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What Is An "Edge" IN Trading?

  • #41
  • Apr 1, 2009 2:01pm Apr 1, 2009 2:01pm
Quoting Leonlorenzo
IMO...

You need to find an edge first, and then build a trading plan around it, it wont work any other way.
Yes and much of FF and other online trading sites is dedicated to the trading plan aspect of trading - putting the cart before the horse. Particularly so in the trading journals and interactive trading. I see very little system logic posted on the boards. Or even hard research. Most of the "systems" are throw 3-5 indicators on a chart or two charts or 3 charts and when they line up - pounce! Always with the provision that "something extra" is needed to make the strategy profitable so please help me develop it further. After reading this thread can you guess what that "something extra" is called?

Actual edges are not easy to come by. It takes a great deal of thinking on the subject of "what is my advantage" to figure out what type of an edge might be available to Joe Trader. A real advantage is a scarce commodity. It is born out of taking advantage of an inefficiency. That is why there is no Rockefeller passing them out on street corners for free.

To the people who think they are an edge, that MM + Discipline is an edge, or that pondering your navel is an edge - good luck with that. Leonlorenzo got it correct.
  • #42
  • Apr 1, 2009 2:09pm Apr 1, 2009 2:09pm
Quoting acumen
Trading isn't some kind of gift... what horseshit.

Trading is a combination of varibles executed in concert to produce a desired outcome.

That outcome is winning.

If you want to pontificate at least do so responsibly.
What gift!???? All Im saying is that an EDGE comes with expirience,
and if someone thinks that there is some magical combination of
indicators that will make you win long term is dead wrong!
forexflash
  • #43
  • Apr 1, 2009 2:12pm Apr 1, 2009 2:12pm
Quoting FOREXflash
What gift!???? All Im saying is that an EDGE comes with expirience,
and if someone thinks that there is some magical combination of
indicators that will make you win long term is dead wrong!
Experience is one very large variable.

Agree.
  • #44
  • Apr 1, 2009 2:14pm Apr 1, 2009 2:14pm
"Without an edge, the costs of trading will cause you to lose money over the long haul. In order to gain an edge in trading, you must find a statistical advantage within a market. And the best edges come from market shifts fueled by a trader’s psychology" Bo Yoder

regards
2.minutes
  • #45
  • Apr 1, 2009 2:17pm Apr 1, 2009 2:17pm
Quoting FOREXflash
LOL....paradox, isnt it!??
When I say using bollinger can be an "edge", I dont mean that anybody can take it, and trade it profitable!!!
I trade BB, but from my experience, I can easily see what is happening
in background, where the price can go, what are sr levels...etc
Expirience is what makes you profitable, not a magical formula!
This is what I posted:
An Edge is a system or method that gives a higher probability of one outcome over another with positive expectancy.

How is what I typed a magic formula? When did I ever mention an indicator of any kind?
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #46
  • Apr 1, 2009 2:21pm Apr 1, 2009 2:21pm
Quoting LasVahGoose
This is what I posted:
An Edge is a system or method that gives a higher probability of one outcome over another with positive expectancy.

How is what I typed a magic formula? When did I ever mention an indicator of any kind?
Sorry.......The biggest problem here(at least for me) is that
everyone have a different idea what the EDGE is!
When someone talks about the edge, he is probably thinking about some price patern
or combination of indicators or strategies, that has a positive expectancy, and Im simply
sharing my thoughts based on that!
forexflash
  • #47
  • Apr 1, 2009 2:27pm Apr 1, 2009 2:27pm
Quoting FOREXflash
Sorry.......The biggest problem here(at least for me) is that
everyone have a different idea what the EDGE is!
And some people still start threads with titles like, "Why do 95% of traders fail?" I'll just wager that there is a correlation in there somewhere.
  • #48
  • Edited 9:21pm Apr 1, 2009 2:50pm | Edited 9:21pm
IF the bols predicts where to place a tp, AND IF that tp is hit, then by definition the bols has PREDICTED the price.

