What is your edge?

[tomorton]

Edge is something we can easily start to take for granted after even a ton of experience. All of our trading practices evolve and develop so it can be easy to stray off this essential requirement. systems can become more sophisticated or become really basic, but either way its easy to become blind to the longer-term implications.

What is your edge?

My aim is to use strict rules to confirm a trend, and then follow it. The tendency of price in a trend to continue in the direction of the trend gives me what I would say is a true edge.

A false edge I'm going to say would be an approach that says something like, "I'll know the long entry set-up on the chart when I see it".

Another might be, "I look for charts that are over-bought and go short at the top". That's not an edge.

Do you want to share your edge? Can you show its a true edge?

 

[SteamRoller]

Interesting question Tom which I've thought about a lot.

Quick answer: I don't think I have an edge. I think it's probably one of those situations where if you had an edge you'd know exactly what it was. It has been said by people on here and elsewhere that (words to the effect of) 'any system etc that isn't based on market sentiment is bound to fail in the long run' i.e. there isn't an edge unless you are reading market sentiment. I don't know about that, but I could believe it to be true. Broader question might be, is the trend you've identified illustrative of market sentiment or not? In one sense I guess it has to be, that's what drives price moves, but whether you can reliably build a method around a recently trending price assuming it going to continue, I don't know.

Very interesting though. If I thought I could identify a real edge in medium term trading such as say trends on 4hr charts on FX, then I'd be very interested in that, but I'm quite sceptical to be honest.

Edge is something we can easily start to take for granted after even a ton of experience. All of our trading practices evolve and develop so it can be easy to stray off this essential requirement. systems can become more sophisticated or become really basic, but either way its easy to become blind to the longer-term implications.

What is your edge?

My aim is to use strict rules to confirm a trend, and then follow it. The tendency of price in a trend to continue in the direction of the trend gives me what I would say is a true edge.

A false edge I'm going to say would be an approach that says something like, "I'll know the long entry set-up on the chart when I see it".

Another might be, "I look for charts that are over-bought and go short at the top". That's not an edge.

Do you want to share your edge? Can you show its a true edge?

 

[barjon]

Edge is something we can easily start to take for granted after even a ton of experience. All of our trading practices evolve and develop so it can be easy to stray off this essential requirement. systems can become more sophisticated or become really basic, but either way its easy to become blind to the longer-term implications.

What is your edge?

My aim is to use strict rules to confirm a trend, and then follow it. The tendency of price in a trend to continue in the direction of the trend gives me what I would say is a true edge.

A false edge I'm going to say would be an approach that says something like, "I'll know the long entry set-up on the chart when I see it".

Another might be, "I look for charts that are over-bought and go short at the top". That's not an edge.

Do you want to share your edge? Can you show its a true edge?

Money management (I like to think )

 

[seekingTruth16]

Money management (I like to think )

Money management can be quite a broad term. What do you mean by it?

Controlling risk and even risk reward ratios cannot on their own lead to an edge, right?

 

[tomorton]

Hi SteamRoller - Thanks for that reply.

But maybe you're being too modest. If more than 50% of your trades are winners, or you win more money than you lose, there must be some edge behind what you're doing?

 

[darktone]

my emotional intelligence.

 

[barjon]

Money management can be quite a broad term. What do you mean by it?

Controlling risk and even risk reward ratios cannot on their own lead to an edge, right?

Yes, I find it quite difficult to describe as it's to do with how I approach It. My trading methodology hasn't really changed over getting on for 40 years but what's made the difference is the money/trade management - so I count that as an edge.

Basically, I know if I get 1.5:1 from a trade then I'll tick along nicely. So, I won't take a trade unless I feel that potential is there, I am strict with stoploss, I am reluctant to exit before 1.5:1 is reached, I will protect 1.5:1 if it gets there and more willing to exit after that before a higher target is reached (anything more than 1.5:1 is a bonus).

 

[Pat494]

The common knowledge is that winning systems should be kept quiet because if they are exposed to all and sundry the edge disappears.
Maybe this is because the " big boys " tend to adapt winning systems and then fade them.

But no harm trying I guess.

 

[foroom lluzers]

Money management (I like to think )

My edge is able to trade rebuttals on every technical set up , and to put on debunk trades on .every technical set up , since 95% who follow it lose.It just does everything opposite of the 95% and what they are taught , by their cheer leaders.My edge is not to follow the stampeded or about to be stampeded.My edge is not to believe the crowd.

stampede (plural stampedes) definitions

A wild, headlong scamper, or running away, of a number of animals; usually caused by fright; hence, any sudden flight or dispersion, as of a crowd or an army in consequence of a panic.  
A situation in which many people in a crowd are trying to go in the same direction at the same time.

 

[tomorton]

my emotional intelligence.

