The conversation is between Vivek Bajaj, co-founder of StockEdge and elearnmarkets, and Ankit Garg, a trader and founder of Decibel Capital, discussing the relationship between the US dollar and the Indian rupee (INR) and its impact on the Indian stock market.
Ankit explains that when the US market is doing well, investors tend to diversify their investments in emerging markets like India, causing the dollar to flow into India and the rupee to appreciate. This, in turn, affects the Nifty and Bank Nifty indices.
Ankit discusses his approach to identifying market regimes and using a data-driven, quantitative approach to make trading decisions. He emphasizes the importance of understanding market regimes and how different assets behave differently.
He also explains the concept of normalization of returns and how it can be used to compare different assets. Ankit shares a strategy that involves switching between Nifty and USD-INR based on normalized returns, which can lead to higher returns and lower drawdowns.
Throughout the conversation, Ankit shares various charts and data to support his arguments and explains the underlying concepts and strategies in a clear and concise manner.
1. Vivek Bajaj is the co-founder of StockEdge and elearnmarkets.
2. Ankit Garg is a guest on Vivek Bajaj's show and he is from India but currently living in the US.
3. Ankit Garg has a background in FX trading and has worked in big banks in Mumbai and Delhi.
4. Ankit Garg has a degree in Financial Engineering from the University of California, Berkeley.
5. Ankit Garg is the founder of Decibel Capital and has worked in hedge funds and proprietary trading firms.
6. The topic of discussion is identifying market regimes and using a quantifiable approach to make trading decisions.
7. The presentation is based on a data-driven approach and not on personal opinions or biases.
8. Ankit Garg has worked on a project called Decibel Academy, which aims to educate people on quantitative trading.
9. The concept of market regime is discussed, and it is explained that different assets behave differently in different market conditions.
10. The correlation between the Indian and US markets is discussed, and it is explained that the US market has an impact on the Indian market.
11. The concept of normalization is discussed, and it is explained that it is necessary to normalize returns when comparing different assets.
12. The standard deviation is used to measure volatility, and it is explained that it is an important concept in trading.
13. Ankit Garg presents a strategy that uses the normalized returns of Nifty and USD-INR to make trading decisions.
14. The strategy is based on switching between Nifty and USD-INR based on their normalized returns.
15. The strategy is tested using historical data, and the results show that it can provide better returns with lower drawdowns.
16. The concept of dual momentum is discussed, and it is explained that it can be used to improve trading performance.
17. The strategy is compared to other strategies, and it is shown that it can provide better returns with lower drawdowns.
18. The importance of robustness in trading strategies is discussed, and it is explained that it is necessary to test strategies using different techniques.
19. The cost of trading is discussed, and it is explained that it can have an impact on trading performance.
20. The concept of success in trading is discussed, and it is explained that it requires a combination of knowledge, skills, and discipline.