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

  • #401
  • Aug 10, 2011 9:57pm Aug 10, 2011 9:57pm
Quoting CindyXXXX
Doing the opposite to what the book said ?
Hi there Cindy, thanks for your nice comments. And yes I still have a few songs I would like to share on the "What kind of music do you like" thread.

So what are you trading these days?
  • #402
  • Aug 10, 2011 10:01pm Aug 10, 2011 10:01pm
Quoting newyear498
How about we discuss where the edge is...

I once went to a book store and bought a book labeled "How to Trade Forex for Dummies"

I went home and read it all night about trend lines and how they can show me which way to trade and where to enter and put my trailing SL

I also read about support and resistance lines and how to short and long them along with simple steps where to put my SL and my TP...

Where is the Edge? I know where the edge is.. and there is an edge in both of these systems.. but take a guess where the...
<YAWN>

A trader that knows what his edge is can tell you immediately. It's not like you have to give up your exact method.
"I trade price action at important s/r levels." "I place counter-trend trades when there's divergence."
Those that don't know their edge, speak in riddles.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #403
  • Aug 10, 2011 10:18pm Aug 10, 2011 10:18pm
I think it's about that time for this thread...

.
Inserted Video
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #404
  • Aug 10, 2011 11:54pm Aug 10, 2011 11:54pm
Quoting reres
I have nothing against it but i find it completly useless becouse it does not make any predictions in trading.
Just few more remarks

-all the best traders in the world dont care about TA. Some of them use it to confirm their signals but only as last confirmation when everything else already fits

-TA is derived from price so its a lagging indicator. You are better of trading price action in that case so you dont have delay

-Like i said, it can be used to trade long term trending currencies like gbp/usd or gbp/jen but thats it. Noone can convince...

Come on reres...no one is the owner of the true. You CAN'T say something doesn't work just because it didn't work for YOU. Success is in your MIND, in your ATTITUDES, in your BELIEFS, not in the indicators or anything else.
I started reading this post and I saw you saying many times that TA doesn't work, PA doesn't work. Come on. If almost every one here is saying the same thing, don't you think that "maybe" they are right?
Are you looking for the holy grail? It doesn't exist. Your "edge" is something only YOU can understand. You could trade according to the moon, or according to "how your dog barks" and this is your edge. Some other traders, use PA and this is "their" edge, not yours.

Don't say PA doesn't work, because you might look as a NEWBIE and also as a person that is unable to hear and accept the opinions from others.
No problem if your a NEWBIE, since you admit you don't everything.

bye
  • #405
  • Aug 11, 2011 5:09am Aug 11, 2011 5:09am
Quoting BrazilPips
You could trade according to the moon, or according to "how your dog barks" and this is your edge.
This is excatly what bothers me. Trading according to the moon makes no sense, right? Its the same with lagging indicators. So until someone support their claims this with some common sense and not just "oh well there is my edge" i cant have much respect for that stuff.

Quote
LasVahGooseI think it's about that time for this thread...

What is this video? Mixing FA and TA and making sth that works better
  • #406
  • Aug 11, 2011 5:21am Aug 11, 2011 5:21am
Quoting ha-pattern
Anyhow, interested in what reres may want to add to or correct about his method.
That last one if not my method. I saw someone mentioned it here and i see many people are making money with that so i added it to the list.

Correlations trading on the other hand i did quite a bit. Euro/chf negative correlation was very good trading pair when the swiss central bank was keeping it over 1,5 due to exports. But right now trading this pair would kill u if you traded correlation adjustment
  • #407
  • Aug 11, 2011 5:27am Aug 11, 2011 5:27am
Quoting reres
This is excatly what bothers me. Trading according to the moon makes no sense, right? Its the same with lagging indicators.
Agreed. That makes no sense at all. Please don't confuse systematic Price Action trading with Hocus-Pocus. Moon trading is clearly in the mumbo jumbo category.

There's been some really good posts in this thread:

"The edge is in YOU"... ok I can see if you're not buying that. It's a bit abstract, although it's true. The edge is in how you trade, in a way that minimizes losses and maximizes gains. It's in reading the market and learning how it acts, and especially learning how you will react. It is many things put together.

