What if the real edge in markets is not in adding more assets, but in choosing fundamentally different ones? In this episode, Moritz Siebert speaks with Tom Babbedge about why alternative commodity markets offer a distinct source of diversification and trend. They explore how structural supply and demand imbalances create persistent price moves, why many financial markets behave as one during stress, and how capacity constraints shape portfolio construction. The conversation also examines how markets are selected, how execution differs from traditional CTAs, and why understanding who trades a market may matter more than any backtest.

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Episode TimeStamps:

00:00 - Introduction to the episode and guest

02:04 - Why focus only on commodity markets

03:59 - The myth of diversification through more markets

05:01 - Structural differences within commodity markets

06:22 - Why financial markets behave as one in crises

07:57 - Capacity constraints and portfolio construction

11:18 - Adding and removing markets from the portfolio

13:28 - How to identify truly alternative markets

16:40 - Trend quality vs trend quantity explained

19:11 - Structural drivers behind commodity trends

20:01 - Case study European carbon and trend persistence

26:59 - Execution as an edge in systematic trading

32:42 - Reducing trading costs through patience

40:09 - Why investors allocate to alternative commodity strategies

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Disclaimer

OI21: The Hidden Edge in Markets No One Is Trading ft. Tom Babbedge

Top Traders Unplugged