Sharing hurt your method? | Forex Factory

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Sharing hurt your method?

  • #1
  • First Post: Feb 3, 2007 1:44am Feb 3, 2007 1:44am
Does sharing your method blunt your edge or is the market so big it won't make a difference?
How you act is more important than how you feel.
  • #2
  • Feb 3, 2007 9:18am Feb 3, 2007 9:18am
Quoting Warmagus
Does sharing your method blunt your edge or is the market so big it won't make a difference?
It makes no difference whatsoever. Whatever you're doing has been already studied by other people before, and even if a hundred new people begin using it, it wont alter the market conditions one inch.
  • #3
  • Feb 3, 2007 9:53am Feb 3, 2007 9:53am
Imo, if large amounts of money are placed into the market using "the method" (through wide acceptance of "the method"), a pattern will emerge and sooner or later another large amount of money will be placed into the market to take advantage of the pattern.
But then is a known fact that everyone trades "the method" in a different way .
-soso
  • #4
  • Feb 3, 2007 9:54am Feb 3, 2007 9:54am
Good question, and i agree with WTB's and Soso's comments and will add the following thoughts.

There could be some situations that the method might break down at bit i believe. One possible senerio might be if your method is semi mechanical and the entry/exits can be shown to have some form of reoccuring pattern. Then you, as the originator, for various reasons have suggested to its users that they use XYX brokerage. I can imagine that if the method is profitable, and there are X number of individuals all following it's entry/exit calls in a fairly consistent manner, and that brokerage gets wind of it there may be an issue. I've read enough here and there to imagine they could do such things as flag those accounts for manual excecution and there could be a greater frequency of requotes and such. Of course if the model is not scalping based in the methodology, one or two pips on a requote and a precise entry point won't make a lot of difference.

The above does not neccesarily "hurt" the model, but any number of its users, depending on their tollerance of such brokerage-shinanigans might begin to either vary the method so it does not match the original engagement rules, or move on to a different brokerage if possible, or move to a differnt model.

Just thinking out loud.

Cheers,
Thom
  • #5
  • Feb 3, 2007 10:01am Feb 3, 2007 10:01am
Depends on your method I suppose.

A real honest to goodness trader’s edge should provide you with a way of looking at capital markets to discover inefficiencies. Sharing the edge you actually have is gold, but seldom is anyone interested in trying to understand what makes you profitable. So you can share it all day long and it doesn’t make the slightest difference to your profit. When one inefficiency dries up, you can use your edge to locate another one with little difficulty.

Pointing out the inefficiencies will usually destroy their profitability in short order. For an example you can look at news trading. Up until about 6 months ago, there was a gaping hole in Oanda's execution system which allowed a trader to get guaranteed fills on orders during an announcement. A small group of people were making some serious bank exploiting the hole until a few idiots decided they needed to prove to the world how smart they were by showing everyone else how it was done. The army of people flowing into the trade led to a widening of spreads and the death of that inefficiency. I imagine people still make some money trading the news, but not in the same way and the profit is nothing like it used to be.

Most systems being traded have no component of inefficiency to them and as such, no real edge. Almost all of the moving average and other derivative indicator based systems fall under this category. Some methods can be shown to be statistically profitable looking at historical data, but very seldom are they much better then chance (1-5%). Given a large enough sample of data they almost all break down. The reason for this is that the underlying order flow these systems need to win isn't generated by these systems. The likelihood of even 3 traders looking at the same combination of indicators and trading them exactly the same way is almost nil. The moral of this story is that sharing these systems will often have the effect of INCREASING their profitability (albeit marginally) because the effect on the order flow of more people trading at the same time in the same way causes the system to work. Unfortunately the most likely traders of these systems are novices and seldom follow the system exactly or for very long.

Fibs and long term (1hr+) price action system work for the same reason indicator systems fail. The concepts are SO pervasive within the trading community that the core patterns almost always generate order flow that helps them to work. A breakout doesn't work because it's a breakout, but because many people see the breakout and act in the same way. It's with these types of systems that exits become the critical component to success. Lots of people are entering at the breakout, but only the successful have back tested/forward tested different exit rules to determine the probabilities for the best exit. This data provides the winners their edge. It's a smaller edge then an arbitrage situation may provide, but it is still tradable for a decent enough profit.

