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Where is the EDGE in trading? The most important thing in trading!

  • #101
  • Aug 6, 2011 8:05am Aug 6, 2011 8:05am
From 'TheRealDeal'
http://www.forexfactory.com/showthre...799#post205799
  • #102
  • Aug 6, 2011 8:08am Aug 6, 2011 8:08am
Quoting flotsom
I'm still hoping this thread can find it's way back to addressing the original question rather than the back and forth blind arguments about who is right or wrong about TA, PA, or FA. So let me briefly touch on what I think amounts to the "edge" in my trading.

I attempt to get in to a free trade as quickly as possible and then let that trade remain open for as long as possible to gain potentially unlimited upside gains.

On entry, if the price is rising, I buy. If price is falling, I sell. If after entering a trade the price changes direction...
Sounds like an edge to me, great post.
  • #103
  • Aug 6, 2011 8:12am Aug 6, 2011 8:12am
Quoting jag1966
Oh, not sure how that happened, sorry Nub it was meant for resres.

It is all BS anyway.

Like I said I am only here to encourage others to keep an open mind and know that if they keep at it long enough and keep asking the right questions profitable trading can be achieved.

Negativity does no good at all.

Peace
it's all the same to me if someone feels sorry for me or not... so meh.

keeping an open mind is great, and asking the right questions is great. getting the wrong answers is not great. i think this thread asks the same question i, and others, have asked in the past. the problem is the answers are the same tired old shit.

you get the lucky muppets who claim their magic fairytale system is the grail and lead hordes of idiots down the garden path. you get the intuitive crowd who are making money using triggers they can't yet define and so label it all discretionary (as if there is such a thing). you get the crowd who make excuses to get into and out of trades and claim it is all simply TA/PA/FA, yet discount or don't realize the extra elements outside of these excuses to trade which provides various edges.

like i said, if EVERYONE was trading using the same system some would make money and others wouldn't. but why? because it's not the system. the system is the identified and public rules. it is the framework, the excuse, the reason to get in or out or stay in or out... and then along with this is the auxiliary elements that is tipping the profit factor towards profits that some are aware of and some are not aware of.

read a system thread and see how many times the OP doesn't follow their own rules and stays out or stays in a trade. why do they do this? because they 'sense' something. it is my suggestion that these 'senses' are simply unidentified criteria.

a card counter knows their edge. they don't get 'a feeling'. they have rules that anyone but the MOST unfortunate person can follow and make money with... that is the point of an edge. an edge is not luck, or a feeling, or 'discretion'.

so... good questions and open minds. yes plz. crappy answers. no thx.
Congratulations ScalaFX for coming out of the closet!
  • #104
  • Aug 6, 2011 8:13am Aug 6, 2011 8:13am
As a professional poker player my edge = Loss less money with my bad hands and Win more money with my good hands then my opponents.

As a professional trader my edge = Loss as little as possible with my bad trades and win as much as possible with my Winning trades.

When I get immediate feedback that a trade is correct and moves in my direction I am very patient to hold that trade.

When I do not see the feedback that I would expect to see at my entry I am very quick to exit that trade.

I put a mantra in my head each day as I trade.

Hold my winners and cut my losses fast.
  • #105
  • Aug 6, 2011 8:17am Aug 6, 2011 8:17am
Quoting jag1966
If you see a pattern that works 90+% of the time does that qualify as a edge?

That's my edge, when I see that pattern I trade it.
depends on the pattern and the sample size. are you trading because 9 times out of 10 times you danced and it rained, or because 900 out of 1000 times you saw dark clouds on the horizon and it rained. i'm not suggesting you aren't profitable. i'm suggesting that an edge is not TA/PA/FA. they are a bland, general, broad all inclusive shitty answer to a question regarding EDGE.
Congratulations ScalaFX for coming out of the closet!
  • #106
  • Aug 6, 2011 8:24am Aug 6, 2011 8:24am
Quoting flotsom
I'm still hoping this thread can find it's way back to addressing the original question rather than the back and forth blind arguments about who is right or wrong about TA, PA, or FA. So let me briefly touch on what I think amounts to the "edge" in my trading.

I attempt to get in to a free trade as quickly as possible and then let that trade remain open for as long as possible to gain potentially unlimited upside gains.

On entry, if the price is rising, I buy. If price is falling, I sell. If after entering a trade the price changes direction...
sounds like you are a few steps ahead of the road i am on.

what i like most about this is that it mentions NOTHING of "big boys". NOTHING of "this ma cross works 83.2% of the time this last week". NOTHING of "if i average down i win"... and so on.

it says "hey. the market does this, and is an understandable and appreciable aspect relevant to all markets which you can build upon to give yourself a better chance of a random trade making its way into enough profit to cover the losing trades".

it's the same a saying there are times when flipping a coin will randomly win you $1 or lose you $5, so don't fucking trade then. but, there are times when flipping a coin will randomly win you $5+ or lose you $1 if you put an appropriate stop in place... SO TRADE THOSE TIMES WHILE RESPECTING ASPECTS LIKE OVERTRADING AND UNWORKABLE STOPS.

there's NO mention of TA, or PA, or FA.
Congratulations ScalaFX for coming out of the closet!
  • #107
  • Aug 6, 2011 8:36am Aug 6, 2011 8:36am
Quoting jag1966
If you see a pattern that works 90+% of the time does that qualify as a edge?

