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Cant find a substantial edge!

  • #61
  • Feb 27, 2010 6:30am Feb 27, 2010 6:30am
While we are getting into semantics and getting off the point I think we should be aware of trading styles.

Pipmutt is a highly respected trader on these boards and if he says managing risk is an edge then believe me, it is. Of course Pipmutt does not enter trades randomly and dump those that go the wrong way.

The point I am making is that some traders will take hours if not days or more before entering a set up and then still manage the risk. It sounds like you are wanting to become this kind of trader.

I remember reading a James16 post where he criticises "scattergun" approaches to trading. His experiences have been bad in his earlier days of trading. Like all of us he has been pulled through a hedge backwards getting to where he is now and that has set his style. I resent the scattergun analogy because I know my hit rate and as long as I know it and manage my risk appropriately I am happy. I "shoot grouse" and i wouldn't use a high velocity sniper rifle for that.
Gone to a better place
  • #62
  • Feb 27, 2010 6:49am Feb 27, 2010 6:49am
It comes down to the word predict. We need to be able to predict some price direction with at least say 52% accuracy (if R&R is 1:1)- Be it 5 pips in a direction or 100 but i really dont see how you can make any money otherwise.

Even if u are using breakout methods as entry method you are still predicting the price will move a certain direction a few pips wnabling you to get "in". Any edge must have a probability of it occurring more than 50% of the time. If this isn't true then i must be missing something (that is if risk reward is 1:1)
Just by saying ok what if risk reward is 1:3 does not better your chances if you have no edge in the first place- This seems very obvious to me but feel free to disagree.
With risk and reward1:3 (providing my maths is correct which can be a bit dodgy) and you have no edge (or higher probability entry) it just means you will hit your stop 75% of the time and you will win 25% of the time. To be profitable (with this R and R you will need to find an edge that will enable you to win at least 26% of the time, also this is not taking in the spread.
Anyway this is obvious.But maybe you have some other method pipmutt that i am totally overlooking that enables you to make money regardless of where price goes.
  • #63
  • Feb 27, 2010 7:00am Feb 27, 2010 7:00am
Hi smikester- This has been argued lots of times and many other respected traders have also argued that money management alone is not an edge. I have always leaned towards their side of the case. I know Pipmutt has been around for ages- i have read many of his very informative posts that go way back - it does not mean i agree with everything he says- I firmly believe money management is not an edge. Its vital but not an edge. Otherwise we may as well just enter trades randomely with a R&R of 1:20 . Thats what i am understanding is being said and thats what i respectfully don't agree with.

Anyway i am going to end my participation in this thread as i believe its more constructive spending my time looking for my edge than arguing about whether and edge is necessary- Cheers all for your input its very much appreciated.

P.s smikester i like your analogy of shooting grouse with a scattergun.
  • #64
  • Feb 27, 2010 7:15am Feb 27, 2010 7:15am
Quoting pipmutt

You don't need any convoluted strategy, deep understanding, or specialist knowledge to trade profitably, just some very basic principles, common sense, and discipline. The majority fail because they spend too much energy and focus on discovering/developing a strategy which will predict direction...Eventually the penny drops and they realize consistently profitable trading has very little to do with strategy.
Hey Pip, i haven't read the whole thread, just checked in to see your contributions. Having said that, i doubt there's a more honest paragraph than this in the entire thread.

How are you? Sensibly spending less time around here i hope.

All the best
Dan
  • #65
  • Feb 27, 2010 7:46am Feb 27, 2010 7:46am
Quoting abritton76
Cutting losses while letting winners run is not an edge .
Perhaps not, edges tend to be a synergistic combination of several elements rather than one specific thing, but its a reasonably good starting point, and if you back it up with a little diversification, and sensible position sizing, its certainly sufficient to trade profitably.

The important point is that the approach is unlikely to be an edge for you personally, because its currently in complete contradiction to your beliefs. Someone else commented that there is no edge, other than trade management, thats his belief, and I'm confident that he could probably make money tossing a coin, and managing his exits, and making the most from the opportunities presented.