It's for this reason you find a lot of information about entries but very little for exits. If the exits are what provide the edge, sharing that information will hand a portion of that edge over to someone else. Enough some ones and the profits are gone.

So to make a long explanation short, if the system you’re trading actually has an edge, sharing it will be detrimental for you. If it doesn’t have an edge, share away because it may actually improve it.

Ohh, and if you do manage to find a real market inefficiency, do yourself and those who are already trading it the courtesy of keeping your mouth shut about it. The shiny red Ferrari it will buy you will boost your ego for much longer then the complements of your trading peers.

Luck be with you.
  • #6
  • Feb 3, 2007 11:25am Feb 3, 2007 11:25am
Quoting Darkstar
Depends on your method I suppose.

A real honest to goodness trader’s edge should provide you with a way of looking at capital markets to discover inefficiencies. Sharing the edge you actually have is gold, but seldom is anyone interested in trying to understand what makes you profitable. So you can share it all day long and it doesn’t make the slightest difference to your profit. When one inefficiency dries up, you can use your edge to locate another one with little difficulty.

Pointing out the inefficiencies will usually destroy their profitability in short order. For an example you can look at news trading. Up until about 6 months ago, there was a gaping hole in Oanda's execution system which allowed a trader to get guaranteed fills on orders during an announcement. A small group of people were making some serious bank exploiting the hole until a few idiots decided they needed to prove to the world how smart they were by showing everyone else how it was done. The army of people flowing into the trade led to a widening of spreads and the death of that inefficiency. I imagine people still make some money trading the news, but not in the same way and the profit is nothing like it used to be.

Most systems being traded have no component of inefficiency to them and as such, no real edge. Almost all of the moving average and other derivative indicator based systems fall under this category. Some methods can be shown to be statistically profitable looking at historical data, but very seldom are they much better then chance (1-5%). Given a large enough sample of data they almost all break down. The reason for this is that the underlying order flow these systems need to win isn't generated by these systems. The likelihood of even 3 traders looking at the same combination of indicators and trading them exactly the same way is almost nil. The moral of this story is that sharing these systems will often have the effect of INCREASING their profitability (albeit marginally) because the effect on the order flow of more people trading at the same time in the same way causes the system to work. Unfortunately the most likely traders of these systems are novices and seldom follow the system exactly or for very long.

Fibs and long term (1hr+) price action system work for the same reason indicator systems fail. The concepts are SO pervasive within the trading community that the core patterns almost always generate order flow that helps them to work. A breakout doesn't work because it's a breakout, but because many people see the breakout and act in the same way. It's with these types of systems that exits become the critical component to success. Lots of people are entering at the breakout, but only the successful have back tested/forward tested different exit rules to determine the probabilities for the best exit. This data provides the winners their edge. It's a smaller edge then an arbitrage situation may provide, but it is still tradable for a decent enough profit.

It's for this reason you find a lot of information about entries but very little for exits. If the exits are what provide the edge, sharing that information will hand a portion of that edge over to someone else. Enough some ones and the profits are gone.

So to make a long explanation short, if the system you’re trading actually has an edge, sharing it will be detrimental for you. If it doesn’t have an edge, share away because it may actually improve it.

Ohh, and if you do manage to find a real market inefficiency, do yourself and those who are already trading it the courtesy of keeping your mouth shut about it. The shiny red Ferrari it will buy you will boost your ego for much longer then the complements of your trading peers.

Luck be with you.
bravo ... someone with sense here.
  • #7
  • Feb 4, 2007 8:51am Feb 4, 2007 8:51am
If anyone here is under some impression that anything we do here would have any effect on the market or the way we trade, or that even if we as a whole group here got together as one... could make some kind of difference in the market.. well then, I say you clearly have no idea of how big the market really is and who and what really makes it move...

I laugh those hew who don't want to share their """secret""" systems and ways of trading... as if it would make some difference in their profits...

