A Columbia computer science student figured out pairs trading in 1987. His desk at Morgan Stanley made $50 million that year - enormous for the time. Within five years, the edge was gone. Traders left to start D.E. Shaw and Two Sigma. Capital flooded in. The trade got crowded. The alpha evaporated.
This isn't a one-off story. This is how markets are supposed to work.
We've been watching the trading education industrial complex for years now, and the math has never added up. Millions of people paying for strategies that, by definition, cannot work the moment they're shared. The contradiction is so obvious that we're surprised more people aren't talking about it.
The Decay Problem
Here's what efficient markets actually mean in practice: every trade you take with a real edge pushes price closer to fair value. If your strategy correctly identifies an underpriced asset, you buy it. That buying pressure raises the price. Do this enough times, with enough capital, and the mispricing disappears.
Now multiply that by everyone who knows the strategy.
Academic research has actually quantified this. One paper analyzing the effects of publication on trading strategy returns found they decline by approximately 25% after going public. A private edge returning 100% per period loses a quarter of those returns purely from other traders crowding into the same positions.
And that's the optimistic scenario - strategies that still have any returns left are often just artifacts of unrealistic backtesting. No slippage. No transaction costs. Ignoring the mispricings that get arbed out by high-frequency firms in milliseconds.
The Guru Contradiction
So here's the question we can't stop asking: why are trading influencers posting their "edge" for millions of followers to see?
The common retail rebuttal is that quant firms wouldn't want these strategies - position sizes are too small, not worth their time. That's wrong. These gurus trade some of the most liquid securities in the world. SPY. QQQ. Major forex pairs. Assets with trillions in daily volume. The strategies don't require sophisticated HFT infrastructure. Neural networks could automate the decision-making tomorrow.
But forget institutions for a second. How have the 1.2 million followers of the biggest trading YouTubers not arbed this out themselves? If the strategy works, they're all executing the same trades, pushing prices toward fair value with every click. If they haven't crowded out the edge yet, only one explanation remains: there wasn't an edge to begin with.
The Real Business Model
The math makes sense when you realize what these influencers are actually selling.
If you had a strategy with a genuine edge on the most liquid, scalable assets in the world, you would: raise capital from investors, hire quant developers under NDA to build systematic implementations, guard the strategy with your life, and scale to tens or hundreds of millions in AUM.
You would not: sell a course, post daily YouTube breakdowns, or trade from your phone in your bedroom.
The legal contrast is stark. Actual proprietary trading strategies are protected by every legal mechanism available. In January 2025, the FBI unsealed charges against a quant trader who tried to leave with his firm's source code. He attempted to trade the stolen strategies independently. They got him.
Meanwhile, trading gurus post their "complete strategy" to millions of viewers and ask you to book a call with a closer to discuss pricing.
What Actually Works
The retail trading education industry has inverted the entire learning process. Everyone starts at step two - picking which influencer's strategy to copy. But step one is the only step that matters: building the strategy yourself from scratch.
This means discovering relationships that other people haven't noticed. Engineering features that reveal something non-obvious about price behavior. Testing rigorously with realistic assumptions about costs and execution.
And critically: if you find something, you stay silent. From day one. Forever.
Any edge that's public is already priced in. Any strategy for sale has already been sold to enough people to crowd out the returns. The fundamental structure of markets guarantees this.
The Uncomfortable Truth
We're not saying profitable trading is impossible. We're saying profitable trading from public strategies is impossible. The distinction matters.
Real edges exist. They're just not on YouTube. They're not in courses. They're protected by NDAs and legal teams and infrastructure that costs millions to build.
The winners: the gurus selling hope, the platforms collecting commissions on losing trades, and the small number of people who figured out that the first rule of having an edge is never talking about it.
The losers: everyone who thinks they can shortcut the process by paying for someone else's alpha.
If you can find the strategy published anywhere, it doesn't work. If someone's selling it to you, it doesn't work. The only path that's ever worked is building it yourself - and then telling no one.
This article was inspired by a breakdown from DeltaTrend Trading on YouTube - worth watching if you want the full argument.
