What is your edge?

[foroom lluzers]

I can't see many trade able trends on ftse.

 

[barjon]

Fl let's not spoil Tomo' thread. Go here to continue this http://www.trade2win.com/boards/tec...tement-80-breakouts-fail-only-20-succeed.html

 

[tomorton]

I don't use STOPS so never have that problem, I also don't need to watch my trades, set the hedge as a limit order, no emotion at all... it's all a mathematical calculation. If the hedge triggers, the trade remains in a frozen state till I feel like looking at it and decide on best course of action dependent on prices at that time, again it becomes a mathematical calculation, not an emotion.

Would you then say that a balanced hedging strategy is your edge?

 

[no stops trader]

Would you then say that a balanced hedging strategy is your edge?

hedging is a superior alternative to stops that suits my trading strategy, it's an edge only under temporary reversal instances. The real edge is trading the fundamentals without too much regard to technicals. The basic theory is quite simple... use fundamentals to determine the likely direction with 2 to 7 days horizon, then wait for a dip and go long using the symmetry to determine entry price. It is a Warren Buffet strategy I adapted for trading and developed algoes to help calculate the entry. Buffet says... pick the target based on fundamentals then be brave when others are fearful, buy when others are selling and remain convicted unless the fundamentals change. It's a strategy that works only if you can divorce from all emotions otherwise you become part of the fearful bunch.

 

[itspossible]

^NST has an unfair advantage as he has the gift of time travel.he can move from Zimbabwe to australia in about 5mins.

 

[no stops trader]

 

[SteamRoller]

So, does this answer the original question? Is this what you expected? Does it help?

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?

 

[Tradersonflow]

I can anticipate market activity of the next day about all the times.
I dont know why, mix of practices, experience, instinct.

 

[tomorton]

So, does this answer the original question? Is this what you expected? Does it help?

Well, not exactly.

I was glibly thinking that there must be a limited range of edges and that they would all be somewhat related. So in a little while we could build a list of the best of the bunch, identifying which work best in trading markets and which in ranging markets, that sort of thing. Instead, I am seeing things I would never have thought were edges in the first place. So its a more open question than I had thought and I'm question I'm glad I asked.

 

[tomorton]

I can anticipate market activity of the next day about all the times.
I dont know why, mix of practices, experience, instinct.

If you can't define how you do what you do, list the objective criteria you use, and how much weight you give to each, etc. how can you be sure you're not just a lucky guesser? (I don't mean any disrespect).

 

[Tradersonflow]

How a good nba basket ball player can free-throw or 3 points and aim right 80% of the time ? Well spend a few years (a lot of) on the court and you will develop a set of skills that are considered excellent. How ? Well training under different circumstances, when you were tired but still went, sweating but still did, did not want to go, but still went etc.

I will do what I started to do on that thread www.trade2win.com/boards/commodities-money-markets/224578-crude-oil-daily-targets-also-weekly.html#post2928012 almost everyday. Just train

 

[dbphoenix]

Well, not exactly.

I was glibly thinking that there must be a limited range of edges and that they would all be somewhat related. So in a little while we could build a list of the best of the bunch, identifying which work best in trading markets and which in ranging markets, that sort of thing. Instead, I am seeing things I would never have thought were edges in the first place. So its a more open question than I had thought and I'm question I'm glad I asked.

Whether or not there is a limited range of edges and whether or not they are related depends on how one defines "edge". I've posted this before, but since the topic has come up again, I may as well repost it. If nothing else, it may encourage clarity (if one can't explain his edge to somebody else, it is likely that he doesn't have one):

One's edge is "the knowledge one gains through his research and testing that a particular market behavior offers a level of predictability that provides a consistently profitable outcome over time". Trade management, risk assessment, discipline, etc, etc are necessary components, but they do not constitute an edge any more than do lucky socks.