Instead we should all share whatever we can... we are all here to learn to make money in forex... there is lots of money to go around... there is more being added everyday... it is the truly generous who have shared some of the info and helped others to learn, who have had more wealth added to them... and if you have shared, your share will surely come around...

I sincerely thank all those who have stopped and taken a minute to share things with me from this forum... I doubt that anyone of them has lost a cent by helping me or taking time for me...

Yet because of them, I now have a system, a way of trading that hopefully will be profitable... we will see... if any of you see your profits lessen because of me.. let me know...
  • #8
  • Edited 10:18am Feb 4, 2007 10:06am | Edited 10:18am
Quoting Tiki Trader
If anyone here is under some impression that anything we do here would have any effect on the market or the way we trade, or that even if we as a whole group here got together as one... could make some kind of difference in the market.. well then, I say you clearly have no idea of how big the market really is and who and what really makes it move...

I laugh those hew who don't want to share their """secret""" systems and ways of trading... as if it would make some difference in their profits...

Instead we should all share whatever we can... we are all here to learn to make money in forex... there is lots of money to go around... there is more being added everyday... it is the truly generous who have shared some of the info and helped others to learn, who have had more wealth added to them... and if you have shared, your share will surely come around...

I sincerely thank all those who have stopped and taken a minute to share things with me from this forum... I doubt that anyone of them has lost a cent by helping me or taking time for me...

Yet because of them, I now have a system, a way of trading that hopefully will be profitable... we will see... if any of you see your profits lessen because of me.. let me know...
At 26,000 members and probably just as many guests, if each person here only commanded $100 our total buying power would be around $520mio. That certainly is enough to move the market and potentially destroy a legitimate inefficiency.

And many people here trade with far more than $100.

Helping someone learn how to trade is a very different proposition from what were discussing. Just because your not teaching everyone with an internet connection your bread and butter, it doesn't mean your not helping them.
  • #9
  • Feb 5, 2007 3:08am Feb 5, 2007 3:08am
Quoting Tiki Trader
If anyone here is under some impression that anything we do here would have any effect on the market or the way we trade, or that even if we as a whole group here got together as one... could make some kind of difference in the market.. well then, I say you clearly have no idea of how big the market really is and who and what really makes it move...

I laugh those hew who don't want to share their """secret""" systems and ways of trading... as if it would make some difference in their profits...

Instead we should all share whatever we can... we are all here to learn to make money in forex... there is lots of money to go around... there is more being added everyday... it is the truly generous who have shared some of the info and helped others to learn, who have had more wealth added to them... and if you have shared, your share will surely come around...

I sincerely thank all those who have stopped and taken a minute to share things with me from this forum... I doubt that anyone of them has lost a cent by helping me or taking time for me...

Yet because of them, I now have a system, a way of trading that hopefully will be profitable... we will see... if any of you see your profits lessen because of me.. let me know...
you really have no idea how the market works if this is the way you think.otc is admittedly differnet enough from trading on an exchange that you might see a noticeable diff (good example being the surge on news traders causing fx brokers to alter the way they quote prices at certain times), but to say that sharing strategies will affect your personal bottom line is laughable and the typical comment of someone jealous of other's profitable strategies. Guaranteed, if YOU had an edge, and you knew why how that edge worked and why, you woulndt most def not share that strategy with anyone
  • #10
  • Feb 5, 2007 3:51am Feb 5, 2007 3:51am
Good fills are a scarce commodity. Dark Star's post summed up the issues very well. No wonder so many on here are so anxious to share their methods <g>.
  • #11
  • Feb 5, 2007 8:50am Feb 5, 2007 8:50am
Quoting Tiki Trader
If anyone here is under some impression that anything we do here would have any effect on the market or the way we trade, or that even if we as a whole group here got together as one... could make some kind of difference in the market.. well then, I say you clearly have no idea of how big the market really is and who and what really makes it move...
Hold on there before you make that statement!

My students are forex traders for their respective banks, and they move, with a push of a button, about $300M USD. That's not much in forex you say? Try it in the Asia opening (I'm in Taiwan) and watch them move the market..
google:
  • #12
  • Feb 5, 2007 8:14pm Feb 5, 2007 8:14pm
Quoting twoblink
Hold on there before you make that statement!