it matters not if it will give you no conversation as to WHY that was a tp point, as all that matters is that it IS the tp point.

actually, the discussion can have extremely fruitful results, although these things are a bit of a waste of brain cells, because one finds the truth down the road, and while the road is paved with "incidents", kernels of knowledge and rights and wrongs, the big door at the end of it, where the pot of gold stands waiting, wears a huge sign that says EXPERIENCE !

a few years of trading does not a LOT of experience make so i guess the trader who dies the oldest is the winner on that score !

an "edge" is a hoped for non existent quantity, because the ONLY edge (as its being defined here) is full knowledge of trading, not only how to use this or that, but WHEN to use it, WHEN to step back, WHEN to go forward and WHERE the market is going, and since that is simply what a REAL trader needs to know, its not an "edge" but everyday tools and knowledge --- the rest is just smoke and mirrors with a huge dollup of ego thrown in !

otherwise, the trader who uses and understands the MACD should have an edge over the trader who uses the stochastics and understands them who has an edge over the person who simply uses price action and candles very well, and since they all make the same amount of money WHO HAS THE EDGE ?

IT DOESNT EXIST --- ITS A MERE FIGMENT OF OVERACTIVE EGOS THINKING THEY HAVE SOMETHING BETTER THAN THE REST, and you dont have something better if someone comes along, making 700 pips a day claiming he has NO edge at all except experience in the market and thats why he makes good pips !

THINK ABOUT IT for a while --- if you produce a couple hundred pips a day, and another trader comes along who makes 700 or 1000, and that second trader has NOTHING that makes him/her better than you except for more years, is that an EDGE or is that EXPERIENCE ?

Throughout life, the young think they are better and smarter than the older, and the older smile and pat the heads of the younger with a smile ---- it takes a heap of living to gather all the information to REALLY trade well, and few teenagers possess that ability, even when they THINK they do !

LOL --- an "edge" is an "advantage" that is standard thinking for the very young or ones with underdeveloped egos, not for the realities of trading well !

mp


Quoting Leonlorenzo
I disagree.

An edge to me Is a cause and effect. A bollinger band offers very little predictive value, and you have no idea why price may turn at the outer band.

Like I said to Mparker before, this is a debate that cant have any conclusion except agreeing to dissagree.
  • #49
  • Apr 1, 2009 4:07pm Apr 1, 2009 4:07pm
Quoting mparker
LOL --- an "edge" is thinking for the very young or ones with underdeveloped egos, not for the realities of trading well !
When doing fully automated system trading you better have a clearly defined edge. That is pretty much indisputable.
  • #50
  • Apr 1, 2009 4:22pm Apr 1, 2009 4:22pm
LOL --- doesnt that mean the EA has to have the edge ? but what if you could teach the EA to just trade, sorta like deep blue against kasparov ?

interesting !

mp

Quoting BlackMage
When doing fully automated system trading you better have a clearly defined edge. That is pretty much indisputable.
  • #51
  • Apr 4, 2009 7:46pm Apr 4, 2009 7:46pm
Quoting mparker
IF the bols predicts where to place a tp, AND IF that tp is hit, then by definition the bols has PREDICTED the price.

it matters not if it will give you no conversation as to WHY that was a tp point, as all that matters is that it IS the tp point.

actually, the discussion can have extremely fruitful results, although these things are a bit of a waste of brain cells, because one finds the truth down the road, and while the road is paved with "incidents", kernels of knowledge and rights and wrongs, the big door at the end of it, where the pot...
Nothing predicts price. People make up the market and people are unpredictable. Though a "herd mentality" does exist that can be taken advantage of from time to time. If anything predicted price, then the market would cease to exist because those who had the predictor would own everything after a while.

You missed the point by redefining "edge".

