hi nimish ,
HOw did the conference go ?
The conference was amazing. It was a stunning hotel with some dynamic traders and hedge fund managers. However, most of these hedge funds like they usually are as the name suggests market neutral. They were basically quants fund. They have been getting good returns over the period of last 4-5 years 2008 included.
So, I learnt a lot especially from these geeky traders who use signal processing etc to apply to a range of data set. The machines costs like 1.5 crore upwards. In short I realised if you are not an investor you are risking too much as these guys have amazing machines and amazing resources.
If you are young have savings and ready to dispose off your savings in the market best way is to invest medium term to long term. Don't waste your capital short term if you can't sit on the market 24/7.
Don't have 2 business at 1 that is trade and work somewhere else too. Trading needs dedication, regular hours spent to read news, read about markets, macros etc.
In short these hedge funds didn't have any view on the market as they just seek alpha and are not beta seekers. Hence they didn't say where the market will move in the short term. The fund managers and traders sounded very clever and when they were talking about high frequency trader the conversation became even more interesting. They discussed how they switched off their computers when dow tanked below 10,700 that day on flash crash. However they didn't say the reason for shutting the system was the market risk. They thrive on it their reason was that the time it takes the for the order to be sent to the exchange and then it gets displayed on their screen increased hence the delay became massive. A bit more than micro seconds they tade on. Because there was a massive delay in the data feed they said it was too risky to trade. Hence they quit the system. The reason for the delay they said was that when things like this happens there are lot of buy orders on various support levels. However when supports got taken out there were lot of order cancellation which takes time for the exchange to process and suddenly with massive buy sell orders and massive cancel orders the loop slowed down and hence the signals were getting a delay.
It would be interesting to learn more about quantitative trading and high frequency trading however, the expenditure is very huge. I would be interested to start a thread on it and may be find material to learn from if many people are interested as I am very much interested in learning these risk neutral strategies and also new ways to trade markets.