// System
How a system tries to make money.
A trading program always carries an assumption about why a price moves. Eight basic kinds, each with its catch. Scroll.
01 · Arbitrage
The same thing at two prices.
Buy cheaply there, sell dearly here, in the same moment. The catch: the gap is gone in milliseconds — without the shortest line you arrive too late.
02 · Market making
Earn the spread, not the direction.
Always quote a price to buy and a price to sell. The catch: you get filled in full exactly when everyone runs the same way — and you hold the position nobody wants.
03 · Trend
What moves often keeps moving.
Join the direction that is already running and stay until it breaks. The catch: many small false starts against a few large hits.
04 · Mean reversion
A spike usually comes back.
Trade against the exaggeration and wait. The catch: sometimes the spike is a beginning — then the loss grows with every step you add.
05 · Pairs trading
Two things that normally move together drift apart for a while.
Sell the dearer one, buy the cheaper one, wait for them to meet. The catch: “normally” is an assumption about the past.
06 · Carry
The money comes from waiting, not moving.
Some positions pay you for holding them. The catch: it goes well for a long time and then very badly once — the premium pays for exactly that once.
07 · Events
The price jumps when something new becomes known.
What is traded is the reaction, not your own opinion. The catch: it takes milliseconds, and part of the news is already in the price — whoever reads it trades the second wave.
08 · Order book
Read the next small step from the jostling of orders.
Who wants how much at which price. The catch: that holds for seconds, and orders lie — placed to be seen.
// And here?
Patterns in the price.
Movement that keeps running, and spikes that come back. Not arbitrage and high-frequency trading: those need lines and locations a small firm does not buy.
At the end: the JKHD mark — Quant Systems, Just Know How to Dominate.