Trade Bitcoins, Ethereum, Litecoin Online

I frequently get asked about how to trade crypto currencies. Aspiring traders see the daily swings in the bitcoin price and wonder whether they should take up trying to pick the highs and lows by trading. This post will describe some trading methods and provide you with a list of venues where you can trade.

The first thing to understand about crypto currencies such at bitcoin, ether, and litecoins, is their value is represented by their market price which is simply set by the powers of supply and demand. There is no central authority that determines their market price, so if you want to profit from the daily price swings, you’ll need to have a trading strategy that takes advantage of this volatility.

You’ll also need to choose your trading venue(s). Where you trade will be based on your trading strategy, but also on your legal/tax jurisdiction. Since you’ll need to comply with the laws of your local government, you should choose exchanges that are compliant for you. The place where you trade will be different if you’re American, Canadian, European, Japanese, etc. And sub-state governments such as provinces and states will also have their own laws. It’s common today for each US and European state to regulate bitcoin differently so do careful research to ensure you are trading in a tax compliant way.

The place(s) where you trade will also depend on your strategy. If you are arbitraging the bitcoin price between different exchanges you’ll need to hold accounts at more than one place, and also have wallets that serve as conduits/transfer nodes for cash, if you’re making your trades manually you’ll be more concerned about the trading dashboard and other human readable analytics, but if you’re using a bot to conduct your trades you’ll need the best API access with easy to use functionality.

Here is a step-by-step tutorial of how to trade on QuadrigaCX, a Canadian based bitcoin exchange. Once you open your account, you can fund it with Canadian dollars using Interac if you verify your account. You can also fund your QuadrigaCX account with bitcoin, ethereum, and litecoin without verification.

Once logged into QuadrigaCX, choose the “trade” tab from the header menu near the top of the page. As the image below shows, you’ll arrive at a page that shows the current market for CAD/BTC with a simple interface you can use to buy and sell. You’ll notice the best bids are listed on the left side in green, and the best offers are listed on the right side in red. These prices are bids and offers from other users on QuadrigaCX just like yourself who are buying and selling. You might be familiar with a market like this since it operates just like a stock market such as the TSX and NASDAQ.

 

 

You’ll notice on the image above, the current market has a best bid of $9,995.01 and a best offer of $10,000.06. This means another user is willing to buy at $9,995.01 and another user is willing to sell at $10,000.06. If you’d like to make a trade right away (a market order) you can sell to the user bidding $9,995.01 and buy from the user offering $10,000.06.  Depending on your trading strategy, you might only be willing to buy at $9,500, so in this case, you can place a order at that price and join the other bids in the order book. Your order will be placed with the quantity you determine at $9,500 until the market drifts down to that level and another user chooses to sell you their bitcoins at that price. Conversely, if you’d like to sell your bitcoins, but only at $10,500, you can place this order as well.

On QuadrigaCX, limit orders placed manually on the dashboard do not have expiration dates, so all orders are essentially good till cancelled (GTC).

As you review the order book from the image above, you will also notice an “amount” beside each price listed in the order book. This is the quantity being bid or offered by all users at that price. This quantity will help you determine whether your order can be filled entirely at the posted price or whether you should choose to pay up or offer down from the best posted price.

 

 

When trading, always keep the fees in mind QuadrigaCX charges an explicit fee of 0.50% per transaction. So if you buy 1 bitcoin at $10,000 CAD, your actual cost will be $10,050. You should also pay attention to the “spread”, which is the difference between the best bids and offers. Using the example above, with a current bid of $9,995.01 and an offer of $10,000.06 the spread is $5.05 or 0.06%. The spread represents an implicit cost of trading too.

Here’s an example of an easy to implement manual trading strategy with a bullish bias. Say you have $1,000 CAD to trade with, you’ve noticed the price of bitcoin is quite volatile, so you plan to make a market on QuadrigaCX to take advantage of this volatility. You will risk 10% of your account with each trade so your unit size will be 0.01 bitcoins since the current price is $10,000.

You place an order to buy 0.01 btc @ $9,993, which is slightly below the current market price using the example image above. You place the order and wait for the market to come to you, when your order is filled, place an order that is 3% above your purchase price (9993 * 1.03 = $10,292), enter your order to sell 0.01 btc @ 10,292 and leave the order in the market.

