Jan

26

 When ecologists write about animals such as the badger, they should include in their thoughts some idea of the animals place in the community to which it belongs, just as if they had said "There goes the Vicar".

Since Elton sharpened the concept of niches all the way back in 1927, much work has been done on the theory of how niches develop. One idea that has much support in this area is that if a niche exists in nature then it will be filled. If an extinction occurs, then either the niche has closed, or the remaining species will expand to fill it. In an isolated environment like the Galapagos Islands there are finches with different shapes and sizes of beaks that are all able to compete better in certain weather and certain predator situations — each has their specific niche. These finches expand and speciate to fill every possible combination of environment, the same way the vicar will always find a place to ply his trade, be it among cannibals or the aesthetes. At any one time I am always looking for niches in markets that are not filled.

Take the market open. Many orders have piled up from overseas, and from overnight wires and instructions. There are the market makers who must take the other side of these trades and according to published data have the highest rates of return imaginable on their trades. In partial recognition of this, many exchanges have rules that give the public the same single price that the market makers realize on the opening. Other electronic exchanges have complex algorithms based on the panoply of limit and market orders that attempt to create the maximum number of contracts tradeable based on bids at equal to or higher, or offers equal to or lower.

There would seem to be many bargains to be had at the open which somehow take adantage of these profitable trades by those higher up in the feeding chain. Alternately, for those of a quantitative bent, a close study of the rules of the opening algorithms would seem to allow the possibility of some immediate high profit trades. The niche would seem to have many resources for nourishment in it as the moves between transactions on the open are very lumpy, especially on the electronic exchanges.

Indications of likely opening prices are made in individual stocks and electronic exchanges, and this adds to the opportunities for nest building. There must be finch like traders who just specialize here. How could this be tested? One proposes that the most popular individual stocks for daytrading would be candidates for a niche filler. What might be the sharpest way of making a living here?What other niches are as yet unfilled where a proper environment and adequate nourishment for the speculator is available?


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