Where the maths runs out
Everything in this course is a model, and every model here is a simplification you can name. That's the point of building them by hand: you end up knowing precisely which assumption is carrying the weight, which is the only durable form of financial literacy.
| What this course does not model | Why it matters |
|---|---|
| Financing and margin mechanics | Prime brokers can raise haircuts mid-crisis. Most funds that died were solvent on paper and unable to fund the position — being right is not the same as being able to wait. |
| Trading against other people | Every simulation here draws prices from a distribution that doesn't know you exist. Real markets contain participants who can see your position and profit from your having to exit it. |
| Non-stationarity | Every parameter is fixed. In reality edges decay as they're discovered, correlations regime-shift, and the process that generated your backtest may already have stopped existing. |
| Career and capital constraints | The mathematically optimal position is irrelevant if your investors redeem after two bad quarters. Survival constraints are usually tighter than the maths, and they're the ones that bind. |
The one thing worth remembering. Every formula in this course is exactly correct given its inputs, and every input is an estimate from a finite sample. The mathematics is never the hard part. The hard part is knowing which number you've quietly assumed you know — and what happens on the day you find out you didn't.