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-   -   How can an "edge" wear off - Shouldn't it be the opposite? (https://www.forexfactory.com/thread/1024492-how-can-an-edge-wear-off-shouldnt)

ionone Sep 6, 2020 3:31am | Post# 1

How can an "edge" wear off - Shouldn't it be the opposite?
 
I don't understand how releasing a working strategy to the public can make it stop working
If a lot of people trade at the same time in the same direction, price will go in the right direction strongly.
The only problem can be a diminution of liquidity, but I don't understand how it could affect the edge ?
It should enhance it at best, no?
please enlighten me

thanks

Jeff

Rennaissance Sep 6, 2020 10:26am | Post# 2

I don't understand how releasing a working strategy to the public can make it stop working If a lot of people trade at the same time in the same direction, price will go in the right direction strongly. The only problem can be a diminution of liquidity, but I don't understand how it could affect the edge ? It should enhance it at best, no? please enlighten me thanks Jeff
If the USA gives away their defense secrets to the rest of the world what do you think will happen? Will it make their defense better? What about Google giving away their search algorithm?

ionone Sep 6, 2020 10:38am | Post# 3

{quote} If the USA gives away their defense secrets to the rest of the world what do you think will happen? Will it make their defense better? What about Google giving away their search algorithm?
not the same thing.

do you think scientists sharing their discoveries will improve science ? YES it will

Rennaissance Sep 7, 2020 1:06am | Post# 4

{quote} not the same thing. do you think scientists sharing their discoveries will improve science ? YES it will
So far as the area the discovery is made is not competitive. Yes! Scientists involved in competitive fields dont publish their findings. Not everything we know of as a specie is in textbooks. From my experience real, tangible and pertinent information is not found in textbooks.

ionone Sep 7, 2020 1:44am | Post# 5

{quote} So far as the area the discovery is made is not competitive. Yes! Scientists involved in competitive fields dont publish their findings. Not everything we know of as a specie is in textbooks. From my experience real, tangible and pertinent information is not found in textbooks.
can you explain with detail how the edge woul wear off in case of trading only?

Rennaissance Sep 7, 2020 2:31am | Post# 6

{quote} can you explain with detail how the edge woul wear off in case of trading only?
You will be competing at your entry price. Lets say you want to buy at 10, you believe the price is going to 15. If alot of traders come to know of that information, everyone places buy stops at 10. Because there are too many buyers at 10, price will jump to 13 or 15 instanly. So instead of getting filled at 10, you might only be filled at 13 or 14. Wiping away all your profit potential.

Second, even if the market is liquid enough to were you can all get filled at 10; who will be left to bid the price to 15. You need others to buy after you and bid the price to 15 to make a profit. Result, price starts moving in the opposite direction and take away all your stop losses ( we say the market is bought out).

Third, if you want to buy at 10; someone has to sell at 10. Trading being a zero sum game. If the people who are bearish get to know that they will get swindled at 10, they will not be willing to take the other side of your trade. Result, price stays at 10. These are the ranges you see on your charts. A range is simply a phase of the market when buyers and sellers don't want to do business with each other. Everyone suspecting the other side has some information or advantage on them.

These things happen on a micro level which then translates to a macro level. The price is simply the sum total of these descisions made by traders. Cheers

ionone Sep 7, 2020 9:03am | Post# 7

when you set a slippage value in the OrderSend function, if price jumps to 13 or 15, won't the order be canceled if you set a slippage value small enough ?
i'm not sure about it.

Cogra Sep 20, 2020 11:00am | Post# 8

In my opinion, it looks strange because I don't see a pattern that profit depends on the number of people who trade in one direction or another. Then what's the point of forums if we can't share information and observations here, because that's what helps us to find some new ways and learn something new. I don't think it's good not to share information with other traders. But in general, it's probably a personal matter of everyone, probably, there are traders who are convinced that they should keep silent about everything and enjoy all the benefits only by themselves. I don't know, it's a difficult question... Probably, I should think about it in more detail.

Rennaissance Sep 20, 2020 11:06am | Post# 9

In my opinion, it looks strange because I don't see a pattern that profit depends on the number of people who trade in one direction or another. Then what's the point of forums if we can't share information and observations here, because that's what helps us to find some new ways and learn something new. I don't think it's good not to share information with other traders. But in general, it's probably a personal matter of everyone, probably, there are traders who are convinced that they should keep silent about everything and enjoy all the benefits...
Yeah you should. Find a gold mine and go tell the whole world about it huh ..

alphaomega Sep 20, 2020 11:50am | Post# 10

{quote} Yeah you should. Find a gold mine and go tell the whole world about it huh ..
It depends on the gold mine. Not All gold mines are the same. There is gold almost everywhere, but the concentrations are low and most of it is not cost effective for mining. The spending required for investment and energy cost cannot be covered by the profit from the extracted gold. In other words the return on investment ROI is below 1 and so you have negative expectancy. Forex trading is exactly the same. Most of the easy/high RR gold is depleted. Now you have to dig deeper in harder places. Most cases you are lucky if break even.