The posts which describe TA and Price action trading using momentum and support and resistance with little or no reliance on indicators, really is the path to pursue. (TA doesn't mean indicators, it means trading off of the charts)
  • #408
  • Aug 11, 2011 6:26am Aug 11, 2011 6:26am
price is actually someone who is helpful... a first for the thread. nice!

reres : something i threw together recently is exactly what you are against right? http://www.forexfactory.com/attachme...1&d=1312698714

that's an untradeable mess with no rhyme or reason, but it is typical of the things you see around the joint. you can drop a horizontal line anywhere on a chart and you will find somewhere that it looks like it mattered. you can connect a series of points on a diagonal and it looks like they have some meaning.

you are like myself. you want something a little more concrete and sensible than "just because... look... see how it keeps bouncing off this random line i draw, or random circle i placed around this arbitrary price!". you want ideas for things that make some semblance of sense.

here's some ideas that might, or might not, lead anywhere... some might claim this lack of definitive value with any idea as the "you" factor, i guess. it's the part that either resonates with you and you can frame price movement in a way that makes sense to you and creates a logical story in your head, or it sounds like crap and is useless. see if there is any edge in knowing how far on average the market moves in an hour, a day, a week. see if there is a particular hour of the day that more often than not is the high or low for the day on average, or the day of the week that makes the weekly high or low for the week. see if you can find hours or days that trend more often than range.

some of these ideas might lead to new ideas, or not. perhaps there is no tendency in any of the ideas and it's all random over any period... but, if you do find something that the market does have a tendency to do then you can begin trying to exploit it. it's better than just taking a stab and making pictures on a chart and trading arbitrary nonsense.

so why is it that some people use bullshit ideas that boil down to hocus pocus fortune telling but still manage to make a dollar? luck, or an unconscious implicit knowledge of some of the tendencies that the market has and they just don't realize they are targeting these ideas but within the framework of their hocus pocus nonsense which is merely an excuse to get in a trade. it's one thing to drop a random horizontal lines on a chart and make a dollar, and another to drop seemingly random horizontal lines on a chart without realizing you have unknowingly taken into account the implicit ATR of the time you are trading as well as the statistical likelihood that it is the weekly high / low.

i'm just spit-balling. so grain of salt.

on a side-note, i've come to the conclusion that the trend is an ass and not my friend. if the market trended for long enough and on a regular basis then that'd be sweet, but for everything i have seen it's a rare occurrence depending on the timeframe you are looking at. it's nice when you hit a runner, but always aiming to hit runners might be the antithesis of what will keep you afloat. the market can't stay in one spot. it has to move for there to be a market. but that doesn't mean it likes to move.

anyways...
Congratulations ScalaFX for coming out of the closet!
  • #409
  • Aug 11, 2011 7:24am Aug 11, 2011 7:24am
Even if this thread was started according to the usual model:
- Person X says "this" doesn't work
- Person Y says it works for me
- Person X says it is because of luck or I don't believe you
- they argue undefinitely...

I wanted to provide some thoughts, in case it would help someone to think about trading (If you find my remarks just obvious or stupid feel free to ignore and not comment in details as I will not answer anyway)

- About Mumbo Jumbo trading: some years ago a famous commodity trader was interviewed about his success in trading (Don't remember the name of the trader or the name of the book but it was quite famous book that contains traders interview, probably most of you have read these books). Then he explained the guy that he used a pendulum and if it was going "like this" he was buying and going "like that" he was selling. The interviewer was quite surprised and later find out that in fact it was the way he was managing the trade once it was opened that made him profits. So basically it is not impossible that a random entry is ok if the trade is managed properly (I wouldn't recommend a random entry though) -> the edge doesn't have to be in the entry

- In my opinion, very often the discussion about PA, TA is meant using TA or PA for the entry, but as mentioned above I think that entry is overrated.

- Also in some mails I had the impression that it was presented so that the question was "what is your edge in forecasting the future price". But I think there is an edge on acting on what is happening now (that is trading) not in acting on suppositions.

- TA is always a subject of fierce discussion, but indicators are just a way to represent the price and its movement in a different way. Nothing magic but if it is helpful for people to have a different representation than the price only it is fine. The price represents all info available. Indicators just highlight some characteristics of the price. Then it is really up to individual to choose what they are more confortable with. No need to fight on this I think. I am personally just using PA without any indicator but whatever works for you is fine.

