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

  • #261
  • Aug 8, 2011 3:16am Aug 8, 2011 3:16am
Reres,

Having read more of your posts, I think maybe I'm understanding your take on technical analysis, and please correct me if I am wrong. I am wholeheartedly with you in the belief that TA as is most commonly interpreted by amateur retail traders is unlikely to hold any edge whatsoever. But, I don't think what the crowds on this forum call TA is actually TA....it is more likely "shape analysis". The arbitrary shapes made by candles, moving averages, MACD, Stochastics etc, is pretty meaningless. At least from all the evidence I have seen.

But just because amateurs don't really know what TA is, and inappropriately use the term to describe their shape analysis, doesn't mean real TA is useless or holds no edge.

I have explained my basic strategy, and where my edge comes from and why it works. I believe price is dictated by fundamentals 100% and TA plays no part in influencing where price goes next, and yet I pay no attention to the fundamentals whatsoever. I would consider myself a technical trader. I analysed genuine "patterns" (not shapes) in the markets and found a strategy to take advantage of those repeating patterns. From my understanding, that would be considered absolutely technical analysis, and my results suggest it works.

Correct me if I'm wrong, but it seems your issue with TA has more to do with how most people interpret it rather than if it can actually hold an edge when applied correctly.
  • #262
  • Aug 8, 2011 3:18am Aug 8, 2011 3:18am
Quoting jag1966
No it isn't, trends work on M1 and no doubt they probably work on the micro second charts too.
ffs, that was my POINT!

on one hand you have someone arguing that moment to moment everything is a 50/50... and on the other you have people saying that over a series of time you can't have a repeated 50/50 events that go nowhere! re-read my last few posts or something.
Congratulations ScalaFX for coming out of the closet!
  • #263
  • Aug 8, 2011 3:21am Aug 8, 2011 3:21am
Quoting nubcake
ffs, that was my POINT!

on one hand you have someone arguing that moment to moment everything is a 50/50... and on the other you have people saying that over a series of time you can't have a repeated 50/50 events that go nowhere! re-read my last few posts or something.
You said everything outside a trend is noise!!

There is no such thing as noise!!

No need to swear ;-)
  • #264
  • Aug 8, 2011 3:29am Aug 8, 2011 3:29am
Quoting flotsom
Reres,

Having read more of your posts, I think maybe I'm understanding your take on technical analysis, and please correct me if I am wrong. I am wholeheartedly with you in the belief that TA as is most commonly interpreted by amateur retail traders is unlikely to hold any edge whatsoever. But, I don't think what the crowds on this forum call TA is actually TA....it is more likely "shape analysis". The arbitrary shapes made by candles, moving averages, MACD, Stochastics etc, is pretty meaningless. At least from all the evidence I have seen.

But...
you nailed it. i would suggest that TA = shape analysis these days for most people, despite it's original meaning, and as such might as well be one and the same.

similar to how hacking went from an honorable description to a different, even illegal, meaning completely different to the original description.

the term has evolved, or devolved as it were.

where you say TA might be better described instead as something like market habits and tendencies (or something even more obscure sounding).
Congratulations ScalaFX for coming out of the closet!
  • #265
  • Aug 8, 2011 3:30am Aug 8, 2011 3:30am
Quoting jag1966
You said everything outside a trend is noise!!

There is no such thing as noise!!

No need to swear ;-)
no i did not. you are either selectively reading what i wrote, or i am selectively reading what i wrote. i tend to think it isn't me.
Congratulations ScalaFX for coming out of the closet!
  • #266
  • Aug 8, 2011 3:32am Aug 8, 2011 3:32am
"or the key to trading profitably"

And maybe THERE is the edge that we all are looking for.

Guess what... it isn't a "key" or a "secret" that only a few
are privy to.

It's ALL right there in front of you. In your charts, in the day
to day data reports. In the hyped-up media.

The edge is really YOU.

Thanks for allowing me to participate and
as in politics, I'm sure the debate will never end.

I'm voting for The Edge
  • #267
  • Aug 8, 2011 3:37am Aug 8, 2011 3:37am
Quoting Mr Breakout
No you are right, trading Forex does not require a college degree, it only requires a lifetime of studying.
Quote
At least this is what I am doing, and I will keep searching for a better system until I die, this is what real trading is all about.

