I will go straight to the point without any mambo jambo. Imagine a situation where a trader group has found that when a new indicator reaches a value below 20 it would mean that in 55% of the time the price would start rising. Hence this provide a trader an edge. Of course, the group starts to use it and extract money from other traders. Eventually other traders start to analyze why this specific group is making money. After much work other traders slowly one by one also realize this new amazing money making indicator which provides an edge. This is where the magic starts to end. The indicator slowly starts to lose its edge. But why does it lose its edge? Imagine that this new fascinating money-making indicator goes below 20. Now this will cause a strong and fast reaction in the market where only the fastest traders will get their orders filled when the indicator hits 20. The other traders which where left to the station don't of course like this. They want to hop on too. So they alter their strategy so that they start buying as soon as the indicator hits 21. Now only the fastest traders again get their orders hit and once again most of the other traders get stranded on the beach. This all creates an on-going battle where traders constantly rise the indicator value where they will hop on eventually killing the edge there originally was. In the end this market anomaly is dead because of the greed of various market participants.
This all sounds like there is an ever on-going battle in the market between different trader groups. This is true. In order to survive in the market one has to constantly pursue new market inefficiences in order to make money and survive. But how can a normal private trader then survive in the market? He doesn't have the necessarily skills, money or time to develop new systems. This is the harsh reality. If you have read Jack Schwager's Market Wizards there was an interesting interview of one of the top traders. I can't remember his name but I remember he saying this all quite well: "All of this is beyond the reach for a normal private trader. Markets change all the time and systems that worked before don't do it anymore. We are in constant battle".
This all sounds like there is an ever on-going battle in the market between different trader groups. This is true. In order to survive in the market one has to constantly pursue new market inefficiences in order to make money and survive. But how can a normal private trader then survive in the market? He doesn't have the necessarily skills, money or time to develop new systems. This is the harsh reality. If you have read Jack Schwager's Market Wizards there was an interesting interview of one of the top traders. I can't remember his name but I remember he saying this all quite well: "All of this is beyond the reach for a normal private trader. Markets change all the time and systems that worked before don't do it anymore. We are in constant battle".