Bill Gebhardt from 10Dynamics discusses the intriguing intersection of market efficiency and systematic trading strategies. He emphasizes the idea that while traditional views suggest markets are efficient, many hedge funds continue to find success using price-based strategies that should theoretically not work. This paradox leads to a fascinating exploration of the psychological aspects of trading, particularly how human behavior can create opportunities for systematic traders. Gebhardt shares insights on the operational complexities of running a nearly continuous trading process, utilizing intraday data, and employing a diverse range of signals. The conversation explores the risks of underfitting versus overfitting in trading models, ultimately advocating for a strategy that embraces empirical success without excessive optimization.
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Episode TimeStamps:
02:17 - Introduction to Bill Gebhardt
06:35 - No pain, no gain
08:40 - Why are they called 10Dynamics?
10:08 - What is their philosophy behind how markets work?
12:24 - Are the signals that they run based on trend following?
13:47 - How they handle the operational complexity of their system
18:15 - How they assess the validity of their data
20:39 - Exploring the technical details behind the execution of their system
22:39 - How they approach trading times
25:07 - Combining short and long term trading
26:52 - How they avoid overfitting and underfitting
30:58 - How Gebhardt implements his experience from the energy space
33:54 - How many markets do they trade?
35:50 - Accessing the domestic futures markets
36:56 - Why are single name equities so special to 10Dynamics?
41:08 - How they approach VIX futures
43:39 - Their perspective on replication strategies
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