In the meantime, if you’re still feeling bullish, place another order below the current market, and if this order is also filled, place an order 3% above your fill price. Keep doing this until you reach the maximum value of your account. As you do this, the price of bitcoin will bounce around going up and down, and your orders will fill at prices where you make a spread between your buys and sells. You profit when the price of bitcoin trades within the range of volatility your limit orders imply, and you lose when the price of bitcoins drops straight down.

This is a simple market making strategy with a bullish bias that takes advantage of the volatile price of bitcoin. You can obviously tweak your own strategy to suit your own goals. You could use technical analysis to choose your entry and exit points, etc. Its completely up to you!

Follow this link for a long list of exchanges from around the world.

QuadrigaCX Common Account Verification Questions

Opening an account at QuadrigaCX is the best way for Canadians to buy and sell cryptocurrencies such as bitcoins, ethereum, and litecoin. If you are a Canadian who wants to begin trading or investing in cryptocurrencies on a safe Canadian based bitcoin exchange then you’ll need to open and verify your QuadrigaCX account. It might seem daunting at first, to give QuadrigaCX your personal information, but this is for your own safety since QuadrigaCX is complying with all Canadian money laundering law (AML) so you can be sure you’re following all relevant Canadian laws by using QuadrigaCX.

To verify your QuadrigaCX account, you can either connect your Equifax account, or you can upload your identification manually. The information required includes:

  • A Photo or scan of a Passport or Drivers license – must be in colour
  • A Photo or scan of a bank statement or utility bill showing your name and full address
  • A Photo of yourself holding the government issued ID that you have provided

When I registered, I took a picture of my drivers license from my phone, I downloaded a copy of my phone bill from Rogers.com, and I took a picture of myself holding my drivers license. A few minutes later, a representative from QuadrigaCX called me to confirm my identity, and even asked me to confirm some credentials listed on my LinkedIn profile.

 

 

Here are some common verification questions:

How long does ID & Address verification take?

ID & Address verification is processed manually by the QuadrigaCX Fraud & Compliance team and they aspire to process all new applicants within 72 hours. However, during times of incredible demand for crypto-currencies, there may be delays.

What do you require for ID & Address Verification?

QuadrigaCX uses a manual process performed by members of their Fraud & Compliance team.

Requirements:
– Photo or scan of a Passport or Driver’s license – must be in colour
– Photo or scan of a bank statement or utility bill showing your name and full address
– Photo of yourself holding the government issued ID that you’ve provided. In the same picture have a note that reads “ID VERIFICATION FOR QUADRIGACX.COM” along with today’s date. Make sure your face will be clearly visible and that all ID details are clearly readable.
– Business accounts are required to provide an extra document that supports you are in control of the company, such as articles of incorporation and corporate resolutions.

All of these requirements must be uploaded via the secure file upload within the verification section.

Does QuadrigaCX accept international IDs?

Yes, QuadrigaCX accepts IDs from almost all countries with the exception of the Unites States of America. Canadian Money Service Business (MSB) laws prohibit QuadrigaCX from servicing clients within the Unites States of America. QuadrigaCX will not service US citizens or clients utilizing bank accounts domiciled within the Unites States of America.

Do I need to be verified to trade on QuadrigaCX?

Verification is not required if you plan to fund your QuadrigaCX account with bitcoin, ether, or litecoin and then trade on the exchange for any other fiat or crypto currency.

How does the verification process work?

For Canadian users, QuadrigaCX offers two methods of verification. To become verified, users must complete at least one of the two verification methods:

  1. ID & Address verification where you securely upload copies of your ID and proof of address.
  2. Instant verification in partnership with Equifax where you are served multiple choice questions based on information within your credit file.

By completing either form of verification you enable numerous funding options. Users who complete ID verification gain maximum Interac Online limits and those who complete both methods of verification unlock additional access to EFT (Electronic Funds Transfer) funding.

Do I need to be verified to withdraw?

Verification is not required withdraw any fiat or crypto currency from the exchange. Verification is only required to fund your account with CAD or USD.

How to price CoinRoster bitcoin pools

This post will describe how to use binary options to estimate the odds of a pari-mutuel pool. Friends of mine run a fantasy sports site called CoinRoster where they host pari-mutuel pools on a variety of topics including the bitcoin price. The CoinRoster bitcoin pools are fairly straight forward, users are presented with a binary question such as “will the bitcoin price be over/under a fixed price at a future date”. As the image below shows, at the time of writing, CoinRoster had a pool asking whether the price of bitcoin will be above or below $5,000 USD on February 1st 2017 based on the CME reference price. This pool closes in a few hours with the current bitcoin price is $6,352.

