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Trading System versus Trading Strategy: Gaining a Profitable Edge

  • #21
  • Aug 22, 2017 2:04pm Aug 22, 2017 2:04pm
Quoting KeenPips
{quote} Madinvestor was not talking about a bad or mediocre strategy but about a mediocre system. There is a big difference between a trading system and a trading strategy, imho. This is one thing we all need to be aware of. You will sweat and perhaps be frustrated to make a mediocre strategy win but you can make a mediocre system get some good results with very solid and well-honed strategy. Trade safe and prosper. KP
I also agree, if you have a mediocre edge you could hypothetically make it better with a better strategy, but it doesn't really matter that much since you already have an edge, which is the single thing that is really needed in trading, no money management, no strategy, just an edge. So the real question is not whether or not a good strategy can turn an already profitable system ( albeit mediocre ) into a better one, but whether or not a good strategy could turn a losing system into a profitable one ( mediocre or good ). If it can't then what's the use of it ?
  • #22
  • Aug 22, 2017 2:30pm Aug 22, 2017 2:30pm
That is quite correct. For me a trading strategy is discretionary and should give the individual trader a profitable edge in the market.

I never planned to show any trading system, lots of them abound. In the same vein, I am not focusing this thread to discuss my trading system or trading strategies. This thread is about discussing the comparative advantages traders gain with their trading strategies over trading systems. I leave it to individual contributors to discuss what they want to share in the context of the broad overview I gave in Post #1.

If you want to check what consists of my trading system, you may visit two of my other threads Weekly Technical Outlook and Trap the market.

Trade safe and prosper.

KP

Quoting metta87
{quote} thanks, sorry i was lazy i didnt read those 2 posts before posting. About my last question tho, can you show an example of a system and a strategy , something like charts or something. in your post #2 you said {quote} what i get from this is that the strategy you allude to is the discretionnary part in a trading system, like for example : you re trading a moving average cross but instead of trading every crosses, you decide for example to only do so in specific cases, like during london session, around round numbers or support and resistance...
Do your homework, follow the footprints of smart money
  • #23
  • Aug 22, 2017 2:38pm Aug 22, 2017 2:38pm
You need a winning edge to be profitable in the market. Is there anything like a 'mediocre edge'? I don't know and I don't think if it exists at all you will ever be profitable in the market for long. Will you ever be satisfied with mediocrity? Not for me mate. When talking of an edge, it really, imho, refers to how you gain strategic advantage. I don't think mediocrity is ever factored into that definition.

Trade safe and prosper.

KP

Quoting metta87
{quote} I also agree, if you have a mediocre edge you could hypothetically make it better with a better strategy, but it doesn't really matter that much since you already have an edge, which is the single thing that is really needed in trading, no money management, no strategy, just an edge....
Do your homework, follow the footprints of smart money
  • #24
  • Aug 22, 2017 2:51pm Aug 22, 2017 2:51pm
Quoting KeenPips
You need a winning edge to be profitable in the market. Is there anything like a 'mediocre edge'? I don't know and I don't think if it exists at all you will ever be profitable in the market for long. Will you ever be satisfied with mediocrity? Not for me mate. When talking of an edge, it really, imho, refers to how you gain strategic advantage. I don't think mediocrity is ever factored into that definition. Trade safe and prosper. KP {quote}
Exactly, that's the only thing needed an edge. No strategy, no money management, just an edge.
Also by saying mediocre I was using madinvestor's words and also yours in post #15, cause an edge is still an edge, mediocre or not.
  • #25
  • Aug 22, 2017 2:52pm Aug 22, 2017 2:52pm
I hope you re going to add the edge option in your poll.
trade safe and proper
87
  • #26
  • Aug 22, 2017 3:43pm Aug 22, 2017 3:43pm
A trading strategy is worth having only if it gives you a profitable edge in the market. Otherwise you have a problem as a trader.

