At the 25th anniversary of the crude oil contract on the NYMEX, Paul Tudor Jones ( http://en.wikipedia.org/wiki/Paul_Tudor_Jones ) gave a presentation where he described how he categorizes trading strategies. Here they are with some examples...
1) Specialized knowledge of an Instrument
Stock picking long/short (research analysts)
Floor traders (back in the day)
Insider trading
2) Arbitrage (take advantage of pricing inefficiencies)
NYC vs. London, Cash vs. Futures
Pairs trading (statistical arbitrage or relative value)
Microstructure (Bid/Ask spreads) (HFT)
3) Trend (Momentum) Trading
Trin trading (day trading)
Nasdaq late 90’s
CTA “Trend-followers”
4) Execute at the “Peak of Human Emotions”
Small group of people (Idiot Savants) Exuberance vs Fear
Buffett “Be greedy when others are fearful and fearful when others are greedy”
This is a useful framework...if it's good enough for PTJ it works for me.
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