This is a simple market with two possible outcomes, the price will either be $5,000 and above, or below $5,000 as described by the pool’s terms. With the current price of $6,352, we can use a binary options calculator to determine the theoretical price for each outcome. We can even go a step further by converting the binary option price into an odds number format that you prefer, in the example below, I use decimal odds.

To start, let’s tally all the information we need to price the binary option:

Days Till Expiration 92
Strike Price $5,000
Underlying Price $6,352
Volatility 90%
Risk Free Rate 1.25%
Distributions 0

The days till expiration is the settlement date of the pool, in this case, the pool closes on October 31st, and settles based on the February 1st price, this is 92 days.  The strike price is $5,000 since this is the price that the pool uses to determine the outcome (either above or below). The underlying price is the current price of bitcoin, which is $6,352. To estimate the volatility, I used the average implied volatility rate for options on deribit.com, I chose a level of 90%.  I used a risk free rate of 1.25% and there are no dividends or distributions which might impact the price, so this number is zero.

Now we have all the variables, to determine the binary option prices, simply visit a free binary options calculator online and plug in the numbers, below is a screenshot.

With these variables entered, we get a result of a binary call price of 0.62 and a put price of 0.38. The first thing we should notice is since there are only two possible outcomes, the sum of call and put prices should be exactly 1.00. We should also notice that the call option is worth much more than the put option, this makes intuitive sense since the strike price is $5,000, while the underlying price is currently $6,352, making the call option “in the money”.

The binary option values can also be viewed as percentage chances, in other words, a binary option value of 0.62 is like saying there is a 62% chance of the outcome happening. To convert the binary option into an odds format such as decimal odds, simply divide 1 into the binary price = 1 / 0.62 =  1.612 or oppositely 1 / 0.38 = 2.63. Now we have an estimated price for each outcome in this pool, 1.612 for above and 2.63 for below.

In this example, the main variable that will impact the calculation is the volatility rate. We could assume different levels of volatility and get much different results. For example, instead of using a volatility level of 90%, if we used a level of 30%, the result would be binary prices of 0.935 call and 0.065 put. This makes intuitive sense since the less volatile the underlying is, the less likely it is to make big swings “out of the money” in this case, below $5,000 by February 1st.

The CoinRoster bitcoin pools are fun ways to bet on the price of bitcoin, whether you are hedging or speculating.

Price of a Binary Option

Consider an underlying price of 918. You are presented with the choice of buying or selling a European binary call option with 1 day till expiration and a strike price of 918 (i.e. at the money). The 30 day historical volatility of the underlying, as measured by standard deviation, is 5%, and the risk free rate is 1.50%.

Since this is a binary option, the bet is about whether the underlying price is going up or down tomorrow. So how should this option be priced?  If the price of the underlying is more than 918 in a day, the binary pays off 1, if the price is lower than 918 in a day, the binary pays off 0. Is this a 50/50 bet?  An amateur would say the option should be worth 0.50 since there is an equal chance of each event happening. But the price of this binary call is actually worth slightly more than 0.50. How so?

To value the option scenario described above, we need to consider the (1) time value of money and (2) the volatility of the underlying. If we use a black-scholes model, with the variables listed above, we come up with a call price of 0.506.

Try out various calculations on this example, check out the CME binary calculator link, here.

Using the same variables, but changing the time to expiration, comes up with the following values.

Days till Expiration Binary Call Price
1 0.506
30 0.531
90 0.552
180 0.572
365 0.599

More Bitcoin Gambling Sites to Review

Bitcoin gambling is still in its infancy, and there are many new innovative competitors emerging. Below is a review of three bitcoin gambling platforms that provide betting on events.

Bitbet.us

Bitbet.us offers pari-mutuel markets on a range of topics including politics, sports, entertainment, and bitcoins. Like many other bitcoin betting sites, users do not open an account with the site in order to make a bet. With the nature of bitcoin, users send their bet to a bitcoin address of the site, and if the bet is a winner, profits are then sent back to the same address. This enables users to remain anonymous.