- There is kind of urban legend that 90% of traders are losing money (I saw that mentioned in this thread as in so many others): when people claims this please provide official statistics that support your claim. If you look here http://forexmagnates.com/us-forex-br...rison-q4-2010/ I think there is clearly over 30% of accounts profitable as Oanda has the biggest share. So this stat is not perfect as it is only per quarter and it is not exhaustive but still I am waiting for something more accurate to support the 90% claim...

Ok that's all folks.
Good trading whatever your method is
  • #410
  • Aug 11, 2011 8:55am Aug 11, 2011 8:55am
Quoting nubcake

on a side-note, i've come to the conclusion that the trend is an ass and not my friend. if the market trended for long enough and on a regular basis then that'd be sweet, but for everything i have seen it's a rare occurrence depending on the timeframe you are looking at. it's nice when you hit a runner, but always aiming to hit runners might be the antithesis of what will keep you afloat. the market can't stay in one spot. it has to move for there to be a market. but that doesn't mean it likes to move.

anyways...
well, the market doesn't give daily paychecks. You should not frame the market to what you want, you should frame yourself to what the market can give you on a consistent basis.
Trends might not occur every day, but they give you money consistently.
  • #411
  • Aug 11, 2011 9:26am Aug 11, 2011 9:26am
Quoting Custos
well, the market doesn't give daily paychecks. You should not frame the market to what you want, you should frame yourself to what the market can give you on a consistent basis.
Trends might not occur every day, but they give you money consistently.
oh geez. that wasn't the point!

everyone touts the all-powerful trend, and you must always go with the trend. forget that shit and just try everything and see what sticks. if it's riding trends then great, if it's something else then great.

that is the point i was making!
Congratulations ScalaFX for coming out of the closet!
  • #412
  • Aug 11, 2011 9:30am Aug 11, 2011 9:30am
Quoting nubcake
oh geez. that wasn't the point!

everyone touts the all-powerful trend, and you must always go with the trend. forget that shit and just try everything and see what sticks. if it's riding trends then great, if it's something else then great.

that is the point i was making!
okay
  • #413
  • Aug 11, 2011 9:34am Aug 11, 2011 9:34am
Quoting nubcake
reres : something i threw together recently is exactly what you are against right? http://www.forexfactory.com/attachme...1&d=1312698714
This is the key to sucess

Quote

"just because... look... see how it keeps bouncing off this random line i draw, or random circle i placed around this arbitrary price!". you want ideas for things that make some semblance of sense.

Excatly. Anyway thx for your input and suggestions. Nice post.
  • #414
  • Aug 11, 2011 9:41am Aug 11, 2011 9:41am
Quoting Mr Breakout

Well do the backtest and see for yourself, there is absolutely no significant difference as far as the profitability of this system is concerned.
Obviously Mr Breakout doesn have a clue that backtests are done with maximum 90% or less modelling quality so this test that you posted doesnt mean much. A backtest on tick data tho can be up to 99% correct.

Its very much often the case that backtest look good but on live trading it fails.
  • #415
  • Aug 11, 2011 10:49am Aug 11, 2011 10:49am
Well stated BrazilPips

The "Edge”... Your personal “Grail " if you will, is really between ones ears. It’s the ability to see and translate that into an action... Hopefully a profitable action. It is a business based on percentages to be sure.

As stated throughout this thread some traders can be successful with indicators... Others with only PA.

Let me offer up a simple observation. Let’s take the lonely Simple Moving Average. It can give you a sense of direction... Shorter TF maybe so much, longer TF your odds are a little better. Is it the end to be all...? Of course not... It is just giving an "INDICATION" I would not base my trades solely on it, that for sure. In my own trading I use a simple 55.on a 15M TF. All it is designed to accomplish is to give me a sense of direction. Is it perfect, nope! Do I trade off of it, nope...? Directional only.

Previously I talked of patterns. There was the example of the snake in the room... 100% of the people would would clear the room. I personally would not say 100% as there are those who like snakes and would try and capture. MY point... Nothing is 100%... just like trading. Our job as traders is to find our "edge" using a combination of things whether they be indicators, PA, S/R's, Harmonics, Fundamentals... whatever.

