edge init

ChocolateDigestive

ChocolateDigestive

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foorum's been a bit devoid of anything useful recently so I thought I would try and start of a thread that may be beneficial to all.

This thread is all about trading edge's.

Do those of you trading believe you are trading with an edge?

If you think you have an edge how did you come about it? Not asking for details of the edge just how you came about it?

How would you go about finding your own edge? How do you validate an edge?

Maybe some of you believe that you can trade profitably without and edge, you just trade from the gut? If so speak out.

What is an edge anyway? (the simplest way I have heard it described is you are trading with an edge when you have a greater probability of winning over an extended sample). The way I like to think of it is me walking into the Empire Casino in London, pushing all the chinese people out of the way (they love a gamble don't they) to get the the roulette wheel. I blow the dust of my wallet and place £10 on red. The casino has an edge over me, I may win or lose but over an extended sample you would expect them to win as they are trading with an edge.

Can you trade an edge in a discretionary way?

What you sayin?
 
Consistently win more than you loose, then you have an edge. Just saying you have an edge doesn't make it so. You have got to have a statement to show for it. In order words, if you have a statement to show every day, you definitely have an edge.

I would suggest the following strategy for casino roulette:

1. Set aside for the amount you can afford to loose for the night
2. Bet £1 on red or black
3. If you win, bet all winnings on red or black
4. If you loose, go to 2
5. If you win, go to 3

On a lucky run, you will win a million. If you don't get lucky, you have lots of bets and lots of fun. If you get poor luck, you have lost nothing more than planned. Same principle could be applied to trading.
 
BeginnerJoe said:
Consistently win more than you loose, then you have an edge. Just saying you have an edge doesn't make it so. You have got to have a statement to show for it. In order words, if you have a statement to show every day, you definitely have an edge.
Click to expand...
BJ,
You're never going to find anyone that can produce successive statements over an extended period of time from playing roulette. As the OP says, it's the casino who has the edge - not the punters. Punters can and do win in the short term, possibly even large sums, and they may have an individual bank or other statement to prove it, but that doesn't prove they have an edge. Never has, never will, because it's only the casino that has any kind of an edge (as defined by the OPs highlighted pink text) in the medium to long term.
Tim.
 
ok, I'll dunk :)

Having an "edge" always sounds to me like having an advantage over others that they do not possess (like insider knowledge) but I can't better the definition you quote.

I suppose an "edge" can come from a trading set-up that wins more often than it loses; robust money management where gains exceed losses; trade management skills that closes off trades to best advantage (or least worst); an understanding of market participants' behaviour; and a "feel" for the behaviour of your market. Or, probably some combination of those things.

Or, of course, your "edge" might be that you were born under a lucky star :D
 
timsk said:
BJ,
You're never going to find anyone that can produce successive statements over an extended period of time from playing roulette. As the OP says, it's the casino who has the edge - not the punters. Punters can and do win in the short term, possibly even large sums, and they may have an individual bank or other statement to prove it, but that doesn't prove they have an edge. Never has, never will, because it's only the casino that has any kind of an edge (as defined by the OPs highlighted pink text) in the medium to long term.
Tim.
Click to expand...

Not winning consistently over the long term is not a certainty. Although the people who win over the long term are small, there is no certainty that says it can't be you. Hence staying in the game as long as you can increases your chance despite the casino's edge. The casino's edge works against the aggregate of all their customers and not necessarily against you. Basically, both the casino and you can be winners simultaneously without violating the laws of probability.
 
BeginnerJoe said:
Not winning consistently over the long term is not a certainty. Although the people who win over the long term are small, there is no certainty that says it can't be you. Hence staying in the game as long as you can increases your chance despite the casino's edge. The casino's edge works against the aggregate of all their customers and not necessarily against you. Basically, both the casino and you can be winners simultaneously without violating the laws of probability.
Click to expand...

oh god, what have I done...................
 
careful the 'set up' police will be on your tail soon! lol.

You raise a good point about luck, last month I happened across a black swan event that went in my favour. I lucked out and cashed out. Sometimes luck can be bad for you, give you false hope in your 'edge'.

barjon said:
ok, I'll dunk :)

Having an "edge" always sounds to me like having an advantage over others that they do not possess (like insider knowledge) but I can't better the definition you quote.