KP

Quoting metta87
I hope you re going to add the edge option in your poll. trade safe and proper 87
Do your homework, follow the footprints of smart money
  • #27
  • Aug 22, 2017 6:41pm Aug 22, 2017 6:41pm
Strategy, System, Method, etc. etc. All semantics in my book. The so called "edge" is another favorite term used by many to suggest they have something no one else has. It's really BS. Market makers move the market. The charts historically document the tricks of the market makers which are designed to get traders on the wrong side of the trade and they do this over and over. But most are caught up in their indicators AND their strategies and methods and systems and their
"EDGE" and such and so they never figure it out.
  • #28
  • Aug 22, 2017 6:52pm Aug 22, 2017 6:52pm
Quoting Winston Reed
Strategy, System, Method, etc. etc. All semantics in my book. The so called "edge" is another favorite term used by many to suggest they have something no one else has. It's really BS. Market makers move the market. The charts historically document the tricks of the market makers which are designed to get traders on the wrong side of the trade and they do this over and over. But most are caught up in their indicators AND their strategies and methods and systems and their "EDGE" and such and so they never figure it out.
So do you have an edge or a strategy ?
  • #29
  • Aug 22, 2017 6:55pm Aug 22, 2017 6:55pm
Quoting metta87
{quote} So do you have an edge or a strategy ?
No I gave up edges, strategies, systems some time ago. I now study price and what "THEY" are doing. I trade with them.
  • #30
  • Aug 23, 2017 4:54am Aug 23, 2017 4:54am
Quoting Winston Reed
{quote} No I gave up edges, strategies, systems some time ago. I now study price and what "THEY" are doing. I trade with them.
That is still an edge and a strategy. Let's not make this too hard folks. Too many traders overthink the market. People make it harder than it has to be by getting too caught up in theories.
  • #31
  • Aug 23, 2017 7:48am Aug 23, 2017 7:48am
Quoting Winston Reed
{quote} No I gave up edges, strategies, systems some time ago. I now study price and what "THEY" are doing. I trade with them.
well thats still a system -strategy my friend. now, does it have any edge ? only your bank account could tell
  • #32
  • Aug 23, 2017 8:55am Aug 23, 2017 8:55am
Quoting metta87
{quote} well thats still a system -strategy my friend. now, does it have any edge ? only your bank account could tell
A system, strategy, method whatever you want to call it implies a set of rules or "set-ups" that one looks for. In other words when "this" happens I buy or when "this" happens I sell. An analogy is the famous MA crossover. When MA 5 crosses MA 10 to the upside get long. When it crosses to the downside get short. Someone might say they have an edge because they have found a unique way of using another indicator they think no one else has thought of. Such a system may even be profitable but it requires little to no understanding of the market. My trading is completely discretionary. I study the market and figure out what "they" are doing then I just participate. Sure there are repeatable patterns, structures, etc, etc that help but my trading is in no way systematized. I guess if understanding the market is an edge then so be it. But I think using such terminology promotes the idea that there is a magical combination of indicators that will solve one's trading dilemma. There isn't.
  • #33
  • Aug 23, 2017 9:41am Aug 23, 2017 9:41am
Quoting Winston Reed
{quote} A system, strategy, method whatever you want to call it implies a set of rules or "set-ups" that one looks for. In other words when "this" happens I buy or when "this" happens I sell. An analogy is the famous MA crossover. When MA 5 crosses MA 10 to the upside get long. When it crosses to the downside get short. Someone might say they have an edge because they have found a unique way of using another indicator they think no one else has thought of. Such a system may even be profitable but it requires little to no understanding of the market....
Yes I understand what you are saying because I trade in a similar manner, but it is still a system, albeit a discretionary one. You still have some kind of rule or trigger that causes you to act. In this case, price action. It doesn't have to be something programmable or mathematical to qualify.
  • #34
  • Last Post: Aug 23, 2017 10:06am Aug 23, 2017 10:06am
Quoting Winston Reed
{quote}....I study the market and figure out what "they" are doing then I just participate. Sure there are repeatable patterns, structures, etc, etc that help but my trading is in no way systematized. I guess if understanding the market is an edge then so be it. But I think using such terminology promotes the idea that there is a magical combination of indicators that will solve one's trading dilemma. There isn't.
It is often the case that we confuse definitions. At any rate, in the context of this thread, how you use a system is the strategy. If a trader studies the market, it is meaningless unless they are able to interpret it, develop specific attitude or action steps that can help them succeed in the market, and trade according to that understanding or insight. That, imho, is what can produce the edge; a winning or profitable edge.

Trade safe and prosper.

KP
Do your homework, follow the footprints of smart money
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