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How can an "edge" wear off - Shouldn't it be the opposite?

  • #21
  • Sep 21, 2020 6:13am Sep 21, 2020 6:13am
Quoting ionone
{quote} market makers don't move the markets, they just provide liquidity and make money on the spread
Who do you consider being market makers?
  • #22
  • Sep 22, 2020 2:48am Sep 22, 2020 2:48am
Quoting mtruefx
{quote} Who do you consider being market makers?
market makers buy at bid and sell at ask and profit from difference
  • #23
  • Sep 23, 2020 6:30am Sep 23, 2020 6:30am
In what your OP is referencing to, you have to acknowledge the fact that trading is in fact competitive by nature. The closer to the chest a particularly strategy is, the harder it is for others to emulate. If you happened to magically make the "next big thing" and released it to the public, if it was in fact profitable, everyone would use it, competition would temporarily dwindle, and the big players in the market would compensate for this shift. This is all theoretical of course, but that is what would likely happen. We as retail traders are merely pawns in a massive game of chess, and the banks and institutions are the players. The best we can ever hope to do is trade as closely as they do, because otherwise we're just going against them and will lose our asses.

As a personal aside, I feel like said big players are really only interested in price movements on the 1H and up charts. Anything less is just a byproduct of market movement. So I feel like the easiest way to trade against the big players but still be successful is to trade the smallest timeframe you can comfortably trade. A properly set up smaller trade on the 1m chart can be equally as effective and profitable as a larger trader on the 1H or 4H chart. For me, it's always a matter of finding the safest stop loss I can use while making it as small as necessary, so that I can take a larger position and get more bang for my buck. My one seemingly inconsequential trade on the 1m chart is nothing more than a passing candle consolidation to the big players. Just some food for thought.
  • #24
  • Sep 23, 2020 10:29pm Sep 23, 2020 10:29pm
Richard Dennis once said he could advertise his trading rules on the front page of the Wall Street Journal and it would cause him no trouble because almost no one can follow the rules. He was right. You can post your winning strategy here and nothing will happen.

Most traders fail because they fight the trend and won't get out of losers. That is the secret. Trade with the trend and kill losers and you will become profitable. The entry style doesn't really matter all that much.
  • #25
  • Sep 23, 2020 10:45pm Sep 23, 2020 10:45pm
How do you kill losers in a working environment that is as dynamic as forex markets without dying a death of a thousand cuts; even if you're trading on one and four charts being reactive without being too reactive consistently is easier said than done.
  • #26
  • Sep 23, 2020 11:00pm Sep 23, 2020 11:00pm
Quoting wmram
How do you kill losers in a working environment that is as dynamic as forex markets without dying a death of a thousand cuts; even if you're trading on one and four charts being reactive without being too reactive consistently is easier said than done.

I had a thread on here where I went into detail on how to set stops. I use ATR so the dynamic nature of the market is taken into consideration. I don't advocate using fixed stops but either structure based or ATR based. You can also use an arbitrary "oh shit" stop. My point is that you have to draw a line somewhere because price doesn't always come back.
  • #27
  • Sep 24, 2020 3:43am Sep 24, 2020 3:43am
Quoting Seneca pilot
Richard Dennis once said he could advertise his trading rules on the front page of the Wall Street Journal and it would cause him no trouble because almost no one can follow the rules. He was right. You can post your winning strategy here and nothing will happen. Most traders fail because they fight the trend and won't get out of losers. That is the secret. Trade with the trend and kill losers and you will become profitable. The entry style doesn't really matter all that much.
Richard Dennis and his famous trend following turtles story is full of shit.
Blind Trend following based on technical analysis does not work in today's markets and it barely worked 50 years ago and this is super easy to proof for anyone who can write code and know how to build and test automated systems. The trend following systems in general are the easiest systems to code because their rules are very simple and straightforward. There is no complicated pattern recognition. The definitions for trends are simple and clear. So if these systems really worked everyone would be making money because there are enough good programmers around the world to automate all possible trend following systems.

So you see it's not a case of psychology and discipline at all. You don't have to struggle to follow some set of rules. You just write a robot and the robot will execute these rules perfectly without errors day after day forever until the end of time. If the rules really work you will make tons of money. But they don't work unfortunately.