Another interesting aspect of bitbet.us is they allow users to create and settle their own markets. Bitbet.us provides users with brief guidance with how to propose markets. I’m not sure their system is working very well as only 21 markets are currently listed on the site. I think bitbet.us would have a better platform if they created a easier system to post markets, and posted their own standardized markets in order to give users more choices since the marginal cost of posting and settling a contract could be low.

Another problem I noticed with bitbet.us is many of their listed contracts close in the distant future such as months in advance. Having markets that close in the distant future (longer than a few days) is a problem for a pari-mutuel market because there is no incentive to bet early. Sophisticated users will wait until the final moments of a market to place their bets because they will gain the information of the market (how much is bet on what) and from the underlying event. For example, a sharp better will take the market action into account before placing a bet by looking at the odds and amounts on each outcome to see whether the pool odds reflect alternative market odds or handicapping odds.  A sharp better will also use the current information of the market to place their bets.

To use a market on bitbet.us as an example of the problem with their market structure, let’s consider the market currently posted of “Francois Fillon wins the 2017 French presidential elections”. The market closes in three months and will be settled shortly afterwards following the election results. There is no reason why a better would place a bet this early in the market!  The early better only gives themselves a disadvantage. bitbet.us would do a better job if they created and closed the market each week, and then settled this “serial” of contracts at the same time. What amazes me is that there is already 6.98 btc bet on this market, and with a 2% rake from the pool, bitbet.us has a profit of 0.14 btc locked in.

Based on site stats, bitbet.us has collected over $600,000 worth of rake in the past two years of its existence.

Fairlay

Fairlay is a bitcoin binary option market. Its the closest thing to InTrade still available. The market displays odds on particular binary outcomes. For example, if a question is asked such as “will Emma Stone win best actress at the Oscars”, the outcome is either yes or no, and the current odds are displayed as 2.10. Users can toggle the odds format they want to display between decimal, american, and fractional. Fairlay also offers markets on a wide variety of topics such as sports, entertainment, entertainment, bitcoins, etc.  I can tell that they’ve made some effort to create markets automatically so there is some consistency in the way contracts are listed.

I noticed there are a bunch of markets on Fairlay without any volume, but there are still some market makers posting prices. Making markets on Fairlay can be profitable, especially where there are alternative venues with the same market structure (such as being able to place a bet on the oscars on William Hill and then comparing those odds at whats listed at Fairlay). I’m generally impressed by the Fairlay system. One of the early challenges with InTrade was latency. With new technology and programming methods, many of the latency issues are easier to overcome today.

Fairlay charges a 2% on winning bets and no fees on certain markets. They also list denominations in mBTC.

BetMoose

BetMoose is mostly a pari-mutuel marketplace, but there are a limited number of fixed price markets available. BetMoose users are also able to create their own markets.

The most innovative thing that BetMoose does is provide a time weighted factor to pari-mutuel bets. This is an attempt to encourage early betting. Their formula = 1 + (0.005 * # of hours between the current time and the bet deadline). As you can see, their formula provides a linear incentive, and does not account for the log-normal value of time. To provide a more accurate time weighted incentive, they should apply a log normal function. But kudos to BetMoose for even thinking of this. Its something that I’ve proposed and I’m calling it a dynamic rake.

 

Each of the sites discussed has its own pros and cons. I think one thing that the entire group of sites could do better is standardize their contracts. Its a good idea to have users post and resolve their own markets, but the value that a site can provide is minimized and I think it creates a more disorganized user experience. It would be better from the average user’s perspective to be able to easily view and manage a number of consistent markets. These standardized markets should be posted by the site so they are standardized over time periods. This way, its easier for users to compare and make more bets over time without having to worry about the particulars of each contract or market.

Although Fairlay is probably the best of the three, BitBet.us and BetMoose can improve their user interface. I also wonder why none of these sites has an open API. High volume betters really appreciate an open API that they can use to manage their markets in their own dashboard since they are managing a book for trades/bets over multiple platforms.

 

Dynamic Pari-Mutuel Rake

Recently, Bob Dancer posted a blog that briefly reviews US Fantasy, which is a pari-mutuel based fantasy sports product currently being offered in Nevada. Bob Dancer touches on two major areas where US Fantasy should improve. First, there is no app and no ability for bettors to place wagers online. This is a major drawback for players. Much of the growth of sports book handle over the past few years is due to the increased access that players have by using mobile apps. But this is also a fairly straight forward downside to overcome. It just takes some commitment of time and resources by US Fantasy.

