Build a Super Advanced Trading Bot on DYDX Hosted on AWS with Python - About Half-Life

The video tutorial discusses the concept of spread reversion and its significance in identifying profitable trades. It introduces the Half Life calculation as a superior method for analyzing trading pairs, emphasizing the importance of selecting pairs with low Half Life values for better returns. The tutorial highlights the need to identify oscillating spreads and avoid non-oscillating trends to minimize losses. The goal is to automate the process of finding profitable trading pairs using these insights.

What is the primary benefit of using the Half Life calculation in statistical arbitrage?

• It helps identify profitable spreads.

• It simplifies the trading process.

• It increases the speed of transactions.

• It reduces trading costs.

Which of the following is a desirable characteristic of a spread's Half Life?

• Negative Half Life

• High, positive Half Life

• Half Life above 30

• Low, positive Half Life

What behavior is expected from a spread with a suitable Half Life?

• It remains constant over time.

• It oscillates around the zero line.

• It trends consistently in one direction.

• It shows random fluctuations.

What is a potential risk of trading pairs with a high Half Life?

• Increased transaction fees

• Higher probability of losses

• More frequent trades

• Faster execution times

What range of Half Life is generally recommended for selecting profitable pairs?

• Below 0

• Between 25 and 50

• Between 0 and 24

• Above 30