> I have funds to invest but every time I look into getting into I cannot bring myself to do it because I cannot stop my brain thinking it's gambling. Without insider knowledge I don't understand how I could beat the market short term.If you have programming skill and a good understanding of statistics, do the following:
1. Identify a subset of equities in the total market which a) have fairly one dimensional revenue streams, b) have a market capitalization of at least ~$1-2B, and c) are not prone to extraordinary hype or tech-centric accounting, such that e.g. a "win" or a "loss" in an earnings announcement is fairly straightforward to understand (and therefore you can more easily, if not perfectly predict how the market will react).
2. Identify a strong, legal source of alternative data that maps directly to the revenue stream of one of these companies. The more difficult to find and collect, the better. Use your programming skills to automate the collection and curation of this dataset.
3. Incubate your dataset for a period of several months, then build it into a timeseries. Using the timeseries, build a model that forecasts the expected revenue of each particular company using historical 10-K and 10-Q documents.
4. For the companies whose data imply a jump in either direction that is very unexpected (according to e.g. the aggregate analyst consensus), take a contrarian position in the equity. If you're feeling very confident and have a higher risk tolerance, study options and take the corresponding derivative position.
5. In particular, establish a target win rate overall, a target tolerable drawdown period overall, and a target exit price (sufficient win or bearable loss) for each position, then follow it.
If you do this correctly and consistently, you will profit significantly and consistently enough that your system will be fully distinguishable from uninformed gambling. To equip you with a bit of meta-analysis here, this outline works because a) all trading strategies profit from finding opportunities to exploit pricing inefficiencies in various securities (or groups thereof), and b) the only way to deliberately identify those opportunities is by having information, access, or techniques that the broader market does not have yet (or else the price would reflect that information).
The great difficulty in this process is finding and analyzing the alternative data in the first place. As a fallback, if you're not confident you can build a trading strategy with this data you can also sell it to hedge funds, who will be very happy to buy it if it actually maps to revenue and is otherwise unknown.