In the end of the day this is true for all technical systems. If you find some set of technical rules that produce positive result during backtesting there is 100% chance that many people already have found these rules before you and already made automated systems based on these rules. The edge will disappear almost immediately after the discovery. And this is the essence of the efficient market. All edges die instantly after they are discovered.
And then we also have the problem with curve fitting and randomness..... This is why everywhere you see the legal disclaimer "Past performance is not indicative of future results". Because many smart people before us have made their homework/research the right way to know what is true.
  • #28
  • Sep 24, 2020 8:08am Sep 24, 2020 8:08am
Quoting alphaomega
Blind Trend following based on technical analysis does not work in today's markets and it barely worked 50 years ago and this is super easy to proof for anyone who can write code and know how to build and test automated systems.

?!?Hello?!?
I am from Africa.
Where are you from?
UNBELIEVABLE!

So, you don't know how to catch trend?!? From the data provided by the chart alone? Really?

In Africa, we do know how to catch the trend, as this is the simplest thing to do, in trading...
Maadik Hugiis. IQ 69.
  • #29
  • Sep 24, 2020 8:16am Sep 24, 2020 8:16am
Quoting alphaomega
{quote} Richard Dennis and his famous trend following turtles story is full of shit. Blind Trend following based on technical analysis does not work in today's markets and it barely worked 50 years ago and this is super easy to proof for anyone who can write code and know how to build and test automated systems. The trend following systems in general are the easiest systems to code because their rules are very simple and straightforward. There is no complicated pattern recognition. The definitions for trends are simple and clear. So if these systems...

You missed the entire point of the post.

Please quote the part of my post where I said anything about trading with the Turtle method.
  • #30
  • Sep 24, 2020 8:26am Sep 24, 2020 8:26am
Quoting Seneca pilot
{quote} You missed the entire point of the post. Please quote the part of my post where I said anything about trading with the Turtle method.

Like in the other tread, he is sky-arrogant here, too.

He should start with:

I CAN'T TRADE TRENDS...
I don't know how to trade trends...
I have not got the skills to trade trends...
ext.

Instead of saying trend trading stopped working like 50 yrs ago (Hello?!?)!? Which is nowhere near any reality I know or I am familiar with.
Maadik Hugiis. IQ 69.
  • #31
  • Sep 24, 2020 8:30am Sep 24, 2020 8:30am
Quoting Seneca pilot
{quote} You missed the entire point of the post. Please quote the part of my post where I said anything about trading with the Turtle method.
What I wanted to say is that the psychological problems are not real problems. The are mostly a result of lack of knowledge and skills.

The people who are not programmers think that they fail because they cant follow their own rules. Their common believe is: "I broke my rules again and I lost. My strategy is good. If only I could follow my rules perfectly I could make millions".

On the other side, the people who are programmers and understand statistics and probability theory already made this strategy into a robot and backtested and forward tested this robot and already found that it does not work when you increase the trade sample. There is no edge. So even if you follow the rules perfectly you still lose in the long run.

Do you see the difference?
  • #32
  • Sep 24, 2020 8:33am Sep 24, 2020 8:33am
Quoting MoneyZilla
{quote} Like in the other tread, he is sky-arrogant here, too. He should start with: I CAN'T TRADE TRENDS... I don't know how to trade trends... I have not got the skills to trade trends... ext. Instead of saying trend trading stopped working like 50 yrs ago (Hello?!?)!? Which is nowhere near any reality I know or I am familiar with.
You just downgraded your IQ to 68 points. Congratulations!
  • #33
  • Sep 24, 2020 8:35am Sep 24, 2020 8:35am
Quoting alphaomega
{quote} You just downgraded your IQ to 68 points. Congratulations!

I know you are SMART! You gotta be ABSOLUTELY RIGHT!
Maadik Hugiis. IQ 69.
  • #34
  • Sep 24, 2020 8:48am Sep 24, 2020 8:48am
Quoting alphaomega
{quote} What I wanted to say is that the psychological problems are not real problems. The are mostly a result of lack of knowledge and skills. The people who are not programmers think that they fail because they cant follow their own rules. Their common believe is: "I broke my rules again and I lost. My strategy is good. If only I could follow my rules perfectly I could make millions". On the other side, the people who are programmers and understand statistics and probability theory already made this strategy into a robot and backtested and forward...