Quoting Mr Breakout
Yes, but knowledge comes after years and years and years of studying those charts, day after day, week after week, month after month. Reading tons of books .....

Quoting Price
The "proof" you're looking for here..... It's complicated. And you're probably not going to be satisfied no matter what anyone else says.
Wrong, wrong, wrong,Wrong, wrong, wrong !!!

This is excatly the reason why TA traders fail. Its all about psyhology. They think forex is complicated and therefore the way to earn money MUST be as complicated as possible to work and can only be achieved by years and years of looking at some mumbo jumbo indicators. Wrong. Could not be more wrong.

It takes 24 hours to learn everything about TA and it takes excatly 5 minutes to see that it doesnt provide any edge and is therefore pretty much useless. Anyone that is wasting lifetime on this like Mr Breakout is trully wasting their life.

Systems that work as simple in nature. They are effortless and dont even require money managment in way. They can be executed mechanically. And they relay on probabilities rather than lagging indicators.

Mr Breakout, dont give me gold mine analogy. We are all know there are no pure TA sucessfull traders. Thats a myth becouse forex is NOT zero sum game as you call it. Its really sad that u dont know this fact after years of trading on forex.
  • #268
  • Aug 8, 2011 3:44am Aug 8, 2011 3:44am
Quoting reres
Wrong, wrong, wrong,Wrong, wrong, wrong !!!

This is excatly the reason why TA traders fail. Its all about psyhology.
well, you still need statistics on your side, otherwise all the psychology in the world won't help.

Quoting reres
It takes 24 hours to learn everything about TA and it takes excatly 5 minutes to see that it doesnt provide any edge and is therefore pretty much useless. Anyone that is wasting lifetime on this like Mr Breakout is trully wasting their life.
really depends. Why don't you run some backtests on TA patterns. I agree, most are pretty much random, but there are some that stand the test of time (and also make sense from a market psychology point of view).

Quoting reres
Systems that work as simple in nature. They are effortless and dont even require money managment in way. They can be executed mechanically. And they relay on probabilities rather than lagging indicators.
agreed, simple is mostly best, cause it tends to be the most robust.

Quoting reres
Mr Breakout, dont give me gold mine analogy. We are all know there are no pure TA sucessfull traders. Thats a myth becouse forex is NOT zero sum game as you call it. Its really sad that u dont know this fact after years of trading on forex.
then what is it, if it is not zero sum? Maybe you could go further into detail with that thought.


best regards
  • #269
  • Aug 8, 2011 3:57am Aug 8, 2011 3:57am
Nub, here is a copy and paste from your original post

otherwise moment by moment it is all just random 50/50 untradeable noise.
  • #270
  • Aug 8, 2011 4:04am Aug 8, 2011 4:04am
Quoting jag1966
Nub, here is a copy and paste from your original post

otherwise moment by moment it is all just random 50/50 untradeable noise.
and here is the entire post with relevant pieces highlighted for clarity!

Quoting nubcake
this is only going to be a circular argument that either resolves itself into frustration or the key to trading profitably.

if you know which way to position yourself and the time to get in and out then you know how to exploit a trend, otherwise moment by moment it is all just random 50/50 untradeable noise.
quoting just "otherwise moment by moment it is all just random 50/50 untradeable noise" is the anti-point to what i was saying! it can be read one way or another, but with the above highlighting hopefully it is clearer what i was saying.

like i said... reading my other posts would also shed light on the perspective i have.
Congratulations ScalaFX for coming out of the closet!
  • #271
  • Aug 8, 2011 4:04am Aug 8, 2011 4:04am
Quoting Custos
well, you still need statistics on your side, otherwise all the psychology in the world won't help.
Ive been saying this all along. The use of psyhology is there only to get to the right mindset. Once you have that you can trade mechanicaly.

Quote
then what is it, if it is not zero sum? Maybe you could go further into detail with that thought.
Trading currency does not involve only speculations. Banks often change currency for their clients needs. Also brokers are taking their share with comissions.