This raises some interesting points, should you (and indeed can you) change your beliefs in order to exploit known market attributes (for example the presence of fat tails), or should you firmly hold onto current beliefs, and attempt to seek out and identify other as yet unknown attributes of the market that allow you to capitalise on your beliefs ?
  • #66
  • Feb 27, 2010 7:49am Feb 27, 2010 7:49am
Last Post Just want to make sure i dont come across rude or ungrateful- i do appreciate all your replies Especially the long time experienced traders here- Pipmutt, Smikester etc.
I just realise that i have to find my own edge so better get looking- Hopefully i will look back on this in a few years time from a better perspective. Thanks again over and out for now


(razzle just saw your post I certainly believe in fat tails but you require alot a willpower to enter many times waiting for one great trade as in Dibs or Donchian. I know the secret here is in the long tales but i would really prefer something with a more balanced win to loss ratio but thats just a preference. beggers cant be choosers so not saying never.
  • #67
  • Feb 27, 2010 8:08am Feb 27, 2010 8:08am
Quoting abritton76
Last Post Just want to make sure i dont come across rude or ungrateful- i do appreciate all your replies Especially the long time experienced traders here- Pipmutt, Smikester etc.
I just realise that i have to find my own edge so better get looking- Hopefully i will look back on this in a few years time from a better perspective. Thanks again over and out for now
If you're referring to my post, i did not mean to imply you were ungrateful at all. Apologies if it came across that way.

"...I just realise that i have to find my own edge (way) so better get looking..."

Just try to make sure you look in the right places, because the wrong ones will do more harm than you can imagine. As a tip, i'd suggest the right places are nowhere near here.

Best of luck to you.
Dan
  • #68
  • Feb 27, 2010 2:22pm Feb 27, 2010 2:22pm
Quoting AstonDan
Hey Pip, i haven't read the whole thread, just checked in to see your contributions. Having said that, i doubt there's a more honest paragraph than this in the entire thread.

How are you? Sensibly spending less time around here i hope.

All the best
Dan
Hey Dan, how's it going! Yep been busy trying to automate a system with a Russian programmer. His english isn't great and my russian is worse.....it could take a while, lol

There's been a few interesting perspectives on how other traders think in this thread, I guess it proves the point that no-one has the monopoly!
  • #69
  • Mar 2, 2010 3:41pm Mar 2, 2010 3:41pm
Quoting AstonDan
If you're referring to my post, i did not mean to imply you were ungrateful at all. Apologies if it came across that way.

"...I just realise that i have to find my own edge (way) so better get looking..."

Just try to make sure you look in the right places, because the wrong ones will do more harm than you can imagine. As a tip, i'd suggest the right places are nowhere near here.

Best of luck to you.
Dan
Aston Dan Thanks for the pm, but just keep it public. No need to go all cloak and dagger. Turveyd is a dick, and will never make any money doing what he's doing. Read his posts, he contradicts himself all the time. Yes I've been around a while, coming up 5 years. I just hate bullshit that is OBVIOUSLY bullshit, yet others defend it." Just because you think tomatoes are red TGM doesn't mean that others don't think their pink..blahh blahh blah..." If you want to ask me something just ask publicly.
  • #70
  • Mar 2, 2010 3:46pm Mar 2, 2010 3:46pm
Quoting TheGreatMilenko
Aston Dan Thanks for the pm, but just keep it public. No need to go all cloak and dagger. Turveyd is a dick, and will never make any money doing what he's doing. Read his posts, he contradicts himself all the time. Yes I've been around a while, coming up 5 years. I just hate bullshit that is OBVIOUSLY bullshit, yet others defend it." Just because you think tomatoes are red TGM doesn't mean that others don't think their pink..blahh blahh blah..." If you want to ask me something just ask publicly.
LOL, as i said, you call 'em how you see 'em!

Nothing to ask really, just curious as to where you're coming from. Prop shop? PF? HF etc.
  • #71
  • Mar 2, 2010 4:03pm Mar 2, 2010 4:03pm
Quoting AstonDan
LOL, as i said, you call 'em how you see 'em!

Nothing to ask really, just curious as to where you're coming from. Prop shop? PF? HF etc.
All I can say is trade roughly ( fx is not an exact science) like I said on that "probably been said before " thread ( is that what it was called?) and you won't go far wrong. The more experience you get, I agree with those who say time in front of a chart counts, the easier it'll be for you to spot what's bollocks and what's sensible. There are many ways of making money in forex, but one way gets the max profits.
  • #72
  • Mar 2, 2010 4:14pm Mar 2, 2010 4:14pm
Quoting TheGreatMilenko
The more experience you get, I agree with those who say time in front of a chart counts...
Yeah, TheWasp said (maybe on here, maybe on T2W) that trading's just like learning a new language, seems to sum it up quite simply to me.

Unfortunately, everyone wants a cuddle when things go wrong, and then they overanalyse things to death, down to a level of detail which i don't believe exists.

