> He described the early experiments at JP Morgan, where they needed to calibrate a parameter in their model, so one day JP Morgan did 2500 trades one way, and

> He described the early experiments at JP Morgan, where they needed to calibrate a parameter in their model, so one day JP Morgan did 2500 trades one way, and 2500 trades another way, and by measuring the market response, Shaw had his parameter. He estimated JP Morgan spent about $5 million or so to measure that parameter, and then used that number for years for a many, many fold return on investment. He also said that the next market participant trying to measure that parameter had to spend $100 million to get the same parameter. almost exactly the story but with a few additional twists, specifically having access to detailed information on client trading flow. Many of the kings of statarb had a past with a direct link to the electronic order desks of major brokerages, PDT and Shaw with MS and the list goes on worldwide. This gives them the insight needed to build models that can detect statistically the difference between trending informational flow and random fleeting uninformed noisy flow which reverts. As of today these statarb incumbents will be fairly difficult to challenge as they have invested in having superior expensive raw informational data sets and additional the size of their trading gives them private information. However their costs are likely too high so the new game will be to find 10x cheaper approaches in costs as the techniques and math are not as advanced as they claim. The ugly truth is most of their PhDs are twiddling their thumbs and they are effectively buying up anyone interested in the field in hopes to deprive smaller upstarts from talent at an affordable price. Founder of mega titan firms like DE Shaw will certainly be exceptional individuals and will obviously cary with them huge egos which will blind them to the degree which luck and being in the right place at the right time played.