That's my edge, when I see that pattern I trade it.
Dude, random patterns dont work. Until u will keep charging money to people to teach them mumbo jumbo randomness u should feel sorry for yourself and u should not be surprised that you are not sucessful. You have to change the mindset and negativity in first place. Until than u are always doomed to failure and never ending frustration i see in all ta,pa traders

Listen to Nubcake advice in the meanwhile. He knows what he is talking about and makes sense.
  • #108
  • Aug 6, 2011 8:56am Aug 6, 2011 8:56am
Quoting reres
Listen to Nubcake advice in the meanwhile. He knows what he is talking about and makes sense.
oh shit. that's a sure sign of trouble.

i have no doubt in my mind that some people have profits. what i doubt is the correlation they make between their profits and what they consider to be creating their profits. some attribute it to things that just don't have logic... now, that's not to say that it's not in the realm of something logical. it's like saying if the president wears a diaper we are in for a massive bear day. now, this is clearly bullshit. but, what if the days that the president wears diapers are the days he has something bad to say to the population and knows he will mess himself? now THAT actually is something logical. it's not based on faith or hope but on logic.
Congratulations ScalaFX for coming out of the closet!
  • #109
  • Aug 6, 2011 9:16am Aug 6, 2011 9:16am
Quoting reres
And this is why it cannot be used to predict future, and definitelly not in a short term. There is no logic behind this nonsense of TA,PA...
TA is not supposed to predict, so its hardly surprising that if you try to use it in this way, you'll fail. Its a phase most of us go through, but the faster you can learn that lesson the better.
  • #110
  • Aug 6, 2011 9:39am Aug 6, 2011 9:39am
THEY abuse me regulary with BIG LONG PRICE directly to my asl

this place is terrible
With a good book and quality paper you can fine wipe your ass.
  • #111
  • Aug 6, 2011 9:43am Aug 6, 2011 9:43am
Quoting flotsom
I'm still hoping this thread can find it's way back to addressing the original question rather than the back and forth blind arguments about who is right or wrong about TA, PA, or FA. So let me briefly touch on what I think amounts to the "edge" in my trading.

I attempt to get in to a free trade as quickly as possible and then let that trade remain open for as long as possible to gain potentially unlimited upside gains.

....
A very good and constructive post.

Can I get your little secret of when the best hours are? Maybe there are hours that price likely not to back to it's initial price.

I have a trading system that is a combination of turtle trading system and Graeme's "build an equity millipede" threads.
Let the profit run and stack up to 30 floating profit trades is fun.

The only problem left now is how to have good entry method. Since I tested with EA, I can only use mechanical entry method and I don't satisfied with the result.
  • #112
  • Edited 10:19am Aug 6, 2011 9:47am | Edited 10:19am
A method's statistical reliability seems to be the theme. (I prefer to fit together tinier methods to get more specific, and thus more reliable, an answer to a chart (neutral of verbal bias, vs. news) area.)

Quoting reres
Statistically it has been prooven that most volaitlity happens on the overlap of EU and USA session. Except for aussie pairs.
If so, then why is a site giving chart-pattern statistics no good?
From what I see, you're used to the format a statistic on sessions is appropriate for (FA (more than PA)), and not used to reading patterns (PA). So you choose a method in one familiar analytic field that has just as much a statistical preference as another field's does. Seems biased.
  • #113
  • Aug 6, 2011 9:56am Aug 6, 2011 9:56am
Quoting Razzle
TA is not supposed to predict, so its hardly surprising that if you try to use it in this way, you'll fail. Its a phase most of us go through, but the faster you can learn that lesson the better.
TA is like trying to land a plane in instrument-only mode without the benefit of an aerial view. When you are a pattern trader you have the best of both worlds.....you are flying using the benefit of the aerial view (i.e. patterns) and perhaps one instrument (indicator) to help you land.