I had a little chuckle the other day when you suggested T2W as a better site than this on another thread and the OP disregarded it, but you see more people just simply trading on there and dealing with it day to day than on FF.
  • #73
  • Mar 3, 2010 3:16am Mar 3, 2010 3:16am
Someone who has shorted GBP/USD at 1.64 or atleast at 1.60 would have earned over 1000 pips.

1000 pips X $ 10 per pip (1 standard lot)= $ 10,000.

Keep holding the position for an eventual 1.40.

This type of position trading can be done along with a full time job as well. It is a risk management- You are not dependent on forex for paying your bills or saving for future.
  • #74
  • Edited 3:37am Mar 3, 2010 3:34am | Edited 3:37am
Quoting abritton76
.
I just realise that i have to find my own edge so better get looking- Hopefully i will look back on this in a few years time from a better perspective. Thanks again over and out for now
Hi abritton76 - this might sound a bit theoretical, but is actually quite practical: referring back to the original purpose of your thread, my main suggestion is rather than "looking" for the edge, try to focus on developing the right methodology for learning and analysis - this will lead you to develop an edge as an outcome of the methodology. This needs to be YOUR methodology and will emerge based on your learning, and your emerging profile as a trader.

I think it is reasonable to argue that looking for an "edge" will probably not work - probably because this is the process that leads to system hopping or indicator hopping - as opposed to systematic and practical analysis and development of the right attributes for trading profitably and consistently. There is quite a big difference between these two methods, and therefore quite a big difference between the likely outcomes - and the outcome is what matters, after all.
  • #75
  • Mar 4, 2010 12:17am Mar 4, 2010 12:17am
Whats a dagum edge anyway?

abritton, here are a list of your edges over the big boys and other retail traders

1. you can enter and exit the market with one click of the mouse (the big boys cant)
2. no one made you take that trade
3. most retail traders are always 2-5 trades away from broke and very predictable ( big boys like to eat retail) hint.
4. your like a moped on the highway you can follow in traffic and get to where your going, when its jambed up you can get off at any time, go against the traffic you might miss some cars, but eventually a semi will hit you. (semis are the big boys and remember they cant do a uturn on a dime) and some times their smoke is thick.
  • #76
  • Mar 4, 2010 1:25am Mar 4, 2010 1:25am
Thanks hedginghog -You are completely right when you say-"developing the right methodology for learning and analysis". Thanks for helping me to stay focused on whats important! Also cheers mr T all important points.
  • #77
  • Mar 4, 2010 3:20am Mar 4, 2010 3:20am
Quoting mr-T
1....
They're your edges are they? I see..............
  • #78
  • Mar 4, 2010 6:26am Mar 4, 2010 6:26am
Just to add my 2c:
Don't underestimate the power of a Forex mentor (mentor with the full meaning of the word, i.e. pure, unselfish, no $$$$ mentoring).
I know that at this point in my trading career I would greatly appreciate such help but how can you find an experienced Forex trader that would spare some of his time to guide you correctly???
  • #79
  • Mar 4, 2010 8:26am Mar 4, 2010 8:26am
Quoting kostas1
Just to add my 2c:
Don't underestimate the power of a Forex mentor (mentor with the full meaning of the word, i.e. pure, unselfish, no $$$$ mentoring).
I know that at this point in my trading career I would greatly appreciate such help but how can you find an experienced Forex trader that would spare some of his time to guide you correctly???
Well sell yourself, justify why an experienced fx trader would donate his time and energy sharing his experience to help you make money.

True mentors are rare, worthy students are even more rare!
  • #80
  • Mar 4, 2010 9:48am Mar 4, 2010 9:48am
Yeah, why would some dude making gazillion dollars want to teach anyone else?

I am no mentor by the way, but read the forums for fun only (as i love ff don't want to say stay away) so i digress. go take the time to find people like James 16 and rob booker who take calm lowtest approach. these are environments that can be mentored. Taking some system that has short term approach is not teachable in the respect that for 2 reasons they will be wasting your time. 1. If you do find the rare coin of someone who has managed to be longterm profitable in short term trading they will have amazingly diff results even if you were right beside them. 2. their trading will suffer during the mentor ship.

If you are mentored by a investor, take way to long to realize the benefits you are looking for, as well the forex market is not a investing game except on the carry trade.

If you are mentored on the position trading or swing trading as some call it, you can learn technique that lets you ride on the skirt tales of much larger entities than your mentor. and have the clarity to work on the psychology aspect (which in my opinion is the common denominator to success)
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