Pair Trading: Collaboration in Finance
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Pair trading* is a technique to improve the productivity and quality of stock trading (or any type of financial trading, e.g. commodities). In pair trading, two traders share a single workstation. The trader at the keyboard (usually called the driver) actively trades, while the second trader (called the observer or navigator) is reviewing, advising, thinking through problems and generally sanity checking the first. These two roles switch on a regular basis (e.g. every 1/2 hour). The pairs also swap partners every day. Pairing is one of the most valuable techniques you can bring your business, yet it is initially counter intuitive. It is hard to convince management that pairing will do anything but double your costs. In actual fact, most empirical studies show a significant increase in quality for a small (15-20%) cost overhead as compared to individuals working independently.
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Pair Trading: Collaboration in Finance
- 1. PAIR TRADING: COLLABORATION IN FINANCE EVAN LEYBOURN
- 2. Evan Leybourn Lean / Agile Business Leader and Author Melbourne, Australia @eleybourn http://theagiledirector.com CLICK TO DISCOVER MORE
- 3. AN AGILE TECHNIQUE TO IMPROVE THE QUALITY AND PRODUCTIVITY OF STOCK TRADING
- 4. THIS IS A SIMPLE IDEA TWO ROLES: 1. DRIVER – WHO TRADES 2. NAVIGATOR – WHO ADVISES
- 5. SIMPLE RULES ROLES SWITCH EVERY ½ - 1 HOUR
- 6. SIMPLE RULES PAIRS SWITCH EVERY DAY
- 7. HARD TO SELL, BUT MASSIVE INCREASE IN QUALITY FOR ~15% COST OVERHEAD
- 8. SOME ADVANTAGES 1. HIGHER QUALITY TRADES
- 9. SOME ADVANTAGES 2. SKILLS AND KNOWLEDGE TRANSFER
- 10. SOME ADVANTAGES 3. SHARED KNOWLEDGE OF INDUSTRY AND COMPANIES
- 11. SOME ADVANTAGES 4. JUSTIFIABLE TRADES
- 12. SOME ADVANTAGES 5. RESILIENCE TO INTERRUPTIONS
- 13. PITFALLS AND DISADVANTAGES 1. COSTS MORE IN THE SHORT TERM
- 14. PITFALLS AND DISADVANTAGES 2. A SOCIAL SKILL THAT TAKES TIME TO LEARN
- 15. PITFALLS AND DISADVANTAGES 3. REQUIRES BOTH TO BE ACTIVELY ENGAGED ALL THE TIME
- 16. PITFALLS AND DISADVANTAGES 4. BONUSES NEED TO BE SHARED ACROSS THE TEAM
- 17. UNSURE ABOUT THE VALUE OF PAIR TRADING EXPERIMENT, MEASURE AND EVALUATE
- 18. TO READ THE FULL ARTICLE VISIT: HTTP://AGILEBUSINESSMANAGEMENT.ORG CLICK HERE TO DISCOVER MORE
- 19. TO LEARN MORE, CHECK OUT DIRECTING THE AGILE ORGANISATION BY EVAN LEYBOURN AVAILABLE AT AMAZON AND ALL GOOD BOOK STORES CLICK HERE TO DISCOVER MORE
Editor's Notes
- Good morning, Let’s start with an informal survey. Hands-up if any of you have heard the terms “Agile” or “Lean” in the context of software or manufacturing? … Great, now I want each of you to put some of your preconceived ideas aside. For those who don’t know; Agile is a set of values, principles, techniques and frameworks for the adaptable, incremental & efficient delivery of work. Originally developed for the software industry, they can be applied to any type of work including finance, sales, HR, marketing, corporate strategy, leadership, and more. In the context of the modern economy, conventional models of business management are failing to keep up with the rapidly changing cultural and technological environment and a different approach is necessary. Enter Agile Business Management; an adaptive approach to business management and corporate governance. We’re all here because business growth is important to us. For the next 15 minutes, I’m going to provide you with some principles and techniques that focus on business agility as a means of promoting business growth. Ultimately, this can only be achieved by improving communication, collaboration, and delivering continuously while remaining responsive to change. So, let's start with a simple definition. Business growth comes from applying profitability to customer growth. Profitability comes from delivering services to your customers, accurately and efficiently.
- Add ABM/GDAC logo
- Let’s finish off by looking at our original definition of business growth; Business growth comes from applying profitability to customer growth. Profitability comes from delivering services to your customers, accurately and efficiently. Over the last 15 minutes we have looked at some of the mechanisms from the lean and agile traditions that we can apply for adaptable businesses and sustainable business growth. And I’ll leave you on that note. Any questions.
- Let’s finish off by looking at our original definition of business growth; Business growth comes from applying profitability to customer growth. Profitability comes from delivering services to your customers, accurately and efficiently. Over the last 15 minutes we have looked at some of the mechanisms from the lean and agile traditions that we can apply for adaptable businesses and sustainable business growth. And I’ll leave you on that note. Any questions.