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Where's The Edge?

  • #201
  • Nov 16, 2022 4:12pm Nov 16, 2022 4:12pm
Quoting RickM
{quote} Hi Tony So true, stop losses save your arse. Except Aussie Dollar Flash crash in January 2019. I was on holiday trading in Gardiner, a town at the edge of Yellowstone National Park trading a portfolio of 6 Algo's on the Aussie & Euro dollar. A sudden surge down of price around 4% in the morning when liquidity was extremely thin (traders still on holiday mostly) caused a major gap down in price over all nearby stop losses including my one as well. The gap down was something like 700 pips and caused a Margin call on my account. $35,000 fuckin...
Hi RickM
I was still digesting these information you shared here, frankly speaking they reminded me about something worst happened few years back, market crash and volatility it's one of the reasons why i makes my fortune, i burned 400k in different occasions trading news, the pain was unimaginable , i went through a horrible times as far as i can remember and it's then only then i turned into a genius, i developed a fundermental strategy that i either make money or don't lose at all it helped me to realize my limits. Bad times come and go, luckily enough i can breath again, a lot of oxygen.
With regards TonyT
I live in the future
  • #202
  • Nov 20, 2022 5:57pm Nov 20, 2022 5:57pm
Quoting FocusWinReal
{quote} Although, and I add without flippant regard to the topic, this man gives some insight to his experience and he said he aims for 90% or better win rate. Interesting. What is his edge from what you hear and see? Not a test just curious. His team trades his calls which he also sells, not endorsing his professional grade service, but he seems a rarity for the simple fact he watches and calls as if he is the wise one. If this is too sensitive please ignore. All the best.
I do have one method also has 90% win rate. I won't divulge it but to achieve such high win rate you can't have 2 to 1 or 3 to 1 ratio. Also, method has to be mean reversion as trend following success is considerably lower. Signal is rare and happens once in several days.
  • #203
  • Edited 3:12am Nov 25, 2022 2:10am | Edited 3:12am
Quoting PetyaNL
{quote} Hi Gepards, Thanks for your reply. I'm a swing trader and typically holding trades ranging from one day till one week. I've read and considered to avoid entering on Monday's and Friday's, but my impression is this won't influence the outcome of the setups too much. I have been thinking to only take setups that are in line with the sentiment and momentum, to avoid going against the market current eventhough I'm trading with the overall higher timeframe trend. I've used some currency strength meters, but they only show the current situation...
I tried to pm you with details, but you're too new to the forum for pm's. I'm not on ForexFactory much, but happened to see your post...you are where I was a few years ago when I found the last piece of the puzzle for me. It will work great with your sentiment indicator and swing trading.

You might try posting several times in the forum until you've posted enough so you are allowed to pm. Then pm me. I'd be happy to walk you through something that might be your edge. And I can show you the targets and patterns for swing trading this way.
  • #204
  • Dec 4, 2022 1:18am Dec 4, 2022 1:18am
Its rare that I post on here..but this concept of an edge is always a fun topic for me. Personally your edge is not a system..your edge is your view..its how you choose to plugin..its how you read a chart ... its about you understanding the trend your trading in.. its about you understanding sentiment and figuring out how you want to trade it ... successfully... your edge is always you ..!
  • #205
  • Dec 4, 2022 4:04pm Dec 4, 2022 4:04pm
Quoting svtnick
Its rare that I post on here..but this concept of an edge is always a fun topic for me. Personally your edge is not a system..your edge is your view..its how you choose to plugin..its how you read a chart ... its about you understanding the trend your trading in.. its about you understanding sentiment and figuring out how you want to trade it ... successfully... your edge is always you ..!
"Your edge is: <some fluffy nonsense>. <some things that make sense>

Your edge is: You ..!"

Yeah, uh. Okie dokey.

So is it me, or is it about understanding real shit like sentiment and order flow and a dash of fundamentals for funzies? How deep do I need to reach inside myself to find an edge, and what glove is recommended for this procedure?

Jeez, pick a lane.
Congratulations ScalaFX for coming out of the closet!
  • #206
  • Feb 2, 2023 11:30pm Feb 2, 2023 11:30pm
Quoting BWilliam
{quote} There are 2 perspectives. First, more common, is to trade regression to the mean, to expect excess kurtosis not to sustain over time. Second, much less common, is to trade into this excess kurtosis. I seldom to rarely trade the first. Because of the difference in volatility(whose distribution is not regular) and this tricky definition of excess(can be larger and sustained than we expect) which is smaller and mostly within predefined expectation in the second at entry. Part of my risk management protocol.
This is a great point and I completely agree with you.

