The Holy Grail of Trading Strategy Development

[sirinath]

Model break downs could result in substantial loss. An ideal financial
model should have a positive expected value and should be hedged
against possibility of model breakdowns. This way the losses in
extreme events can be tamed and in the long run the trading strategy
would prove profitable.

Through it cannot be fully elaborated in the few lines I am writing
here, with many of the currently available derivative products,
trading strategies can be developed without the large negative
exposure to extreme events. These would consistently perform well in
normal market conditions but would also would be graceful ant failsafe
in turbulent times, while producing higher than average returns.

Suminda Sirinath Salpitikorala Dharmasena

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