Importance of information

There are many ways that one can make money on the market, but there are several systematic ways have been exploited. By systematic, I mean there is no risk. Arbitrage opportunity is just one example.

1. Create or Be the market

  • Government and Exchange created the market and took in profit with no risk. They have the ultimate edge over all other players. Similarly, Crypto creators.

2. Close to the policy makers

  • If you have information on how politics will invovle and policy be shaped, there is an enormous advantage over other players. This is why corruption is never going to end.

3. Influence the market

  • If you controls X0%(e.g. X>5) of the transactions on the market as a market maker, then you can use the information to manipulate the market.

4. Statistical arbitrage

  • If you know how to find hidden market inefficiencies based on data and act according algorithms, then there is no risk.

Not all ways are equivalent or legal, and not all ways are possible for everyone. You work on what you can and try what you can not.

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Written on July 31, 2021