Many people argue that kurtosis will converge towards 3 (normal) if you have enough samples or as the time horizon increases. It's a core principle of modern portfolio theory. Unfortunately, this is not true for currency price distributions (or most assets), which is essentially the mathematical explanation of why "markets will stay irrational longer than you can stay solvent".

Most people assume tail moves will end sooner than they do, and be shorter than they are. In other words, kurtosis will convert to "normal" or rational.

The data says otherwise:

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The tails are also so large at times, that even if one distribution appears to converge towards 3, all it takes is one event to blow everything up above 3 again.
ri · skuht
  • #207
  • Feb 3, 2023 2:00am Feb 3, 2023 2:00am
imho there is no edge beside: watching a chart for thousands and thousands of hours.

you can have one or two indis if you feel better with it, but i think they are not needed.
want to get an extra boost: pick a few trader who does make money every year (proven).. and listen to what they they have to say

if i´m wrong, i will let you know in a few years
  • #208
  • Feb 5, 2023 3:59pm Feb 5, 2023 3:59pm
I was reading some of my initial posts and I want to clear a few things up regarding a couple of points I made previously. The first one is the statement below

Quoting Riskcuit
{quote}
Now, since this distribution is perfectly normal, if you take each value of the x-axis, multiply it by its y-axis value, and sum them all together, you will get 0.
This is a formula to detect a directional advantage. But just because there is no directional advantage, doesn't mean there is no advantage at all.

If you can observe any deviations that are different than what is expected in a normal distribution, that can be an edge you target.

The next statement is the one below:

Quoting Riskcuit
{quote} 2. If the formula above adds up to 0, there is no amount of discipline, money management, or fundamental analysis, or that can extract profits. Some money management techniques can shift around the order and size of wins and losses so you stay in the game longer, but eventually, you will converge towards 0 expected pips for every trade you take.

I want to clarify something that I should have said then.

This is only the case if you have a linear payoff. Meaning something like this:
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If you have a non-linear payoff, you could consistently profit by speculating on a perfectly normal distribution. You could even make money speculating on distribution that is skewed against you.

This is precisely why casinos only offer bets with linear payoffs (For example, you can't modify your bet in the middle of a roulette spin).

For example, let's look at the chart below. This is a perfectly normal distribution (blue line) with a traditional linear payoff (red line).

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If you were to multiply every possible payoff by the probability of it occurring and summed the results it would be 0. As expected with a linear payoff.

Now let's imagine we could structure our payoff so that no matter where the price landed below -25 pips, we could never lose more than 25 pips.

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Even with a normal distribution, that provides 0 edges in any way, shape, or form, if we apply the same formula we get 1.3. So even if x (the price distribution) is 100% normally distributed, you can still make money depending on how you structure your payoff (f(x)).

So edges can lie in 2 places.

x (the distribution itself, specifically where it deviates from normal) and/or f(x) (how you structure your payoff/exposure to the distribution).
ri · skuht
  • #209
  • Feb 5, 2023 5:54pm Feb 5, 2023 5:54pm
Quoting Riskcuit
I was reading some of my initial posts and I want to clear a few things up regarding a couple of points I made previously.
If you can observeany deviations that are different than what is expected in a normal distribution, that can be an edge you target.


Now we're getting back to an obvious edge
  • #210
  • Edited 6:44pm Feb 5, 2023 6:23pm | Edited 6:44pm
I think that the first principal in understanding if you do or do not have an edge, is, to clearly believe inside your head that throwing a coin 100 times in the air will most likely come out 50 heads and 50 tail, i e, none of us will ever know what is the next spin result. This will take few years to sink in, really sink in.

Once you understood that, next action is up to the trader, i. e. to control whatever edge you believe you have, with proper mindset and money management. If you fail at these 2, you are a failure in a sense of being a successful vs not successful trader. That part will take longer to fully understand, could be as long as 5-7 years.

If, after 7 years you are still struggling, it is time to give up this hobby. As an example, it took me 5 years (on average 10 hours a day) to be a successful trader, especially with large account. Good Luck to All!
  • #211
  • Feb 5, 2023 6:50pm Feb 5, 2023 6:50pm
Quoting TimeTells
{quote} Now we're getting back to an obvious edge
obvious edge doesn’t mean it’s easy to use.

everyone knows what hands to bet on in Hold’em, most people still suck at the game though
ri · skuht
  • #212
  • Feb 5, 2023 7:12pm Feb 5, 2023 7:12pm
Quoting Riskcuit
{quote}
obvious edge doesn’t mean it’s easy to use.

Hi Risc

Yes I do agree.

I was, though, highlighting my belief (only),
that the edge is in the trader ie YOU,

and that is regardless of whatever methodology you are actually successful with.

eg
Same method, different trader, different result, maybe only slightly different (or maybe hugely different).
Is it the method that varies (and how) or the individual person trading the method?

