When you see all the flashing lights on your screen, this is only a glimpse of the actual market, but the discipline of trading comes down to not only consistency, but simplicity, a few consolidated numbers: Entry, Profit Target, Stop Loss (in the most simplistic case).
What Quantum Edge AI attempts to provide is a suitable AI framework for the trader to consistently profit. Being tired of the gimmicks of indicators and other “signal” or “alert” providers is typical, this is not a gimmick. We’re providing actual Artificial Intelligence, training neural networks and inferencing on live real-time data, models tailored specifically for stock and option traders.
Let’s get back to the strategy…
As shown on your dashboard, you have some positions which are highly correlated. For example AAPL and AMZN. Most of the time these positions are highly correlated. Since this is the case, you can perform what…
I call “Machine Learning Arbitrage” and evaluate the distances from these certain positions away from their Close Forecasts in order to potentially trigger an entry for arbitrage (Long 1 position, Short 1 position).
For individuals unaware of why traders do this, I will simply say that you neutralize what’s called “Beta Risk”, this is the risk of movement in the overall market. Although you do increase another form of risk due to the fact you are in 2 positions, rather than 1. This is a typical strategy amongst day traders looking for arbitrage opportunities in stocks.
Hypothetically, the Close Forecast for AAPL is 1% above its current price, and META is 1% below. Hopefully it is fairly obvious what you would do in this position (you would Long AAPL, Short META). Also make sure to balance the position sizing accordingly, possibly using standard deviation as the metric.
You can also find another opportunity to hedge your remaining position if the first has closed. This is where the screener and watchlists come into play. You find another Short or Long opportunity given the screening process and use it to find a compatible position to hedge with if the opportunity doesn’t exist in your dashboard.
Okay, so you set the profit targets at or around their Close Forecasts, and now you wait. You can either leave both positions until one of them has reached their profit targets or both. If neither have reached, you can close all positions at the specified duration and move on to find another opportunity.