If it was only speculator and no brokers there you could call it zero sum.
  • #272
  • Aug 8, 2011 4:11am Aug 8, 2011 4:11am
Quoting reres
Ive been saying this all along. The use of psyhology is there only to get to the right mindset. Once you have that you can trade mechanicaly.


Trading currency does not involve only speculations. Banks often change currency for their clients needs. Also brokers are taking their share with comissions.

If it was only speculator and no brokers there you could call it zero sum.
same argument as saying energy disappears. it doesn't. it merely changes form. no money magically makes it's way into or out of the trading arena. it is all accountable! if you can account for it, then it is zero-sum. just because money automatically moves away from your account does not make the game negative sum, it makes the perspective of trading from an individual negative sum because no matter what there will be transaction charges that must be paid whether win or lose. but an individual experiencing negative sum does not make the entirety of trading negative sum.

we need to be clear on exactly what we are talking about else it's all just arguing about completely different topics.
Congratulations ScalaFX for coming out of the closet!
  • #273
  • Aug 8, 2011 4:16am Aug 8, 2011 4:16am
Quoting nubcake
same argument as saying energy disappears. it doesn't. it merely changes form. no money magically makes it's way into or out of the trading arena. it is all accountable! if you can account for it, then it is zero-sum. just because money automatically moves away from your account does not make the game negative sum, it makes the perspective of trading from an individual negative sum because no matter what there will be transaction charges that must be paid whether win or lose. but an individual experiencing negative sum does not make the entirety...
Energy can be negative as well

Anyway, noone said money dissapears. We are talking about the game. Zero sum game is the games where one player wins while other looses. In forex there is slight non-zero sum game among retail traders due to brokers fees.
  • #274
  • Aug 8, 2011 4:25am Aug 8, 2011 4:25am
ok now you have gone and done it... strap yourself in because we are in for a ride!

Quoting reres
Energy can be negative as well
so? taking that 'energy can be negative' does not mean that it can also disappear. it will simply change it's form. a nuclear reactor isn't a magic machine that creates energy out of nothing. a fire does not create heat from nothing. water does not remove the energy from heat... it changes it to something else. it's all accountable.

Quote
Anyway, noone said money dissapears. We are talking about the game. Zero sum game is the games where one player wins while other looses. In forex there is slight non-zero sum game due to brokers fees.
so... one trader wins, one trader loses, and the broker gets a cut both ways. the GAME still has all money accountable.

IF... one trader wins, one trader loses, the broker gets a cut both ways, AND a percentage of the money in the entire market is put in a bonfire and lost to everyone then YES, THEN the GAME is negative sum as money does in fact become removed from ALL participants over time and for the GAME to continue requires constant injection of funds from one of the parties involved. even IF all traders overtrade themselves to a zero balance in their account then the broker has all of their funds. it remains accountable.

if all you had were n traders and z brokers, then no money ever magically enters or exits the arena. it is all accountable. it is... ZERO sum.

from the perspective of 1 traders account balance then their experience is that of negative sum because they are battling the spread and commissions. that's a perspective, not an axiom.

you can't say the game is zero sum, implying the mechanics of the entire market, because it is simply not true. traders experience negative sum, and brokers (not bucket shops) experience a positive sum game. positive + negative = 0... zero sum.
Congratulations ScalaFX for coming out of the closet!
  • #275
  • Aug 8, 2011 4:36am Aug 8, 2011 4:36am
Quoting nubcake
so? taking that 'energy can be negative' does not mean that it can also disappear. it will simply change it's form. a nuclear reactor isn't a magic machine that creates energy out of nothing.
Who on Earth said that? Offcourse energy is only changing its form. The amount of positive energy(stored as mass) needs to balanced by the amount of gravitational potential energy which is negative. Thats all clear. I just pointed out it can be negative and not that it can be destroyed.