The house in Vegas has the edge in the games almost all of the time. In Blackjack, a card counter can have the edge over the house and that's why if they catch you counting cards you are physically removed from the casino.
TRO
  • #52
  • Apr 4, 2009 8:12pm Apr 4, 2009 8:12pm
if you wish to define "edge" as the small (but significant over time) "advantage" the house holds over the casino player, there can be NO argument or discussion, as youre totally correct ! Only problem is forex is NOT gambling, and therefore the odds change tremendously !

if you TRULY believe that NOTHING predicts price in forex, I can teach you how to make a LOT more pips per day (and thats between 350 - 900 pips), day after day, because YOUR statement is horribly wrong.

what you refer to as "herd mentality" is correct because people are, as opposed to what you say, HIGHLY predictable as are the banks and institutions which tend to be made up of people also and they all aim for the same place ! The only time they dont, is when they do not have the knowledge, made of experience, to understand how the game is played.

I simply dont believe this game has any bearing on war, zero sums, old chinese generals or EDGES and has EVERYTHING to do with experience, logical patterns and trends, all used wisely !

Its actually kinda simple, all told --- not necessarily EASY, but SIMPLE !

enjoy and trade well

mp


Quoting Money4Nothing
Nothing predicts price....
  • #53
  • Apr 4, 2009 9:46pm Apr 4, 2009 9:46pm
Edge is just something you are better at than other people.
If you understand a company's earning potential better than other people, you've got an edge. If you know the global macro economic trend better than other people, you've got an edge. Same applies to technical analysis, quantitative models, anything.
Bottom line is, you have to be good at it for it to be your edge.
Take a report.
  • #54
  • Apr 5, 2009 2:55pm Apr 5, 2009 2:55pm
Quoting mparker
if you wish to define "edge" as the small (but significant over time) "advantage" the house holds over the casino player, there can be NO argument or discussion, as youre totally correct !...
I have read your teachings and they remind me of an old Chinese proverb:

WHY USE AN AXE WHEN A HACHET WILL DO?

You have so many indicators on your chart that you can barely see the price. Not to mention, you personally attack those who disagree with you and those who cannot defend themselves here. You do not want to share the spotlight. You have taught me a lot but not about trading.
TRO
  • #55
  • Edited 3:30pm Apr 5, 2009 3:18pm | Edited 3:30pm
Interesting thoughts, so naturally i shall address them --- first, whom have I "attacked" on this thread ? I have done NOTHING but state my opinion on "edge", which i dont really believe in and NOTHING more ---- Well, so much for that !

second, if someone sets out to intentionally disrupt, I do not and have proven, will not tolerate it --- if your opinion simply differs with mine, and what you present is intelligible and well grounded, I WILL discuss, but I do NOT suffer fools, and foolish thoughts and perhaps thats where your beliefs come from.

as far as seeing the candles, one side of me has to laugh because the candles are of NO CONCERN to me, only price and profit --- if one knows, because of all these lines and chicken scratches, where to place your TAKE PROFIT POINT for MAXIMUM effect, WHY ON EARTH DO YOU NEED TO SEE THE CANDLES ?

Let us go to the world of music ---- one can have a single guitar playing, folk singer or be at the Philharmonic, with a full orchestra, director, first and second layer musicians and all they do is produce some music, but the MORE complex the music, the MORE is involved in its creation --- i TEACH how to take a COMPLEX situation and reduce it to something simple, and that REQUIRES MORE than a guitar and a microphone !

the second side is that once all of these are in place, anyone who wishes to delete can certainly do so, depending totally on what THEY wish --- i simply supply the information, and then others use it in any combination with ANY other methods they so choose.

with all the confusion my method "supposedly" creates, is it not funny that newbs who were losing just a week ago are now pulling a consistent 150 pips daily and working themselves up to the heading of the thread, 350 pips daily ?

and they do this because i teach them HOW TO SEE THE MARKET, AND NOT JUST A FEW CANDLES !

enjoy and trade well

mp



Quoting Money4Nothing
I have read your teachings and they remind me of an old Chinese proverb:

WHY USE AN AXE WHEN A HACHET WILL DO?