When I say TA, I am talking about those traders who have a computer screen where 1/3 of the screen contains a flattened chart and the other 2/3rds is filled with nothing but technical indicators. These traders have little interest in what is happening in the overall big picture. I have witnessed this personally.
  • #114
  • Aug 6, 2011 10:15am Aug 6, 2011 10:15am
Quoting reres
Dude, random patterns dont work. Until u will keep charging money to people to teach them mumbo jumbo randomness u should feel sorry for yourself and u should not be surprised that you are not sucessful. You have to change the mindset and negativity in first place. Until than u are always doomed to failure and never ending frustration i see in all ta,pa traders

Listen to Nubcake advice in the meanwhile. He knows what he is talking about and makes sense.
Oh dear.
  • #115
  • Aug 6, 2011 10:28am Aug 6, 2011 10:28am
Quoting ha-pattern
A method's statistical reliability seems to be the theme. (I prefer to fit together tinier methods to get more specific, and thus more reliable, an answer to a chart (neutral of verbal bias, vs. news) area.)

If so, then why is a site giving chart-pattern statistics no good?
From what I see, you're used to the format a statistic on sessions is appropriate for (FA (more than PA)), and not used to reading patterns (PA). So you choose a method in one familiar analytic...
take a shape you happen to see on a chart. run the statistics on it over x time. cool, you have some statistics and have some winners. now shorten that shit right down to a lesser time period and see if the statistic holds. then shorten again. i bet you'll find a 10 year statistical shape winner won't hold it's own at all on any period except that 10 year test.

so... it's all great to say something is statistically likely over some period, and another to say that it maintains it's statistical significance over any period. for a week it might be all bulls from the london open. GREAT, I HAVE AN EDGE. until the following week where it's just random bull / bear Monday through Friday. OH CRAP, IT WASN'T AN EDGE IT WAS A CURVE FIT.

...

look at my post count. hah. geek jokes ftw.
Congratulations ScalaFX for coming out of the closet!
  • #116
  • Aug 6, 2011 11:41am Aug 6, 2011 11:41am
Quoting nubcake
take a shape you happen to see on a chart. run the statistics on it over x time. cool, you have some statistics and have some winners. now shorten that shit right down to a lesser time period and see if the statistic holds. then shorten again. i bet you'll find a 10 year statistical shape winner won't hold it's own at all on any period except that 10 year test.

so... it's all great to say something is statistically likely over some period, and another to say that it maintains it's statistical significance over any period. for a week it might be...
Yes exatly. Some strategy that works on certain time frame wont work on others. There is a fallacy. If it does work on all, than u can say there is an edge to it. But that wont happen and especially not in forex where currencies overlap.
  • #117
  • Edited 12:28pm Aug 6, 2011 11:49am | Edited 12:28pm
Quoting flotsom
I'm still hoping this thread can find it's way back to addressing the original question rather than the back and forth blind arguments about who is right or wrong about TA, PA, or FA. So let me briefly touch on what I think amounts to the "edge" in my trading.

........

Do I have a real edge or blind luck?
Hmmm you have a very interesting approach. This in theory can produce some edge in taking advantage of volatility. The problem that i see with this strategy is the complete randomness of entry points and so many times that you need to pay the spread.

How long have u been trading this way?

Quoting jag1966
Oh dear.
Watch out, its a "dear" pattern forming on kiwi. Oh no, maybe it isnt....or maybe it is...maybe not

Dont worry u will understand it someday. Good luck.

Quoting AllanS
We all cling to our myths. Traders believe in money like the Pope believes in God. You think you can conjure it from thin air and it will make you happy ever after. You seek it with all your heart. You love it. You sacrifice a good proportion of your life to it. It's superstitious nonsense in a business suit. Truth is, trading is highly addictive operant conditioning designed to take your money.
I disagree. Money is money. Its not a myth its a real thing. Offcourse it only has a value that people agree upon but it does exist. Superspicious/supernatural beliefs on the other hand are deeply damaging to traders who take them seriously.
  • #118
  • Aug 6, 2011 12:08pm Aug 6, 2011 12:08pm
Quoting nubcake
..that's not to say that it's not in the realm of something logical. it's like saying if the president wears a diaper we are in for a massive bear day. now, this is clearly bullshit. but, what if the days that the president wears diapers are the days he has something bad to say to the population and knows he will mess himself? now THAT actually is something logical. it's not based on faith or hope but on logic.
causality != the only kind of logic.

strict adherance to ONLY this (aristotelian, western) way of thinking - perhaps this limitation accounts for perceived futility and trickiness in dealing with markets.. there are another ways but i don't mean anything like faith/hope/esoteric/religious/blah kinda thing.. try to ask somebody whose brains is wired another way (asian ppl, confucian-like) what are their reason to do stg.. they'll tell you they reacted upon 'order' or 'disorder' of the 'entire world around them' without analyzing A causing B in agreement with C having probability of G resulting in Z. They simply do something that usually works; their approach is not the only one valid, as well as ours is not, alone, in itself.

We strive too hard to grasp the markets via causal relations only. Call me a wanker but I think there's a valid point in trading statistically proven coincidences, no matter how irrational or ridiculous they may seem.

