Small Trader Alpha - Another Real Strategy
Those who know don't care, and those who would care don't know.
I’ve subtitled this article with a quote I think describes these sorts of alphas very nicely. They exist because they require the same skills (although in a much less competitive form) as many HFT strategies but have extremely limited capacity. Those with the knowledge to build and operate these strategies have bigger fish to fry, and the group that would be happy to make 500k of absolute PNL on 1/10th the capital lacks the knowledge to take advantage of it.
Today we will be educating all those degens about small-capacity shitcoin arbitrage. There are a LOT of nuances that you can only really figure out by doing it in production, but I’ll do everyone a favor and break these components down in a nice digestible article.
We fully break down the strategy in this article with real exchanges/opportunities used as examples. These are the sorts of strategies that are great to start with because of how uncompetitive they are. They’re very well suited to one-man teams that are running their own capital / don’t require large capacity.
Two Types, One Favorite
Fixed vs. Variable Costs
Early Convergence Risk
Inventory Threshold Risk
Inventory Holding Risk
API Failure Risk