Wavegarrick Sep 20, 2020 11:51am | Post# 11

Hi Guys,
An edge wears off for a trend trader when markets start ranging. For a range trader, an edge wears off when the markets start trending. Strike a balance between both and you could be onto something. Layman's term answer.
There never ever will be an agreement with price and this keeps the market ticking. There never ever will be an appropriate answer to all these questions.
Just my .02 cents.

Cheers.

mtako Sep 20, 2020 12:01pm | Post# 12

Except on extremely rare occasions (and never caused by small retail traders alone), its an illusion. So in our case, and I know this goes against what many here believe, but its not the edge that wears off, Its the strategy. All strategies wear off, as the market is forever changing. The successful traders adapt or drop their strategy as the market changes constantly and forever will. Creating a successful strategy is the easy part, as pompous as that sounds ....

Sometimes we just dont want to share our hard work for many other reasons but rather repeat the common answer and lie (sometime to ourselves), than tell the truth.

Last time I shared one of my strats, the person I thought was goodhearted put it up for sale....

Headland Sep 20, 2020 1:32pm | Post# 13

{quote} You will be competing at your entry price...... . Cheers
This pretty much says it all...and in any event, why would anyone with a proven edge want to? (I'm not saying you do and understand you are probably asking just an academic question.) Going off to a tangent a bit from the original question but related to it - Trading is s competitive business..we should see other market participants or potential market participants as our competitors. To this extent you would not reveal the mechanics behind your usp/competitive edge to competitors in any other commercial field, and it follows then that you would not in trading.

mtako Sep 20, 2020 1:38pm | Post# 14

{quote} This pretty much says it all...and in any event, why would anyone with a proven edge want to? Going off to a tangent a bit from the original question but related to it - Trading is s competitive business..we should see other market participants or potential market participants as our competitors. To this extent you would not reveal the mechanics behind your usp/competitive edge to competitors in any other commercial field, and it follows then that you would not in trading.

I 100% agree with you, for a group of million$ market moving traders. But all that reasoning does not apply, and far from it, to us. The little-medium traders are not in competition with each other at all, but I get your point.

mtruefx Sep 20, 2020 1:49pm | Post# 15

I don't understand how releasing a working strategy to the public can make it stop working If a lot of people trade at the same time in the same direction, price will go in the right direction strongly. The only problem can be a diminution of liquidity, but I don't understand how it could affect the edge ? It should enhance it at best, no? please enlighten me thanks Jeff
The market makers move in the opposite direction of retail traders, so if retail traders are doing the same the MM's will move it in the opposite direction.. as simple as that.. I suggest you to lookup 'IG Market sentiment'

mtako Sep 20, 2020 2:01pm | Post# 16

{quote} The market makers move in the opposite direction of retail traders, so if retail traders are doing the same the MM's will move it in the opposite direction.. as simple as that.. I suggest you to lookup 'IG Market sentiment'

Exactly ! But if ENOUGH retail traders are doing the same. Forex forums will not make the difference, and far from it.

Varkeer Sep 20, 2020 2:21pm | Post# 17

Retail traders aren't going to change the price. They account for less than 5%.

mtako Sep 20, 2020 2:24pm | Post# 18

{quote} Definately, the most successfull traders are going under the radar.. not going to forex forums, selling signals or mentoring
Very true, but that doesnt mean their strategy 's success will last any longer than if they shared it. But I get why one would need to believe that.

MoneyZilla Sep 20, 2020 3:36pm | Post# 19

First of all, it is controversial, as most, if not all trend strategies, if traded on the annual trend ONLY, do have an edge, nobody or nothing can wipe it out... Annual trend only, with just fewer trades in use.

Now the controversial part. There are NONE, zero, nil, public strategies, offering an egde, in anything below the annual trend.

There are successful private strategies. Probably their number is not so low, my uneducated guess is, likely, they will never go public.

And we can see? The annual trend? It is successful, but nobody cares... As the account is not doubled every day/week/month and 1,000%, 4,400%, 10,000% or higher %s never get reached with that...

How is that, there is not any edge around, or the edge just wears off?!?

ionone Sep 21, 2020 4:14am | Post# 20

{quote} The market makers move in the opposite direction of retail traders, so if retail traders are doing the same the MM's will move it in the opposite direction.. as simple as that.. I suggest you to lookup 'IG Market sentiment'
market makers don't move the markets, they just provide liquidity and make money on the spread


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