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

  • #181
  • Aug 7, 2011 2:01pm Aug 7, 2011 2:01pm
Quoting Nijee
Wouldn't your $/pip value be higher for the 10 trades/day system in your example given same equity risk of say 2%. So 10 trades still more profitable in $ terms.
true, forgot to include that.
  • #182
  • Edited 2:22pm Aug 7, 2011 2:15pm | Edited 2:22pm
Quoting reres
Markets on monthly charts are not random. On 1 min charts they are. There are no random 300 pip spikes unless central bank intervention happens but that only happens once a year on euro/chf. Its rare occasion. And stop loss can prevent big loss. On 1 min chart u have some much randomness it cannot be compared to monthly.
Hello? Even the EDGE or BONO would recognise that the amount of random events impacting forex mkts is a positive function of time. You are getting fooled by the way candlesticks on higher TFs hide all that "noise". Time in mkt. The longer a trade goes for, the higher the probability that a random event will %$^# it up.
Audentes Fortuna Juvat
  • #183
  • Aug 7, 2011 2:27pm Aug 7, 2011 2:27pm
Quoting Nijee
The longer a trade goes for, the higher the probability that a random event will %$^# it up.
True, but that "random" event could also be in your favor.

I would welcome a 500 pip spike anytime, if it is going my way
  • #184
  • Aug 7, 2011 2:29pm Aug 7, 2011 2:29pm
Quoting Mr Breakout
Absolutely not! Markets are not random, they trend.

For example if the price of a currency pair moves 100 pips higher, its probability of moving ANOTHER 100 pips in the same direction is more than 50%. If you don't believe me backtest this system and see for yourself.
Random walks also trend.

I read something the other day by a prof at MIT who said one or two TA patterns might give the trader an incrimental advantage. This was after careful analysis of 35 years of data across the trading specturm. And this prof was arguing that the market wasn't a pure random walk!

If you want to gamble your hard earned cash using some half baked homemade strategy that might give you an incrimental advantage against an army of quants and brokers using super-computers, I wish you all the luck in the world. Me? I just play with this stuff on demos like my wife does crosswords. It keeps me entertained on winter evenings. I have no illusions about my ability to beat the house at its own game.
  • #185
  • Aug 7, 2011 2:38pm Aug 7, 2011 2:38pm
Quoting AllanS
Random walks also trend.
No they don't Allan, they just appear to be trending for a short period of time.
If you flip a coin and Head comes up, the probability of obtaining another Head is always 50%, where is the trend here?

On the other hand, if a currency pair moves 100 pip higher, its probability of moving another 100 pips in the same direction is not 50% anymore, but more than 50% (precisely because markets trend), a simple statistical study will reveal that.

Quoting AllanS
I have no illusions about my ability to beat the house at its own game.
There is no house to beat, in trading you are simply profiting from the mistakes and emotions of other less disciplined, less knowledgeable traders.
  • #186
  • Aug 7, 2011 2:39pm Aug 7, 2011 2:39pm
Hi Guys !

I can underline all Frying has written here.
Without passion for this business what it really is you
can't be successfull in the long run. No way !!
I learned it the hard way and never ever could tell other people how to trade because its my gut who rules....
And this takes a long time....

Happy trading

Bernhard

Quoting Frying
Getting tired of hearing this from unsuccessful traders.

1) Technical analysis doesn't work! - no YOU can't make it work.

2) Also price action doesn't make much sense. - Doesn't make much sense to YOU.

[color=black][font=Verdana][color=black][font=Verdana]To others reading this thread - Trading is possible. Making money is possible. It is not the indicators that don't work. Or the Price Action that...
  • #187
  • Aug 7, 2011 2:45pm Aug 7, 2011 2:45pm
Quoting Mr Breakout
You forgot just one thing Custos, lower time frame = more trades.

Would you like to earn 20 pips a day with a system that generates 1 trade a day on the 1h time frame or make 10 trades a day with an average profit of 4 pips per trade (40 pips/day) on the 1min time frame?
How many actually make 40 pips/day, 200 pips/week, 10,000 pips/year trading the one minute time frame? Very, very few, I assure you. Many may claim to do this, but try to find just one who will provide you with a year of trading statements proving such a record, even with name, account number, and all other identifying information redacted. I'd bet you that even if you offered a $1000 bounty on such a trading record, you'd find no one here at FF or elsewhere who could prove such a record.

While I get what you are saying concerning trade frequency (frequency = opportunity for profit), the idea of trading for such infinitesimal profits typically leads to a trail of blown accounts and short forex trading careers.

Why not consider the trader who trades the daily timeframe, and wins 1/3 trades, does six trades/month, and the average profit is 600 pips while the average loss is 150? There you have a 33% win rate, but an undeniable edge, right?
  • #188
  • Aug 7, 2011 2:51pm Aug 7, 2011 2:51pm
Quoting AllanS
...If you want to gamble your hard earned cash using some half baked homemade strategy that might give you an incrimental advantage against an army of quants and brokers using super-computers, I wish you all the luck in the world. Me? I just play with this stuff on demos like my wife does crosswords. It keeps me entertained on winter evenings. I have no illusions about my ability to beat the house at its own game.
You give far too much credit to the quants, brokers, and MIT professors, and not nearly enough to us half-baked, homemade traders!
  • #189
  • Aug 7, 2011 2:53pm Aug 7, 2011 2:53pm
Quoting Mr Breakout
True, but that "random" event could also be in your favor.

