical factors. Although we are not day traders, we do trade frequently, responding to intraday developments if they significantly alter the expected result of an existing position or create a new opportunity for a profitable trade.
While we are not quantitative traders, we do use statistical information to establish positions with higher expected values. Take, for example, the flip of a coin. The odds are 50% that it will come up heads and 50% it will come up tails. The expected value of betting a dollar on either one is a dollar – half the time you will end up with two dollars and half the time you will end up with zero – leaving you right where you started. In the options market, it is possible to structure trades where the expected value is greater than the cost of the trade. These trades are our “Honey on Toast.”
In reviewing our trading thus far, the single biggest factor driving our success is good trading instincts around structuring sound risk/reward profiles. Fundamental and statistical analysis can lead you to establish potentially profitable positions, but the outsized returns we have achieved so far can only be explained by an astute reading of market action and timely execution.
More than 70% of our trades have proven profitable over the last year.