Having said that, i'm not confident if president's diapers are bearish enough for monday
Quoting Lewis Carroll

'It's very good jam,' said the Queen.
'Well, I don't want any TO-DAY, at any rate.'
'You couldn't have it if you DID want it,' the Queen said. 'The rule is, jam to-morrow and jam yesterday--but never jam to-day.'
'It MUST come sometimes to "jam to-day,"' Alice objected.
'No, it can't,' said the Queen. 'It's jam every OTHER day: to-day isn't any OTHER day, you know.'
'I don't understand you,' said Alice. 'It's dreadfully confusing!'
'That's the effect of living backwards,' the Queen said kindly: 'it always makes one a little giddy at first--'
'Living backwards!' Alice repeated in great astonishment. 'I never heard of such a thing!'
'--but there's one great advantage in it, that one's memory works both ways.'
'I'm sure MINE only works one way,' Alice remarked. 'I can't remember things before they happen.'
'It's a poor sort of memory that only works backwards,' the Queen remarked.
sorry for the quote and bash me for posting cr*p, couldn't resist, is it OT? for me it isn't.
MarginTrader All Time Return: na
  • #119
  • Edited 12:47pm Aug 6, 2011 12:31pm | Edited 12:47pm
Quoting MaryJane
We strive too hard to grasp the markets via causal relations only. Call me a wanker but I think there's a valid point in trading statistically proven coincidences, no matter how irrational or ridiculous they may seem.
actually, i think it's absolutely the opposite. people are too busy grasping at hocus pocus irrational nonsense instead of rubbing their eyes, taking a cold shower, and looking at things in a realistic way instead of trying to be modern day alchemists.

and like i said, there's stuff that shows a statistical bias if you pick a period, but does that hold true for any period or just THAT one? ATR is a daily repeating pattern that you can check over any period and see it maintaining itself to a reasonably standard degree.

who does stuff based on seeing some perceived pattern or based on being told something nonsensical (guru's) that has no scientific / logical basis? go to any church to see. go to any homeopath to see. etc.

and re eastern influences and mentality... to generalize, i don't see the benefit in regarding a subservient culture in the light of trading. you'll find plenty of cases of bullshit in their culture as any other, as well as stuff that has a basis for working.

cutting the meat from the bullshit is what puts a person above the sheeple.

i'd like to add, as crucialpoint mentioned recently any system has a divergent and convergent nature to it... the problem is that most people don't put the time and effort in to check for the the convergent point where their profits disappear. they either get all excited, or they simply don't do the research, and they jump in and start trading their system expecting to quit their day jobs or they start boasting and broadcasting it on forums looking for sheeple and praise. i've found plenty of things that produced nice profits.... until i ran the idea through another hundred or so trades and saw it fail. so statistically over a certain sample i've had plenty of wicked profitable ideas... but, the truth was something else entirely. that is the definition of curve-fitting and coincidence.
Congratulations ScalaFX for coming out of the closet!
  • #120
  • Aug 6, 2011 12:58pm Aug 6, 2011 12:58pm
Quoting reres
Hmmm you have a very interesting approach. This in theory can produce some edge in taking advantage of volatility. The problem that i see with this strategy is the complete randomness of entry points and so many times that you need to pay the spread.

How long have u been trading this way?
I've been trading this strategy on a full time basis live for a little over 3 years. There is no doubt that with such tight initial stop loss levels and break even point, that the spread becomes incredibly expensive. My thought process on this matter is, as a business I am dealing with small profit margins on individual "sales", but hope to deal in such large volumes (occasional big winners) that the profits are ultimately very large. It's been working out that way so far.

I'm not convinced though that my entry is entirely random as you said, though I may well be wrong and my reasons for entry could be nothing more than an emotional crutch to make me take action. However, I am entering trades in the same direction that price is moving "now". My assumption (and the results from my back testing and forward trading seem to agree) is that because of the volatility and momentum at certain times, if I enter in the immediate direction, there is enough kick behind the move to carry it to at least get me to break even. Trading outside of my hours definitely results in less likelihood of reaching B/E before taking a full loss.

My edge as I see it, is I use volatility to carry the price just far enough to get me in to a free trade. If that trade then stops me out for zero profit/loss (most do), it doesn't matter. I will keep trying again and again until a move of sufficient magnitude comes along that allows me to trail the price with a constantly widening stop loss which is occasionally 25 times or more as big as my initial entry stop loss, and I can ride trends which more than cover the inevitable high number of losses. And these big wins also cover all the expenses of spreads and commissions.

I have for a long time been investigating incorporating individual currency strength and weakness to aid my strategy, but to date I have not been able to identify anything that can "filter" losing entries, without equally filtering out occasional huge winners, and so thus far my original strategy still remains the only edge I have personally identified.

In short I think my edge comes from identifying patterns of volatility which I can take advantage of to aid my basic trend following strategy.
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