I would welcome a 500 pip spike anytime, if it is going my way
LOL - Yes!

I just dont see much discussion about the relationship between time in mkt for a trade and the risk of a price reversal/retracement. This is especially true if you have a static TP.

Over time all markets respond to and reflect basic economic fundamentals. We are seeing that played out at present as a country's currency is the ultimate arbiter of its competitiveness vis a vis the ROW. Whilst markets are always tending towards some new equilibrium, that path is not a straight line for a whole variety of reasons. That creates opportunity for traders.
Audentes Fortuna Juvat
  • #190
  • Aug 7, 2011 2:59pm Aug 7, 2011 2:59pm
Quoting LasVahGoose
...As far as I'm concerned an Edge, Money Management, and Psychology are all equally important. If you don't have all three you're toast. What good is having an edge if you can't trade it?
I would agree with this whole heartedly, and I'd only add that poor money management will dull even the sharpest edge. I was reading the J16 chart thread, and James16 said that he could post potential trades before they trigger, but that everyone should realize ahead of time that while two traders can each make identical entries trading identical methods, and one might win while the other loses, and that the variables to trading are endless. The big variable is always trade management, which boils down to money management, and one's ability to mange that aspect most advantageously will come down to one's emotional control, i.e. psychology.
  • #191
  • Aug 7, 2011 3:01pm Aug 7, 2011 3:01pm
Quoting reres
Than you dont have an edge if it always happens.
OK, I'm going to step back in here for a quick minute....

What I referred to in my post (your reply is quoted), is that many traders do take opposing trades. One will buy, another will sell. That's why we have a market. And that is what will always happen. It doesn't mean TA doesn't work, it just means some are better at it than others, or some have all kinds of unrelated reasons for clearing their trades at that time.

Now.... I'm only going to repeat myself here because you're not really listening. Again I don't want to tell you what to think, only to be more open minded about some things.

The real meat of my post went as follows:

Quoting Price
I watch for momentum setups, at preferable times of day, happening together on multiple markets, that have many obvious reasons to cause traders around the world to also take that setup.

When a setup is good, many traders around the world will be looking at the same breakout/momentum/price action.... and many will be taking the same trade for substantially the same reason. Think about it, a substantially significant amount of professional traders all piling trades in the same direction on the same market. It's not coincidence....

I feel that many knowledgeable traders here have truly presented multiple reasons why TA works. Written above is a very good reason why it works. You're free to choose your own thoughts, but I believe that you are set in your ways, and clinging to your beliefs. It's OK to modify your line of thinking when it comes to trading.

If you truly believe that TA can never work for you... then I'm pretty sure it never will.

I do wish you luck with your studies, and I hope you find the edge you're looking for. But your original question, "Where is the EDGE in trading?" has been answered. The WHY Technical Analysis works.... has been answered. Take from it what you will.
  • #192
  • Aug 7, 2011 3:34pm Aug 7, 2011 3:34pm
Quoting Price
OK, I'm going to step back in here for a quick minute....

What I referred to in my post (your reply is quoted), is that many traders do take opposing trades. One will buy, another will sell. That's why we have a market. And that is what will always happen.
Nope. In cases that i mentioned statistically some things will happen more than others. Thats where the edge comes. And thats what TA cannot provide.



I
Quote
feel that many knowledgeable traders here have truly presented multiple reasons why TA works. Written above is a very good reason why it works. If you truly believe that TA can never work for you... then I'm pretty sure it never will.
I believe TA doesnt work for anyone. I stated my reasons already and again i must say "i have yet to see a profitable TA trader". Many are claiming they have systems which work on all timeframes ect....but so far there hasnt been single on to proove it on any forum in few years. Thats speaks for itself.


Quote
"Where is the EDGE in trading?" has been answered.
There are many edges....thats why we are sharing opinions. There is never enough of valuble data.

Quote
The WHY Technical Analysis works.... has been answered.
No it hasnt. Over 150 posts here and not a single one of those angry TA traders said anything sensisble. All they said was "oh well good TA traders are hiding" or sth like "cut your losses and run your profits" ...that doesnt explain why it would work. Lagging data cannot on multiple timeframes in interrelated market cannot make any predictions. I can see why they are angry, its becouse they cannot answer the simple question. Why?

No offense to anyone but thats how i see it.
  • #193
  • Aug 7, 2011 3:48pm Aug 7, 2011 3:48pm
OK, The only thing I said will "always happen" is traders taking opposite positions. One buys... another sells. And Yes, that will always happen.

To the rest of the talk about angry TA traders not explaining why it works.... I still say you're just not wanting to hear it. I'm not angry. I present sensible reasons why it works. If you still don't believe it, I'm cool with that.