I suppose an "edge" can come from a trading set-up that wins more often than it loses; robust money management where gains exceed losses; trade management skills that closes off trades to best advantage (or least worst); an understanding of market participants' behaviour; and a "feel" for the behaviour of your market. Or, probably some combination of those things.

Or, of course, your "edge" might be that you were born under a lucky star :D
Click to expand...
 
IMHO there is only one edge the trader need care about:

LIMITED LOSSES / UNLIMITED GAINS

simple.
 
ChocolateDigestive said:
foorum's been a bit devoid of anything useful recently so I thought I would try and start of a thread that may be beneficial to all.

This thread is all about trading edge's.

Do those of you trading believe you are trading with an edge?

If you think you have an edge how did you come about it? Not asking for details of the edge just how you came about it?

How would you go about finding your own edge? How do you validate an edge?

Maybe some of you believe that you can trade profitably without and edge, you just trade from the gut? If so speak out.

What is an edge anyway? (the simplest way I have heard it described is you are trading with an edge when you have a greater probability of winning over an extended sample). The way I like to think of it is me walking into the Empire Casino in London, pushing all the chinese people out of the way (they love a gamble don't they) to get the the roulette wheel. I blow the dust of my wallet and place £10 on red. The casino has an edge over me, I may win or lose but over an extended sample you would expect them to win as they are trading with an edge.

Can you trade an edge in a discretionary way?

What you sayin?
Click to expand...

I dont believe you can have a physical/technical edge in the market (unless of course you have some inside info). I know that far smarter / more driven / better capitalized folks than me can see exactly what i can on a screen.
I believe the only real edge you can have is psychological. For me i guess that means to be calm when most feel pressure. To be patient, unhurried, uncaring,unknowing,accepting. Maybe most importantly flexible.

If roulette payed 37 for 36 id be a player! :p
 
I reckon people underestimate the power of luck, and this is what holds them back. Often, to win you merely need to be in the game because every dog will eventually have his day. On the other hand, if you are not in the game, you are definitely not going to win.

One taboo subject I find interesting is that no one ever talk about the edge the market has over you. My estimation tells me that this market edge is significantly greater than that of the casino for most (i.e 99%+) tarders.
 
darktone said:
I dont believe you can have a physical/technical edge in the market (unless of course you have some inside info). I know that far smarter / more driven / better capitalized folks than me can see exactly what i can on a screen.
I believe the only real edge you can have is psychological. For me i guess that means to be calm when most feel pressure. To be patient, unhurried, uncaring,unknowing,accepting. Maybe most importantly flexible.

If roulette payed 37 for 36 id be a player! :p
Click to expand...

that's interesting. So do you believe it is possible to be profitable without a trading edge? for example trading purely from the gut? or maybe the gut is the edge?
 
ChocolateDigestive said:
been a while since i thumbed through street smarts, do you rate her?
Click to expand...

well, it was her "holy grail" set-up that changed my life!
I was always wary of detecting a trend-change, but the holy-grail or sling-shot technique was all about not having to predict a trend, but to simply trade a pullback, or slingshot, into an already existing trend.

Just about ALL of my rules since have been variants of the sling-shot.
 
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ChocolateDigestive said:
careful the 'set up' police will be on your tail soon! lol.

You raise a good point about luck, last month I happened across a black swan event that went in my favour. I lucked out and cashed out. Sometimes luck can be bad for you, give you false hope in your 'edge'.
Click to expand...

Aye, you don't want to ride your luck too much. Probably safer to write a book (or worse :devilish:) about the spectacular success of your "method".
 
BeginnerJoe said:
One taboo subject I find interesting is that no one ever talk about the edge the market has over you. My estimation tells me that this market edge is significantly greater than that of the casino for most (i.e 99%+) tarders.
Click to expand...

If you read my posts, you'd know this is a subject that I'm constantly discussing

You'd also understand why I advocate using random trades as part of the methodology when designing an edge.

I can tell you precisely what the market edge is for a number of markets, across a range of time-frames and trade durations. That's arguably the first step of designing an edge knowing what you have to overcome.

I've even see this being discussed quite recently on public domain trading sites, and I've even seen people quantifying that edge :LOL: It might not be discussed at the zoo, but it is discussed amongst traders quite openly

On top of the mechanical edge working against you, there's definitely some psychology at play too. I have yet to find a new trader who can outperform a random system based on coin tosses
 
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