What is your edge?

[no stops trader]

The big sharks eat the small fish , the 5% eat the 95 % " the crowd ".The 5 % buy on the rumor and sell on the news .The 95 % buy on the news ,after the event , waiting for the sharks dinner table.

so true... 95% act on the news after the event. chasing trend is another way of saying it. All a trend is useful for is to remove your fixed t/p level and replace it with a trailing SE STOP instead.

 

[foroom lluzers]

In practice, what does this trite saying mean?

Traders can make money , if they take positions , if they enter before the trend breakout .So the theoretical edge in trend trading is merely a market behavior , not an edge , because 95% lose looking for the elusive trends and 80% of trend breakouts fail.There is a 20% chance of trend success and a 80% chance of failure , so there is no edge in trends.Trends are visible in hindsight .

Large hedge funds tried trend trading and failed.They closed down.

 

[foroom lluzers]

There are about 10 threads on this site on this subject , this question should have been answered long time ago. Timsk pointed out the best definition ,insanity is doing the same thing over and over ,expecting different results.

http://www.trade2win.com/boards/gen...14-what-professionals-edge-2.html#post2905824

 

[barjon]

Traders can make money , if they take positions , if they enter before the trend breakout .So the theoretical edge in trend trading is merely a market behavior , not an edge , because 95% lose looking for the elusive trends and 80% of trend breakouts fail.There is a 20% chance of trend success and a 80% chance of failure , so there is no edge in trends.Trends are visible in hindsight .

Large hedge funds tried trend trading and failed.They closed down.

What you don't seem to understand is that if that statistic you keep parading is really true - 20% of breakouts succeed and 80% fail - then it represents a huge, huge edge. A statistical edge, after all, is just the probability of one thing occurring more often than the other (consistently).

If 80% of break outs fail then trade them as failures and you'll be a billionaire in no time.

 

[foroom lluzers]

What you don't seem to understand is that if that statistic you keep parading is really true - 20% of breakouts succeed and 80% fail - then it represents a huge, huge edge. A statistical edge, after all, is just the probability of one thing occurring more often than the other (consistently).

If 80% of break outs fail then trade them as failures and you'll be a billionaire in no time.

The $64m question is from which low point to enter , the first low ,second low or the third low or lower .This does work in stock indices , by buying multiple lows accumulator ,with a well thought out plan.There is a 75 % success rate buying indices low , if risk is managed.The short side has a 25% success rate , short side is best done with put spreads over 2 months.

There we are now progressing and discussing profitable trading.

 

[no stops trader]

Traders can make money , if they take positions , if they enter before the trend breakout .So the theoretical edge in trend trading is merely a market behavior , not an edge , because 95% lose looking for the elusive trends and 80% of trend breakouts fail.There is a 20% chance of trend success and a 80% chance of failure , so there is no edge in trends.Trends are visible in hindsight .

Large hedge funds tried trend trading and failed.They closed down.

dinosaur hedge funds perhaps, the ones that practice HFT (and have the $$ to invest in the equipment) make huge $$ trading the trend... take a couple of pennies, repeat several times a second until the trend reverses, bring the cash to the bank. but let's not get into that, the ones on this thread are not in that league, so for us amateurs, a trend is a bear trap

 

[no stops trader]

The $64m question is from which low point to enter , the first low ,second low or the third low or lower .This does work in stock indices , by buying multiple lows accumulator ,with a well thought out plan.There is a 75 % success rate buying indices low , if risk is managed.The short side has a 25% success rate , short side is best done with put spreads over 2 months.

There we are now progressing and discussing profitable trading.

yeah, that's my technique, call it an edge if you want.. buy low, buy even lower again if necessary then sell high and never, ever naked short unless a war has just broken out. Works with indices because an index long term gravitational pull is up, quite simple. The complexity is to know when the price is low in relative terms... I have an edge on that too, I study the symmetry of past movements, it surprises even me on how closely history repeats

 

[Pat494]

Here is a reply from an old thread that seems appropriate


1) We are right more than we're wrong - ie the skill of reading a chart
2) We make more when we're right than when we're wrong for a given position - ie the skill of execution
3) We are bigger when we're right than when we're wrong - ie the skill of sizing (position management).

