How to find my trading edge

[Attila the trader]

How can one find their trading edge is it trough back testing , can it be defined mathematically ?

 

[Trader H.C.]

IMO trading edge is when a trading strategy yields a profit factor over 1, preferably with some room of buffer, over a large sample of past data.

Yet, the verification must be done with caution, as some traders curve-fit their strategy by not conducting the backtest and optimization process properly.

I just started a new YouTube channel sharing my backtest results on different trading strategies, you might want to check it out.

 

[Attila the trader]

IMO trading edge is when a trading strategy yields a profit factor over 1, preferably with some room of buffer, over a large sample of past data.

Yet, the verification must be done with caution, as some traders curve-fit their strategy by not conducting the backtest and optimization process properly.

I just started a new YouTube channel sharing my backtest results on different trading strategies, you might want to check it out.

which platform do you use for back testing

 

[Trader H.C.]

which platform do you use for back testing

I use tradingview

 

[biostockscrash]

Another take on this is possible by looking back at the your past trades.
Assuming your trades are eventually manually selected (performing DD/looking at charts/readings the news/etc..) and performed - its more than plausible you have inner biases.
These inner biases(intuition) might prove extremely useful and crucial for your trading edge.

In my experience - I noticed that most of my successful deals are in the biotech/therapeutics industries.
That helped me to focus my screening and trading action to areas which fit my character more.

 

[Attila the trader]

Another take on this is possible by looking back at the your past trades.
Assuming your trades are eventually manually selected (performing DD/looking at charts/readings the news/etc..) and performed - its more than plausible you have inner biases.
These inner biases(intuition) might prove extremely useful and crucial for your trading edge.

In my experience - I noticed that most of my successful deals are in the biotech/therapeutics industries.
That helped me to focus my screening and trading action to areas which fit my character more.

shouldn't back testing be free from inner biases , an objective representation of your strategy ?

 

[Ten Minute Trader]

How can one find their trading edge is it trough back testing , can it be defined mathematically ?

Hi there, I back tested my system easily as it is a mechanical system, I cant see how any fundamental approach can be accurately back tested. Anyway I had great success with it after defining the parameters, entry, exit, trading hours and position sizing.

 

[hatemypips]

How can one find their trading edge is it trough back testing , can it be defined mathematically ?

Yes it is done through backtesting. It is either an opportunity for risk free profit (latency arbitrage, spatial or time arbitrage), some price, economic or political pattern (i.e. knowledge) that in your view can provide you better risk/reward opportunity (odds of win/loss) than in other times. And third possible opportunity is that you construct some complex portfolio ( using derivatives ) where you get exposure to particular risk (hence expecting reward yield from particular outcome of future), while other risks are hedged

 

[NVP]

always test your edge forwards ....backwards is easy

 

[Attila the trader]

Hi there, I back tested my system easily as it is a mechanical system, I cant see how any fundamental approach can be accurately back tested. Anyway I had great success with it after defining the parameters, entry, exit, trading hours and position sizing.

what platform did you use for the testing i also use a mechanical system (still developing ) ?