When we find a method that works, WE found it (sought it, bought is, read it, worked it all out etc etc).

Once we have it (a method) then imho it is WE that is then successful (as in how WE utilise that method).
So to me the edge is … YOU, the trader.

Else we are again just talking trading systems & methods like the near 10,000 threads here on FF.
And then which method has an edge, how many methods also have an edge, which method is best, and also for whom.

For example, could a savvy trader make a success out of a method that another trader had failed with?
(and if so, why?)

Edge is US I reckon. But just a personal thought is all.

- - -

and something to think about in relation to just my personal thoughts above

Quoting Riskcuit
{quote}
everyone knows what hands to bet on in Hold’em, most people still suck at the game though

all the best Risc,
trading is a tricky game, I believe it is meant to be !!!!!, and I believe we can overcome it at some point.
  • #213
  • Feb 10, 2023 3:52pm Feb 10, 2023 3:52pm
For me "time" was what i was missing from my strategy. They dont teach you about time but once you start seeing things happening at a certain time certain days during certain sessions is life changing.
En el mar la vida es mas sabrosa
  • #214
  • Feb 11, 2023 7:00pm Feb 11, 2023 7:00pm
Quoting Shaga
pick a few trader who does make money every year (proven)..
//-----

proof the pen is mightier than the sword.....

you cleared the field with a single razor sharp word.....h
to trade and code, keep both simple... no call to impress....h
  • #215
  • Feb 19, 2023 4:33am Feb 19, 2023 4:33am
Intuition.
You have an IQ lower than 90 if you interact with this user.
  • #216
  • Feb 22, 2023 7:50am Feb 22, 2023 7:50am
Understanding the concept of Brownian Motion, then think while watching your charts.
  • #217
  • Feb 22, 2023 8:50am Feb 22, 2023 8:50am
Quoting Fagin
Understanding the concept of Brownian Motion, then think while watching your charts.
Thought provoking but hurt my head
The first person to describe the mathematics behind Brownian motion was Thorvald N. Thiele in a paper on the method of least squares published in 1880. This was followed independently by Louis Bachelier in 1900 in his PhD thesis "The theory of speculation", in which he presented a stochastic analysis of the stock and option markets. The Brownian motion model of the stock market is often cited, but Benoit Mandelbrot rejected its applicability to stock price movements in part because these are discontinuous.[10]

Taken from : https://en.wikipedia.org/wiki/Brownian_motion
every Saint has a past. Every Sinner has a Future
  • #218
  • Feb 22, 2023 10:02am Feb 22, 2023 10:02am
Quoting turnip15
{quote} Thought provoking but hurt my head The first person to describe the mathematics behind Brownian motion was Thorvald N. Thiele in a paper on the method of least squares published in 1880. This was followed independently by Louis Bachelier in 1900 in his PhD thesis "The theory of speculation", in which he presented a stochastic analysis of the stock and...
Don't worry about it, for us mere mortals, just know it goes up and down and not left to right...
  • #219
  • Feb 23, 2023 5:34am Feb 23, 2023 5:34am
Quoting Riskcuit
Where's the Edge? {image} After spending many years lurking on trading forums, looking at hundreds, of systems and strategies, I always have been left wondering, where is the edge? The system looks great. The chart is a work of art for Pete's sake. The ideas and logic behind the entries and exits sound logical, but the edge is never seen. All too often, it's nowhere to be found. Some people argue it's in risking less than you stand to make. But simple math easily debunks the idea that a particular risk:reward ratio alone can give you an edge. Technicians...
I am not an experienced trader. And I have little to do with Forex. But have an aim to make money on it. Perhaps in further discussion you have already come to an answer. But I will give my opinion based on observation of this area of activity. The market has no edges. Because it is constantly changing. It represents all the economies of different countries. And each country has its own economy, which results in a complete unpredictability of the market. You can technically come to something, but this will not be the solution to everything. This decision is in the moment until the conditions change.
I think that's why everyone is attracted to it. A very big risk. And risk is money. And if the market had edges, then no one would go into it anymore.
  • #220
  • Feb 23, 2023 6:09am Feb 23, 2023 6:09am
Quoting Kaldir
{quote} I am not an experienced trader. And I have little to do with Forex. But have an aim to make money on it. Perhaps in further discussion you have already come to an answer. But I will give my opinion based on observation of this area of activity. The market has no edges. Because it is constantly changing. It represents all the economies of different countries. And each country has its own economy, which results in a complete unpredictability of the market. You can technically come to something, but this will not be the solution to everything....
I think you've about got it in a nutshell to be honest.

Bank of England statement: "The value of cross-border payments is estimated to increase from almost $150 trillion in 2017 to over $250 trillion by 2027, equating to a rise of over $100 trillion in just 10 years."

Those numbers....
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