There is a misconception among some traders that every trade must have a winner and a loser. There is a great deal of misinformation out there, and there have even been books published recently that incorrectly state that Forex trading is a zero-sum game. In order to clear up the confusion created by these inaccuracies, let's first understand the meaning of that phrase.
Suppose you place a friendly bet with an acquaintance on the outcome of a football match. Each of you puts up an equal amount of money, let's say $100, and at the end of the game, one of you will walk away with $200 and the other will be $100 poorer. That is a zero-sum game in its purist sense; unless the game ends in a tie, there will be one winner and one loser, end of story.
Now let's apply this concept to the currency market; suppose you enter a long position on EUR/USD and at the same time, another trader takes a short position in the same currency pair. The broker simply matches the orders and collects the spread. This is exactly what the broker wants, to keep the entire spread and maintain a flat position.
Does this mean that in the above scenario one party has to win, and one must lose? Not at all, in fact both traders can win or lose; perhaps one has entered a short-term trade and the other has entered a long-term trade. Perhaps the first trader will take a profit quickly, but there is no rule that states the second trader must close his trade at the same time. Later in the day, the price reverses, and the second trader takes his profit as well. In this scenario, the broker made money (on the spread) and both traders did, too. This destroys the oft-repeated fallacy that every Forex trade is a zero-sum game.
  • #276
  • Aug 8, 2011 4:46am Aug 8, 2011 4:46am
Edges. Take for example the Razzle effect. Not many people knew about the Razzle effect when it was first mentioned - i believe Craig was the first one to spot it.
But a few years later, the Razzle effect is still in operation despite it being right under the noses of every trader, most of them almost willfully ignore it.
  • #277
  • Aug 8, 2011 4:47am Aug 8, 2011 4:47am
Quoting reres
Who on Earth said that? Offcourse energy is only changing its form. The amount of positive energy(stored as mass) needs to balanced by the amount of gravitational potential energy which is negative. Thats all clear. I just pointed out it can be negative and not that it can be destroyed.

There is a misconception among some traders that every trade must have a winner and a loser. There is a great deal of misinformation out there, and there have even been books published recently that incorrectly state that Forex trading is a zero-sum game. In order...
oh geez.

in this case you are simply unable to wrap your mind around the in/out flow of traders with differing time horizons of being in the market. it makes it slightly more complicated for someone to initially wrap their heads around.... but you can still reduce the whole thing down to a case of it being simply representative of 2 traders and a broker.

you either play a never-ending game of what ifs, taking into consideration the myriad of potential outcomes of differing number of traders with differing intentions and time horizons AT EACH MOMENT IN TIME, and see that the flow of money APPROACHES zero-sum (and perhaps at moments in time actually hits zero-sum when the moons align just right for all participants to create this clean scenario)... or you simply reduce it to it's simplest components and simplest form and see it clearly that the game is zero-sum.

edit : actually, correction... it doesn't approach zero-sum, it continually crosses from positive to negative sum, and at times will obviously equal zero-sum when the situation favors this clean resolute situation.

anyway...
Congratulations ScalaFX for coming out of the closet!
  • #278
  • Aug 8, 2011 5:01am Aug 8, 2011 5:01am
Quoting nubcake

edit : actually, correction... it doesn't approach zero-sum, it continually crosses from positive to negative sum, and at times will obviously equal zero-sum when the situation favors this clean resolute situation.

anyway...
In the end we agree on everything.
  • #279
  • Aug 8, 2011 5:15am Aug 8, 2011 5:15am
Quoting reres
In the end we agree on everything.
only if you conclude that a white person is still white even at the times when they appear to have a tan, or have a green light illuminating them, or they are hiding in the shadow.
Congratulations ScalaFX for coming out of the closet!
  • #280
  • Aug 8, 2011 6:54am Aug 8, 2011 6:54am
I think TA does hold value but not in the way it is publicly taught or shared.

I mean, yes, you get crap loads of books, be them TA, FA, Quants, blablabla.

Many will and gladly do share "bits" here and there. But lets face it, the real meat and potatoes aint going to be shared, whether it's related to TA or something else.

I personally believe there is more to trading than meets the eye, and that any new research or discoveries will never be shared, at least while its being used.

Then when the person retires or the "edge" (so to speak) gets diluted, then and only then will it be made public. Just like all these "make money online" ebooks.

And whatever is left is what the majority of traders use to "try" to build a robust system/method with. The bits.
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