PARALLELS

I remember this time last year very well indeed.  On the 5th November last year I was indoors back-testing a trading strategy, looking out the window I could see one of my neighbours, a law professor, was outside having some beers and a bonfire with some of his students, setting off fireworks etc. 

That strategy was found wanting, it didn't work, I traded it, made a little but not enough to make it worthwhile.  I find myself going through another process now, not dissimilar to last year, where I'm looking at potential new approaches to the market.  It feels like I've come full circle but I'm now on a different parallel.

More recently I've been working on a new way to analyse prices, whether it be stocks, futures, currencies or whatever, it had been at the back of my mind for a long time, and I wasn't sure exactly how to execute it since, to my knowledge, it hadn't been done before and there's some maths involved, not really my strong suit.  And I wasn't really sure whether anything would come of it, the only way to find out was to create it and start using it. Anyway recently I figured out how it could be done and over the last few days I finished the work, and started analysing using the new tool I've made.  What I found was that it can display relationships between prices that may not be well known in the markets, at least outside hedge funds anyway.  There's no way I'm likely to find out if it's already been done or if someone else is doing the same thing or whatever.   That doesn't really matter anyway since unless I can capitalise on it then it is ultimately pointless.  In fact probably a better way to describe it is a method of tracking where the value is actually moving to.  The complex part is that even where I've found a defined relationship there are several different futures/currencies involved, so now I've actually found what appears to be a clear edge, coming up with a trading strategy that captures it, may not be easy.  It was a complex to create this new tool, it may be even more complex to get something out of it.

But then earlier today something very curious happened, I suddenly realised that there is a completely different way I can trade, a totally peripheral idea to the one I've just spent all that time working on, and the first indications look quite positive.  I've always thought that the best way to look at markets is from the side, and that seems to have been whats happened here.  I've spent time creating something completely new, that I need to do more research on to see if I can use it to create trades, and I now have another new direction to go in.

It's an interesting journey, this path that I've taken, maybe today was a signal for me to take it to a new level, a new parallel.