Musings on Trading — Castle
castle.tech · 1,774 words · saved by 2 readers
Notes on markets: price discovery for uncertainty, risk-neutral vs physical measures, edge, adverse selection, and trading for negative edge.
The following are notes on markets. Each section makes a single claim that I find worth stating precisely. The pieces are thematically adjacent and mostly build on each other, but they do not form a single argument and need not be read in order. I. Markets as price-discovery for uncertainty Consider the event that Milei loses the 2027 Argentine election, and let p be the probability of that event. The quantity p is socially valuable. A multinational weighing a capital commitment in Argentina, a domestic factory modeling regulatory exposure, a household allocating savings against a possible…
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