No, it is 100% about following rules and discipline. You have decided that a math based automated approach is the only way to do this. You are wrong. There are thousands of discretional traders making a living in the markets. Is a small percentage of the population? Absolutely, just like success in any other area. Only a small percentage of the people have the discipline to be the best in any field.
  • #35
  • Sep 24, 2020 8:52am Sep 24, 2020 8:52am
Quoting alphaomega
{quote} What I wanted to say is that the psychological problems are not real problems. The are mostly a result of lack of knowledge and skills. The people who are not programmers think that they fail because they cant follow their own rules. Their common believe is: "I broke my rules again and I lost. My strategy is good. If only I could follow my rules perfectly I could make millions". On the other side, the people who are programmers and understand statistics and probability theory already made this strategy into a robot and backtested and forward...
I side with you on : people fail because they dont have an edge. But alot of people that have an edge also fail initially, even if temporary. Because they can't follow their rules. It takes alot of discipline to trade successful. From my research, it shows conclusively that markets trend. If they dont , then they are efficient and technical analysis is all vodoo. The caveat is that they don't trend all the time. Those trends happen only when there are strong shifts in the fundamentals. The market goes from trend to range back to trend, and so on. I will call a successful approach, one that can break even in a range and make money when the trends come. Cheers
When you see it, BET big.
  • #36
  • Sep 24, 2020 9:08am Sep 24, 2020 9:08am
Quoting Rennaissance
{quote} I side with you on : people fail because they dont have an edge. But alot of people that have an edge also fail initially, even if temporary. Because they can't follow their rules. It takes alot of discipline to trade successful. From my research, it shows conclusively that markets trend. If they dont , then they are efficient and technical analysis is all vodoo. The caveat is that they don't trend all the time. Those trends happen only when there are strong shifts in the fundamentals. The market goes from trend to range back to trend, and...

Even better is a method that ignores large trends but capitalizes on the small local trends that occur on a daily basis.
  • #37
  • Sep 24, 2020 9:11am Sep 24, 2020 9:11am
Quoting Seneca pilot
{quote} Even better is a method that ignores large trends but capitalizes on the small local trends that occur on a daily basis.
Yeah agree.
When you see it, BET big.
  • #38
  • Sep 24, 2020 9:19am Sep 24, 2020 9:19am
Quoting Rennaissance
{quote} I side with you on : people fail because they dont have an edge. But alot of people that have an edge also fail initially, even if temporary. Because they can't follow their rules. It takes alot of discipline to trade successful. From my research, it shows conclusively that markets trend. If they dont , then they are efficient and technical analysis is all vodoo. The caveat is that they don't trend all the time. Those trends happen only when there are strong shifts in the fundamentals. The market goes from trend to range back to trend, and...
Here is the basic recipe for what you're looking for:

1. Wait for massive strength and sudden increase in volatility when there are no real reasons for it. Multiple big days in a row but still no news, nothing. Everyone on the internet is asking WTF is going on with this market.
2. Then, buy at the highest price if the movement is bullish. Or sell at the lowest price if the movement is bearish and set trailing stop at 33% of the move.
3. As long as the trend is on, continue to add larger and larger lots to your winning position at fixed intervals like there is no tomorrow.
4. If at some point the profit looks huge and you have the strong urge to take it - now is the time to remove your take profits orders (if any), close your platform, turn off your computer and go on vacation for a few days.

5. Congratulations. You just won the jackpot.

At least that's how I imagine it.
  • #39
  • Edited 12:39pm Sep 24, 2020 10:20am | Edited 12:39pm
Quoting alphaomega
{quote} Here is the basic recipe for what you're looking for: 1. Wait for massive strength and sudden increase in volatility when there are no real reasons for it. Multiple big days in a row but still no news, nothing. Everyone on the internet is asking WTF is going on with this market. 2. Then, buy at the highest price if the movement is bullish. Or sell at the lowest price if the movement is bearish and set trailing stop at 33% of the move. 3. As long as the trend is on, continue to add larger and larger lots to your winning position at fixed...

You seem to be stuck on one type of trend follower. Yes long term trends are tougher and fewer today. There are many more market participants and they are far more educated than they were then. I trade with the trend of now. I am in and out of the ES three to six times per day. My average hold is less than five minutes. I buy when the market is moving up and sell when it is moving down. I am a trend trader. I don't care what the trend is on a daily chart I care what the trend is now. I may sell at 9:30 and be buying like mad at 9:50 Did that today in fact.
  • #40
  • Sep 24, 2020 10:44am Sep 24, 2020 10:44am
Quoting Seneca pilot
. I trade with the trend of now. emphasis added
Brillant.
Without VSA, you're playing checkers while the Smart Money plays chess.
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