Having said all that, the biggest handle a trader has is their own mind set. Many can get out of their own way. They consistently let their opinion get in the way of what they see.

I know many have heard the statement " Trade what you see, not what you think”. We can all look back at our trades and see just that. Yet we let our mind / or opinion change the face of what we were truly seeing and the trade went against. You say to yourself " What the ????, Why didn't I see that?" This type of sight comes in two ways... Time in front of the screen and changing your thinking.

Here are examples of this.......

When I am in range, I trade range. There are those who would constantly think that the next time price hits the top or bottom of the range it will break out... Why..???? Because that what they think or want to happen. But you are in a range market, trade back into the range... Wait for the market to tell you it is now in trend... Then trade trend. But there are those who will try and catch the bottom thinking the market will turn any time now... Why??? Trade the trend... Eventually there will be a change... But until that time you are in trend... trade according to what you see... Not what you think.

If you cannot determine if there is a clear trend or range... Stay out of the market! But many will not do that... Why?? They start seeing things that are not really there... They are trading what they think... not what they are seeing...

There are those who may think this is all a bunch of psycho-babble. From my experience... Early on I thought the same thing. Once I realized it was not I began to turn the corner to profitability. It was a long turn, costly, frustrating as anything I have ever done. It took years and 1000's of dollars.

Trading is a journey to be sure. The length depends on you. Some are given to a shorter journey, some longer like me. Some, sadly, never even get close.

Reres.... Don’t be in a hurry. Put your time in front of the screen. Operate from the mindset that you will learn as much as you can. Try to keep it reasonably simple. And most of all stay positive. By staying positive your mind will allow you to form the "edge" you seek. Trade what you see, not what you think...Understanding this will take you that "edge" you seek...This was my experience.

One last thing... Trading can be very “Counter Intuitive" I believe this is why trading is so difficult. We have to be willing to change our mind set. We have all had life experiences were something we did seemed intuitively correct... Only to find out we were wrong. It is gaining that understanding that will help you find the "edge" you seek.


Good luck
Don’t give up

Trading is one of the great journey's of life (IMHO)

TSD
  • #416
  • Aug 11, 2011 11:00am Aug 11, 2011 11:00am
Quoting jlpi
- There is kind of urban legend that 90% of traders are losing money (I saw that mentioned in this thread as in so many others): when people claims this please provide official statistics that support your claim. If you look here http://forexmagnates.com/us-forex-br...rison-q4-2010/ I think there is clearly over 30% of accounts profitable as Oanda has the biggest share.
Use your noggin, leave the internet and you'll find out that it's higher than 90%.
  • #417
  • Aug 11, 2011 2:39pm Aug 11, 2011 2:39pm
Quoting nubcake
you can drop a horizontal line anywhere on a chart and you will find somewhere that it looks like it mattered. you can connect a series of points on a diagonal and it looks like they have some meaning.
Drop a random horizontal line on a chart and one can still make money. When price is above buy and when below sell.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #418
  • Aug 11, 2011 2:40pm Aug 11, 2011 2:40pm
Here ya go the ultimate edge in the markets:

When price is going up, buy. When price is going down, sell.

Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #419
  • Aug 11, 2011 5:55pm Aug 11, 2011 5:55pm
Quoting reres

So what are you doing here then? ... some prefer to click few trades here and there.
Since my real job is quite intense, I'm here for recreation. I enjoy competing with the markets using a demo account. I often win. I'm up 64% this month, scalping 1M Fti style. If I used real money, I would lose because the bucket shops have no interest in me winning. Slippage, spikes, spreads, drop-outs... they have all the tools they need to shut me down. As it is, they provide me, at their own cost, with an evening's entertainment. Very generous of them.
  • #420
  • Aug 11, 2011 6:20pm Aug 11, 2011 6:20pm
Quoting AllanS
S If I used real money, I would lose because the bucket shops have no interest in me winning. Slippage, spikes, spreads, drop-outs... they have all the tools they need to shut me down.
Those are just excuses.

Anyway, why dont you open a proper platform like Interactive brokers or Tradestation or TOS...and than trade on real market and not against bucket shops??
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