Aug

24

V NAt the traditional Rose Garden meeting of the Specs, held in alternate venue this year because of recent storm damage, I very properly pointed out that my wisdom was very much limited and that the participants could enlighten each other at least as well as I could. We had a very interesting discussion of stops sparked by Anatoly.  Topics discussed included the skewness caused by stops, the sickness indicated by using them, and the expectations after based on the reflection principle as well as the resonance behind the rule " never meet a margin call with new money". A very nice dissussion of oil led by J.P. Highand, with related discussions concerning the movements opposite to the current quantity demanded at the current price, and the evening out of positions overnight as well as the volatility related to price, and the related disconsilience between natural gas and oil. What has to give? A grain trader remarked that he liked to fade the 30 second movements in wheat but not the 30 minute ones, and how it related to fills.

Inspired by the qualitative talk, I added a few things that I would add, change or emphasize if I wrote Ed Spec now. The first one was "always assume that a friend will take care of the interests of his romantic partner ahead of yours." This led to a nice discussion of cronies and related market movements.

The second was "always read and know the rules of the game you're playing with particular reference to how ties are handled and the exact starting and ending procedures." This led to a discussion of whether the robots are better equipped to beat you at tied bids and offers and the speed of light and what can be done when the opponent has better equipment than you.

The third was "always assume that the web, feeding chain, and leading relations between markets, the 'California' that sets the trends for the rest of the world, will change. Particular attention was focused on how the California of the yen goes through Baconian cycles in this regard.


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