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Michael Bigger is an investor and a trader who has been involved with trading technologies for more than twenty years. In 1992, Michael joined Citibank as head trader of U.S. single-stock derivatives, where he managed a $5 billion portfolio of equity derivatives. In 1998, he joined D.E. Shaw & Co., L.P. to trade the U.S. equity derivatives portfolio. (More)

Creative Flow

In Praise of Speculation

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    « Value Investing Made Smarter | Main | Tools to Make Spread Trading Easy as a Summer's Breeze »
    Tuesday
    Jul032012

    The Best Trading Video Ever

    DateTuesday, July 3, 2012 at 11:54AM | by AuthorMichael Bigger | CommentPost a Comment

    If I had one trading video to recommend, Charlie D's trading video would be it. This video was created in 1989 and it is a must watch for all traders. I want to thank the trader on Twitter who lead me to it (unfortunately I can't remember who it is).

    Here is a cool example of how we applied Charlie D's advice recently. On June 28 after the market closed, this tweet from Aris David caught my attention.

    FYI, Europe covered before the close FTSE last minute rally $EWU

    Our signal had a  super strong buy signal going into the U.S. close and we were waiting for a dip to buy. After the market closed at 4pm, the S&P futures went down 7 points and we decided to buy a bigger futures position based on our signal and Aris' information. We thought someone new something about Europe given how the FTSE closed and the S&P selloff presented an attractive opportunity. We had more conviction and we committed.

    That is what spread trading is for us. Trading the relationships. Not only the statistical relationships between stocks, but information against information; a stock price against its intrinsic value; price against news. Spread trading is about exploiting two levels of potential energy and their relationship.

    The next day, the market went up about 2 percent. Someone knew and we exploited it.

    Do you understand why spread trading is so interesting?

    Written by Michael Bigger. Follow me on Twitter and StockTwits. 

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