To put it succinctly: 1. All trading strategies profit by identifying market inefficiencies. 2. Market inefficiencies occur (in general) when the price of a s

To put it succinctly: 1. All trading strategies profit by identifying market inefficiencies. 2. Market inefficiencies occur (in general) when the price of a security is inaccurate. 3. By correcting the inefficiency, the strategy profits consistently until there is no longer a counterparty willing to take the trade at that (inefficient) price. This process is broadly called price discovery.