The second area where Bob Dancer thinks US Fantasy can improve is in the basic structure of the games. He notes because US Fantasy uses a pari-mutuel format, there is no reason to bet early. It is in the player’s best interest to wait as long as possible to place bets. Waiting longer gives the player two major bits of info. By betting late, the player gets to see more of the pool structure. The better can see the latest wagering odds. By betting late, the player also gets to use the latest information on the event.  This could come in the form of scratches, lineup changes, weather, etc, that can impact the outcome of the event.

I think Bob Dancer makes two good points and his comments got me thinking more about how the pari-mutuel DFS model and pool wagering in general can be improved, especially with new technologies that are available.

Essentially, a pari-mutuel pool works by awarding a pool of wagers to the bettors who bet on the wining outcome. Odds are determined by the amount bet on each outcome and payoffs are determined the same way. Typically, operators charge a fixed rake for running the pool. I describe pari-mutuel pools in more detail in a previous post. For example, consider a football game.  There are two teams, team x and team y. $4 is bet on team x, and $6 is bet on team y. The implied odds of team x is 4/10 = 40% or 2.50 decimal odds. The implied odds of team y is 6/10 = 60% or 1.66 decimal odds. If team x wins, then the $10 pool will get distributed proportionately to everyone who bet on team x and visa versa for team y.

Pari-mutuel pools are typically used for horse racing. This betting format takes away all the risk from the pool operator since a fixed rake is charged on the overall pool and the odds are set by the pool itself. It works well for obscure events where the outcome is difficult to handicap. The pari-mutuel betting format is not so great for bettors who have access to fixed odds alternatives. Pari-mutuel pool bettors don’t know the payoff/odds they receive until after the pool has closed. This makes it a little riskier for them and discourages them from betting early. The format can be gamed by sharps who can handicap the pool odds or who have access to an alternative pool or fixed price book.

For the reasons outlined above, pari-mutuel pools have not caught on with many sports bettors. Most sports bettors prefer to use bookies where they can receive fixed price odds. And since there are so many alternative bookies available today, especially online, a liquid secondary market exists on so many sporting events, bettors can know for sure whether they are getting a good price or not.

So how can we use new technologies to improve pari-mutuel pools?  Specifically, is there a way to level the playing field between sharps and squares to generate overall greater liquidity while also taking advantage of the beneficial aspects of betting pools?

According to Bob Dancer, there is a benefit to betting as late as possible in a pari-mutuel pool. Sharp bettors will wait till the last possible second to place their bets. They will scan alternative markets to determine the best odds for a particular outcome and calculate what the impact on the pool will be at a certain amount of wagering. Sharp bettors will find opportunities where a certain outcome is cheap in the pool and will place enough money in the pool for that outcome to gain an advantage. Square bettors are disadvantaged because they might not be able to spend the same time handicapping events and placing their bets at specific times.

I propose a system that will level the playing field between sharps and squares that will also grow the overall pool.  I call the system a “dynamic rake”. A dynamic rake will provide inducements to both sharps and squares which will level the playing field between both types of bettors while at the same time increasing the total amount wagered.

A dynamically raked pool will still have a fixed rake like any other pari-mutuel pool. What changes is the way players are rewarded for their bets and the information provided to participants. A dynamically raked pool will reward early bettors with more player’s club/cashback/credits. The earlier a bet is made, the more points it will receive. If a pool has a 10% rake, players who bet early might get a 20% bonus on their bets. This bonus will induce bettors to bet earlier. The points that are awarded can be determined by an algorithm and tweaked to suit the particular market. The pool operator’s experience will help them tweak the formula to an optimal amount so that the advantage between early betting and late betting is decreased or eliminated. The points could be awarded based on time, but also based on the amount that has been bet in the pool. The operator could determine the amount of points to award based on the amount the pool has received in wagers to certain limits. Once thresholds are met, the operator would be indifferent to inducing any more early bets as the minimum amounts will have been met.

In addition to awarding points based on time or amount in the pool, the pari-mutuel pool can also give pool participants more information concurrently. This will further induce sharp bettors. The pool operator could make it known the amounts bet on each outcome. This will help bettors determine how much certain wagers will impact the pool odds. The operators could also give betters an API that they could use to automatically place wagers. This will help sharps bet at the very last minute with the most up to date information.