My students are forex traders for their respective banks, and they move, with a push of a button, about $300M USD. That's not much in forex you say? Try it in the Asia opening (I'm in Taiwan) and watch them move the market..
This is Forex, Borker Style, If anyone or any group hits a single Borker Hard with a particular direction, what do you expect him {the Brkr} to do. Of course he will adjust HIS pricing effectivly confirming You have Moved the market. Now I ask that you to think about this, Borker 'B' didn't get the same Order but notes that Borker 'A' just moved his price/spread. What should He do? Move to Comply or sit where he is knowing he is at a Vending @ a Discount.

Consider this, Borker 'A' gets pushed into a Major Lot Play and adjusts his spread accordingly. Borkers 'B', 'C' & 'D' figure, "I aint movin." What tf does 'A' do now? Yes. He get's back in line. If you are hitting a Borker to the extent that he has to {and does} "Move HIS Market" ....

Sounds like a two stage play to me....
  • #13
  • Feb 5, 2007 9:07pm Feb 5, 2007 9:07pm
if i sell my system to chase, bank of japan, and 3 biggest brokers, then you could actually move forex
  • #14
  • Feb 5, 2007 9:13pm Feb 5, 2007 9:13pm
Quoting Warmagus
Does sharing your method blunt your edge or is the market so big it won't make a difference?
If you have a profitable method then share it with us. Lets find the answer to that question.
  • #15
  • Feb 5, 2007 10:05pm Feb 5, 2007 10:05pm
DarkStar summed up the issue best. There are systems that work better/worse when shared. No wonder the hedge funds are so secretive about their techniques, perhaps they have some edge.

In my opinion, a real trader's edge is probably the ability to feel the market greed and fear (anticipates panic breakouts). Greed and fear never get stale, it's always in the market.
  • #16
  • Apr 6, 2007 5:17pm Apr 6, 2007 5:17pm
bottom line is if you got a good system you should not share i learn the hard way, they say a good system only last about 10 good years so you should be milking the system for all it's worth, start to share then those 10 good years become 5 years.
If I Go Broke Trying Then I Will die happy.
  • #17
  • Apr 6, 2007 5:45pm Apr 6, 2007 5:45pm
well...why? It totally depends on whom you share the system with.
  • #18
  • Apr 6, 2007 5:50pm Apr 6, 2007 5:50pm
Quoting tradeigel
well...why? It totally depends on whom you share the system with.
That's also true.
If you plaster your system across forums, then you're asking for it.
If it's like a one on one basis with someone you know, it might be a little different.
Unless that person trades huge amounts of money......
  • #19
  • Apr 6, 2007 6:05pm Apr 6, 2007 6:05pm
In a perfect world, if your money were actually being traded with the banks, it wouldn't matter. But what if we all traded a method on the same broker? If they are a market maker and hedge most trades in house (thus taking the risk on outstanding positions) then we cause them some serious issues.

In my mind, there is no forex market (unless you trade with an ECN), instead 50,000 markets articificially created by the brokers....

Quoting Bemac
This is Forex, Borker Style, If anyone or any group hits a single Borker Hard with a particular direction, what do you expect him {the Brkr} to do. Of course he will adjust HIS pricing effectivly confirming You have Moved the market. Now I ask that you to think about this, Borker 'B' didn't get the same Order but notes that Borker 'A' just moved his price/spread. What should He do? Move to Comply or sit where he is knowing he is at a Vending @ a Discount.

Consider this, Borker 'A' gets pushed into a Major Lot Play and adjusts his spread accordingly. Borkers 'B', 'C' & 'D' figure, "I aint movin." What tf does 'A' do now? Yes. He get's back in line. If you are hitting a Borker to the extent that he has to {and does} "Move HIS Market" ....

Sounds like a two stage play to me....
  • #20
  • May 11, 2007 8:47pm May 11, 2007 8:47pm
what is on the trash can of the currency market? .......money

nomater how failed, shaddy or anything the system take/ do , as long it moves the market, it still can gives oportunity for another one.

should there is system to instill the market movement, then we can assume the end is near
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