But to say that no one can make TA work is absolute nonsense.

If you want to find an edge in trading, you need to be open to considering ALL the possibilities. You still have a ways to go. Some day you'll look back on this thread and remember the days when you just didn't understand it yet.
  • #194
  • Edited 4:05pm Aug 7, 2011 3:54pm | Edited 4:05pm
Quoting infinitepips
How many actually make 40 pips/day, 200 pips/week, 10,000 pips/year trading the one minute time frame? Very, very few, I assure you.
I agree 100%, most traders have a hard time making just 50 pips a month on a consistent basis! About 70% of traders lose their money after 4 months. After a year or more they are history, except for a few persistent and highly motivated individuals.

Quoting infinitepips
Many may claim to do this, but try to find just one who will provide you with a year of trading statements proving such a record, even with name, account number, and all other identifying information redacted. I'd bet you that even if you offered a $1000 bounty on such a trading record, you'd find no one here at FF or elsewhere who could prove such a record.
If you had an exceptionally super good system, would you talk about it on forums like this, let alone show your account statement?
  • #195
  • Aug 7, 2011 4:26pm Aug 7, 2011 4:26pm
Quoting reres
I can see why they are angry, its becouse they cannot answer the simple question. Why?

No offense to anyone but thats how i see it.
Well reres, we just explained to you that TA works because the market is not random. And it is not random because traders keep behaving the same way over and over again, when confronted to the same situation. This non-randomness IS our trading edge, end of story and case closed.

I mean even a baby can understand that, so why are still asking the same question over and over and over again?
  • #196
  • Aug 7, 2011 4:53pm Aug 7, 2011 4:53pm
Quoting Mr Breakout
...If you had an exceptionally super good system, would you talk about it on forums like this, let alone show your account statement?
I'm sure you and I are on the same page ... I was just making a comment.
  • #197
  • Aug 7, 2011 4:56pm Aug 7, 2011 4:56pm
Quoting Mr Breakout
I mean even a baby can understand that, so why are still asking the same question over and over and over again?
Even baby could understand why TA patterns cannot predict anything so they are completly random especially on short time frames. End of story until prooven otherwise.

Quote
let alone show your account statement?
Yes showing account is not a problem at all as it doesnt reveal the mumbo jumbo system. It would shut up anyone who claims TA doesn work. But somehow noone ever shows the account statement. I wonder why? I guess they dont have anything to show.
  • #198
  • Aug 7, 2011 5:04pm Aug 7, 2011 5:04pm
Quoting Price
OK, The only thing I said will "always happen" is traders taking opposite positions. One buys... another sells. And Yes, that will always happen.
Yes offcourse there will always be traders on both sides. Noone disagree with that. What im saying is this "in statistically favourable situations there are going to be more buyers/seller at certain periods and that give u an edge". TA tools dont give u that. They are completly random and lagging. Different people see different lagging patterns and they draw different support/resistance lines, different fibo lines ect... so how do u predict sth out of that? Care to explain this simple question?


Quote
If you want to find an edge in trading, you need to be open to considering ALL the possibilities. You still have a ways to go. Some day you'll look back on this thread and remember the days when you just didn't understand it yet.
Lol. I keep an open mind for any explanation as long as it makes sense. If its mumbo-jumbo i dont waste time with it. I think in few years u will came to the same conclusion.
  • #199
  • Aug 7, 2011 5:30pm Aug 7, 2011 5:30pm
Quoting reres
What im saying is this "in statistically favourable situations there are going to be more buyers/seller at certain periods and that give u an edge".
agree.

TA tools dont give u that.
disagree. very much so.

They are completly random and lagging. Different people see different lagging patterns and they draw different support/resistance lines, different fibo lines ect... so how do u predict sth out of that? Care to explain this simple question?

I already have. Twice....
OK, once more for good measure:

"I watch for momentum setups, at preferable times of day, happening together on multiple markets, that have many obvious reasons to cause traders around the world to also take that setup.

When a setup is good, many traders around the world will be looking at the same breakout/momentum/price action.... and many will be taking the same trade for substantially the same reason. Think about it, a substantially significant amount of professional traders all piling trades in the same direction on the same market. It's not coincidence."

I wish the best of luck with your studies my friend.
  • #200
  • Aug 7, 2011 5:47pm Aug 7, 2011 5:47pm
Quoting reres


Lol. I keep an open mind for any explanation as long as it makes sense. If its mumbo-jumbo i dont waste time with it. I think in few years u will came to the same conclusion.
With all due respect, I believe most of you are on the wrong track here. The EDGE is KNOWLEDGE. This is true in any field that you may want to "challenge".

Do you think that George Soros had all his indicators plugged in on his billion dollar day. Did Bill Gates, Warren Buffet or Carlos Slim follow a chart to become super-rich? Not that they were heavily involved in FOREX but the principle is the same.

Educate yourself as much as possible and find the trading method that works for YOU. It doesn't need to be overly complicated and you can never know every minute detail that drives the markets.

Your edge is simply finding a trading method that suits you and because of your knowledge, you make a profit.

I welcome your counterpoint.
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