What I believe a dynamic rake pool will accomplish by inducing early betting and helping sharp bettors, is increase the pool handle and increase the efficiency of the pool. This will enable the operator to make a higher overall rake and also make the odds closer to their optimal level.

Why aren’t dynamic rake methods used more commonly? I believe there are three reasons. First, regulations prevent pool operators from getting too creative. Most jurisdictions around the world put too many restrictions on wagering, and so stifle competition and innovation. Second, the growth of fixed price and betting exchanges has turned the industry’s attention away from pari-mutuel wagering. There is lot’s more growth left in legal sports betting, exchange betting, and DFS formats. Pari-mutuel pools are seen by the industry as an old horse racing format. Third many sports books, DFS operators, and betting exchanges have not become very sophisticated in their player rating systems. There is lot’s of room to grow in the way players are rated and rewarded but because the overall pie is still growing, more resources is being put into marketing and new player acquisition than into player retention.

Baazov pleads not guilty in insider trading charges

David Baazov presumably has a decent lawyer working on his behalf and so they must have done some informed calculations about what his chances would be at trial, and so since Baazov is pleading not guilty leads me to believe that the government’s case against him must be pretty weak.  This trial should be interesting.  It took regulators a long time to search for information and make charges.  I think this plea should be bullish for Amaya’s share price.

Ex-CEO of gaming company Amaya pleads not guilty to securities charges | Toronto Star

MONTREAL-The former head of online gaming company Amaya, two associates and three companies have pleaded not guilty to several securities-related charges following an investigation into allegations of insider trading, Quebec’s securities regulator said Monday.

Disney Bets on DraftKings

As I reviewed Amaya’s quarterly report last week, I was pleased to read about their intent to enter the fantasy sports market. Fantasy sports are likely to grow as it provides a more personalized and customized way to enjoy sports.  The best fantasy sports experience also brings together fun math and technology 🙂 I was thinking that DraftKings would be a good property for Amaya to look at, but today it was announced in the WSJ that Disney has made an investment for $250 million in DraftKings. This is a smart strategic move by Disney and cements a partnership with ESPN. The market for fantasy sports exhibits network effects, so users will likely congregate around the biggest and best networks, these are currently FanDuel (partnered with Comcast) and DraftKings.

Las Vegas Update Oct 9th

So I’ve been in town for a couple of days now.  I arrived monday night and picked up a cheap rental Yaris for $8 per day before fees/insurance/taxes.  I also got a $12 per day (before $14 per day in “resort fee”) at Texas Station.  Its funny that Texas Station can charge a “resort fee”. Oh well.  My budget is $50 per day max room and food.  So far, so good, but it will be a lot easier in November and December as hotel rates drop to rock bottom levels and many hotels are giving their rooms away for free.  I’ll probably also get a bunch of room offers as my time down here progresses.

One of my main goals is to figure out how to beat the sports books using technical analysis.  I use “fundamental analysis” and “technical analysis” in the way they are used in investment analysis.  Fundamental analysis would involve researching the relative strength of the teams, and applying a formula or handicapping method to determine the likelihood of a team winning, the point spread being covered, etc. Technical analysis would involve researching price action.

Technical analysis – Wikipedia, the free encyclopedia

Fundamental analysis

I scratch my head a lot when I listen to fundamental analysis of sports betting, since its one thing to figure out who will win the game, but another thing to find the right price.  There seems to be too little discussion of the price of sports bets and too much time focused on who will win and why. I noticed in Vegas that some sports bets are just outright TERRIBLE!!!  Take most golf bets at most sports books, the odds offered about about HALF of what they are quoted on an exchange such as Betfair.  Anyone who is betting golf thru Vegas sports books must be completely clueless.

I completely forget about fundamental analysis when making my bets in Vegas. I only look at the price trends, and I use spreadsheets and data collection methods to determine good prices.  I look for arbitrage opportunities where sports books mis-price their offers.

Most sports betters seem to use fundamental analysis in order to try and beat the house.  The problem I have with this approach is that its usually not clear until the very long run whether a better has an edge or whether they are just getting lucky. My arbitrage bets yield about 1% to 5% per trade, but my market risk is eliminated. I do have some execution risk and other risk management challenges, but I’m not betting on who will win or lose, I’m betting on relative value.

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