You have so many indicators on your chart that you can barely see the price. Not to mention, you personally attack those who disagree with you and those who cannot defend themselves here. You do not want to share the spotlight. You have taught me a lot but not about trading.
  • #56
  • Apr 7, 2009 2:01pm Apr 7, 2009 2:01pm
SEE the markets with your charts? Maybe if I had special 3D viewing glasses and then it would be clear.

Your music analogy isn't even close.
TRO
  • #57
  • Apr 7, 2009 2:17pm Apr 7, 2009 2:17pm
I already said that my "edge" is BollingerBands......how many people
are using them sucesfully!????
Some does, some dont.....other traders found their EDGE in MACD.....
it will not work for me or someone else......others use RSi&Trendlines,
not me.....but someone does!

If any possible indicator or combination of different indicators\strategy can be a EDGE,
than EDGE is not based on indicator, pattern or strategy, it is based only on YOU!!!
forexflash
  • #58
  • Apr 7, 2009 3:56pm Apr 7, 2009 3:56pm
my golly, do you ever have a problem !

the proof of the teaching, charts and methodology is in the winning of pips AND we seem to have a LOT of that going on now --- no promises or anything, just newbs making money !

I stated CLEARLY that candles are of NO concern to me --- i could trade as well without them at all --- ALL i have to know is where is support and resistance and which way is the price heading ?

After that, 350 pips daily is like stepping off the curb, and yesterdays 800 wasnt much harder.

I will say this though, I dont think 3D glasses will do much for you except improve your appearance !

enjoy and trade well

mp





Quoting Money4Nothing
SEE the markets with your charts? Maybe if I had special 3D viewing glasses and then it would be clear.

Your music analogy isn't even close.
  • #59
  • Apr 7, 2009 8:20pm Apr 7, 2009 8:20pm
Quoting mparker
I will say this though, I dont think 3D glasses will do much for you except improve your appearance !

enjoy and trade well

mp
was that comment actually necessary? You seem to have a difficult time with anyone who has an opposing point of view to your own.

It is becoming obvious to me as to why you have been banned from forums.

______________________________________________________________

To the original poster: To me an edge is anything that will give you a statistical advantage. So let's say that method A is correct approximately 60% of the time but then you add method B to it and your method now is correct 70% of the time. By doing this you have given yourself a slight edge over your old system.

Even though most of my trading is done via EA now, this "edge" is the reason I keep cruising forums and web sites looking for something that will give even a 0.1% increase. That 0.1% increase over time can make a significant difference.
  • #60
  • Apr 7, 2009 9:23pm Apr 7, 2009 9:23pm
the comment was as necessary as was the one stated by whom i addressed it to ---- be FAIR in what you say about what you see, unless hes a friend and you cannot be fair !

I have NO problem with discussion or opposing points of view when presented with INTELLIGENCE and EXPERIENCE, but there is too much Israeli in me to suffer attacks on my person and ideas without ramifications immediately taken, which magnum you can easily see thru the progression of posts ---- was there a reason to speak of my charts in the manner he did, when they are making successful traders out of newbs ? Not at all, and inside yourself you are fully aware of it.

NO magnum, there was not a reason to be seen, but while i LOVE discussion (as you can see on my TWO threads at the moment where we go back and forth and I even admit to mistakes when made) I will NOT suffer foolishness which cloaks argument and dislike !

it was originally a simple statement, but his and your replies prove our relationship to be NOT so simple. Do what I do daily in pip accumulation every day and THEN you can tell me how wrong i am, but until that day DO NOT DISPARAGE what i do, what my charts look like and how i bring OTHERS to making the same amount !

BUT

enjoy and trade well

mp


Quoting magnumfreak
was that comment actually necessary? You seem to have a difficult time with anyone who has an opposing point of view to your own.

It is becoming obvious to me as to why you have been banned from forums.

______________________________________________________________

To the original poster: To me an edge is anything that will give you a statistical advantage. So let's say that method A is correct approximately 60% of the time but then you add method B to it and your method now is correct 70% of the time. By doing this you have given yourself...
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