Defining strategy parameters is fundamental to the success of our arbitrage endeavors. Why is it crucial? Without precise parameters, the strategy can flounder like a ship lost at sea. The goal is to fine-tune the basics that steer the outcome of trades. Are we aiming for mean reversion, or perhaps a pair trading strategy? Each decision here echoes throughout the entire process.
Moreover, meticulous consideration of these parameters minimizes risk and maximizes returns, turning potential pitfalls into opportunities. Are we veering too conservative or overly aggressive? The balance achieved here influences both short-term victories and long-lasting prosperity.