Too many (most) beginners believe that all they have to do is be "disciplined" and "focused" and "keep trying" and eventually they will succeed. The fact that their trading plan, if any, leaks like a sieve never enters into the equation.

Jumping in with both feet and hoping for the best is not a recipe for success.​

 

[tomorton]

Brilliant quote db.

 

[dbphoenix]

Brilliant quote db.

If you mean "the knowledge one gains . . . outcome over time", that's Mark Douglas, and I agree.

 

[Don't Follow Me....]

I've yet to find an edge.

I can backtest multiple ideas and determine that based on 5000 odd similar set-ups I 'could' make an average of 'x' pips per trade, but by the time I factor in the spread, the opportunity costs etc the edge looks bleak. I'm also aware 5000+ backtested trades is very small sample in greater scheme of things and unless the edge equates to big pips the necessity to keep exposure/trade low means making a living out of trading is beyond me right now.

 

[tomorton]

I've yet to find an edge.

I can backtest multiple ideas and determine that based on 5000 odd similar set-ups I 'could' make an average of 'x' pips per trade, but by the time I factor in the spread, the opportunity costs etc the edge looks bleak. I'm also aware 5000+ backtested trades is very small sample in greater scheme of things and unless the edge equates to big pips the necessity to keep exposure/trade low means making a living out of trading is beyond me right now.

I'm going to venture your conscientious research into this is good proof that day-trading is unsustainable.

 

[dbphoenix]

I'm going to venture your conscientious research into this is good proof that day-trading is unsustainable.

Not necessarily. Depends on what the ideas are and how they're being tested. Without specifics, the statement reflects nothing more than frustration and has nothing to do with the viability of daytrading.

 

[Don't Follow Me....]

I'm going to venture your conscientious research into this is good proof that day-trading is unsustainable.

I'm very new to trading and even if I were an old hand I wouldn't posit that any one person's research however conscientious would be good proof that day trading is unsustainable.

I'm merely intrigued by how much of an edge one needs to make it profitable.

For example if I had a sample of 5million backtested trades and concluded that on average I could make 5pips per trade. Would that be sustainable?

Suppose I had £25.000.00 to spare on day-trading. Common advice is to risk no more than 2% per trade and to set stops and limits. So I think about £5 per pip stop at 100. But then re-calculate my backtesting to account for the new parameters and find that a lot of that 'profit' came from wider stops/limits so have to either drop my £ per pip to widen my range or keep my range and accept that each trade now only returns 4 pips on average. Once I account for the spread my 'profit' is down to 3.2pips per trade. So as I enter a trade my expected return is £5 x 3.2pips = £16.00.

Now I might only be able to make one such trade every two days so my return is £8/day.

That's sustainable in the sense that I could anticipate not going broke most of the time. But is the effort worth the return? Could I have used that £25,000 and made a better return elsewhere?

At what point does the expected return per trade make it an attractive proposition? That will vary for everyone, some people will happily watch the charts all-day for £50 or £500. Other would sooner go for a walk or run some other business.

I'm happy 'playing' but as I said, I haven't yet found an edge that would keep me from other things.

 

[Don't Follow Me....]

Not necessarily. Depends on what the ideas are and how they're being tested. Without specifics, the statement reflects nothing more than frustration and has nothing to do with the viability of daytrading.

I'm not frustrated. Testing ideas might indicate that a particular idea could be profitable or is likely to fail. Both results are useful.

 

[Dowser]

I've yet to find an edge.

I can backtest multiple ideas and determine that based on 5000 odd similar set-ups I 'could' make an average of 'x' pips per trade, but by the time I factor in the spread, the opportunity costs etc the edge looks bleak. I'm also aware 5000+ backtested trades is very small sample in greater scheme of things and unless the edge equates to big pips the necessity to keep exposure/trade low means making a living out of trading is beyond me right now.

I disagree that 5000 is a small sample size, in fact I'd say it was a very large sample size and more than adequate in developing a system