OK, not knowing you personally I'll have to grant you that one.

But how do you identify where to apply it?

 

[tomorton]

The common knowledge is that winning systems should be kept quiet because if they are exposed to all and sundry the edge disappears.
Maybe this is because the " big boys " tend to adapt winning systems and then fade them.

But no harm trying I guess.

Seriously? The big players are going to change what they do on Monday because of something I posted on babypips after a glass of red?

 

[tomorton]

My edge is able to trade rebuttals on every technical set up , and to put on debunk trades on .every technical set up , since 95% who follow it lose.It just does everything opposite of the 95% and what they are taught , by their cheer leaders.My edge is not to follow the stampeded or about to be stampeded.My edge is not to believe the crowd.

stampede (plural stampedes) definitions

A wild, headlong scamper, or running away, of a number of animals; usually caused by fright; hence, any sudden flight or dispersion, as of a crowd or an army in consequence of a panic.  
A situation in which many people in a crowd are trying to go in the same direction at the same time.

So e.g. avoiding following trends, waiting to catch the reversal?

 

[foroom lluzers]

So e.g. avoiding following trends, waiting to catch the reversal?

Catching trends ahead of the crowds , catching reversals at key levels.

 

[SteamRoller]

Well, perhaps but at the moment I'm not actively trading since I don't think I have a method that I am confident in. I'm not confident since I can't see where the edge is - I mean a real edge that is an advantage over others. I mean, if I or anyone else in the retail trading world can come up with a fool proof system or method, then with the greatest respect to all, it isn't likely to be something highly original or thus far un-thought of, is it? If that was the case then banks, funds etc would just do the same with very little effort, would they not? Or am I missing something here?

Hi SteamRoller - Thanks for that reply.

But maybe you're being too modest. If more than 50% of your trades are winners, or you win more money than you lose, there must be some edge behind what you're doing?

 

[foroom lluzers]

Well, perhaps but at the moment I'm not actively trading since I don't think I have a method that I am confident in. I'm not confident since I can't see where the edge is - I mean a real edge that is an advantage over others. I mean, if I or anyone else in the retail trading world can come up with a fool proof system or method, then with the greatest respect to all, it isn't likely to be something highly original or thus far un-thought of, is it? If that was the case then banks, funds etc would just do the same with very little effort, would they not? Or am I missing something here?

No !You are not missing anything , you are just following the crowd and thinking in the box .Every one is thinking in the box , you expect none are smarter.

 

[tomorton]

Well, perhaps but at the moment I'm not actively trading since I don't think I have a method that I am confident in. I'm not confident since I can't see where the edge is - I mean a real edge that is an advantage over others. I mean, if I or anyone else in the retail trading world can come up with a fool proof system or method, then with the greatest respect to all, it isn't likely to be something highly original or thus far un-thought of, is it? If that was the case then banks, funds etc would just do the same with very little effort, would they not? Or am I missing something here?

I think its safe to assume that whatever viable new method can be devised, someone somewhere is already using it. But by the same token, the basic principles that are in use by the big players in their viable methods should be successfully applicable to a similar approach but tailored to the private retailer's position.

I don't think this problem needs blue sky thinking. We can't re-invent trading. But fool-proof, meaning 100% risk-free, is shooting a little high, no?

 

[tomorton]

No !You are not missing anything , you are just following the crowd and thinking in the box .Every one is thinking in the box , you expect none are smarter.

THE crowd? There are two crowds in trading - the big players who move price, and the small players who follow it. If the big players are moving price upwards, I don't think its crazy for the small players to be long. But it would be crazy for me to go short and expect price to follow my trade.

 

[SteamRoller]

Yes I agree with both points. Sloppy language on my part when I said 'fool proof', I suppose what I meant was something that was clearly profitable over time, and yes that can be far less than (a completely unrealistic, I get that) 100% hit rate.

I think its safe to assume that whatever viable new method can be devised, someone somewhere is already using it. But by the same token, the basic principles that are in use by the big players in their viable methods should be successfully applicable to a similar approach but tailored to the private retailer's position.

I don't think this problem needs blue sky thinking. We can't re-invent trading. But fool-proof, meaning 100% risk-free, is shooting a little high, no?

 

[foroom lluzers]

THE crowd? There are two crowds in trading - the big players who move price, and the small players who follow it. If the big players are moving price upwards, I don't think its crazy for the small players to be long. But it would be crazy for me to go short and expect price to follow my trade.

The big sharks eat the small fish , the 5% eat the 95 % " the crowd ".The 5 % buy on the rumor and sell on the news .The 95 % buy on the news ,after the event , waiting for the sharks dinner table.

 

[tomorton]

........The 5 % buy on the rumor and sell on the news .The 95 % buy on the news......

In practice, what does this trite saying mean?