097: Derek Wong – How to Think About Strategies Like a Quant and Diversify Like a Boss
Chat With Traders
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How to Detect When to Trade a Divergent Strategy
If we had a convergent strategy, our big hump would be on the right side of zero. We'd have a very high win rate but our tail would be to the left and that means we would have a lot of infrequent but large losses. That means we'll have a big fat lump where we're losing more frequently with a big right tail which is characteristic of a trend falling so that'd be a divergent. How do your algorithms programmed or how strategies set up to detect when to trade a convergent or a divergent strategy? That's a good question. First of all, we need to think top level and for the most part, when you make a fund, you
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