 

[foroom lluzers]

yeah, that's my technique, call it an edge if you want.. buy low, buy even lower again if necessary then sell high and never, ever naked short unless a war has just broken out. Works with indices because an index long term gravitational pull is up, quite simple. The complexity is to know when the price is low in relative terms... I have an edge on that too, I study the symmetry of past movements, it surprises even me on how closely history repeats

If you use options , you can reduce your risk to 20 ticks on daily 65 ticks on weekly options , it also reduces psyche issues.

BTW Please start threads where people can progress and talk about profitable trading IMHO , nobody wants same old discussions repeated over and over again. It is a waste of time.

 

[foroom lluzers]

Here is a reply from an old thread that seems appropriate


1)
3) We are bigger when we're right than when we're wrong - ie the skill of sizing (position management).

This is totally wrong .You don't know the outcome of the next trade.Psychologically this dangerous.

 

[no stops trader]

This is totally wrong .You don't know the outcome of the next trade.Psychologically this dangerous.

didn't see the original post referenced so the extract is probably out of context. I think the post referes to "in a game of chance" you are a better trader when 1. 2. and 3. are true rather than false

 

[no stops trader]

If you use options , you can reduce your risk to 20 ticks on daily 65 ticks on weekly options , it also reduces psyche issues.

BTW Please start threads where people can progress and talk about profitable trading IMHO , nobody wants same old discussions repeated over and over again. It is a waste of time.

not a fan of anything that has a time limit attached, I prefer to buy insurance in the form if a hedge.. if the trade is working then I lose a few points on the hedge, if it goes against me temporarily then I make money both on the hedge and the trade, if it goes against me permanently, I marry the hedge and the trade, take a small loss and move on.

 

[foroom lluzers]

not a fan of anything that has a time limit attached, I prefer to buy insurance in the form if a hedge.. if the trade is working then I lose a few points on the hedge, if it goes against me temporarily then I make money both on the hedge and the trade, if it goes against me permanently, I marry the hedge and the trade, take a small loss and move on.

I hate it when price takes my stop and goes without me.I like to set and forget without emotions.

 

[Pat494]

This is totally wrong .You don't know the outcome of the next trade.Psychologically this dangerous.

I don't know why you think this is wrong. Seems a no-brainer to me to have bigger stakes on the more likely outcomes.

 

[no stops trader]

I hate it when price takes my stop and goes without me.I like to set and forget without emotions.

I don't use STOPS so never have that problem, I also don't need to watch my trades, set the hedge as a limit order, no emotion at all... it's all a mathematical calculation. If the hedge triggers, the trade remains in a frozen state till I feel like looking at it and decide on best course of action dependent on prices at that time, again it becomes a mathematical calculation, not an emotion.

 

[barjon]

What you don't seem to understand is that if that statistic you keep parading is really true - 20% of breakouts succeed and 80% fail - then it represents a huge, huge edge. A statistical edge, after all, is just the probability of one thing occurring more often than the other (consistently).

If 80% of break outs fail then trade them as failures and you'll be a billionaire in no time.

I'll repeat my post because you can't just duck making such a stupid and trite statement (which you don't even define) by a diverting answer full of more claptrap statistics. I truly hope that no-one gets taken in by your pretended expertise.

 

[no stops trader]

I don't use STOPS so never have that problem, I also don't need to watch my trades, set the hedge as a limit order, no emotion at all... it's all a mathematical calculation. If the hedge triggers, the trade remains in a frozen state till I feel like looking at it and decide on best course of action dependent on prices at that time, again it becomes a mathematical calculation, not an emotion.

I had a 66,868 point gain on my positions last month and just below that in May, so I'd say my technique has an edge on options and I wolk full time, trade part time

 

[tomorton]

The global Foreign Exchange market is the largest financial market in the world and it’s size and liquidity ensure that new information and news is disseminated within minutes. A trading edge is a technique, observation or approach that creates a cash advantage over other market players. It doesn’t have to be elaborate to fulfill it’s purpose, anything that adds a few points to the winning side of an equation builds an edge that lasts a lifetime.

What's your edge?

 

[tomorton]

Traders can make money , if they take positions , if they enter before the trend breakout .So the theoretical edge in trend trading is merely a market behavior , not an edge , because 95% lose looking for the elusive trends and 80% of trend breakouts fail.There is a 20% chance of trend success and a 80% chance of failure , so there is no edge in trends.Trends are visible in hindsight .

Large hedge funds tried trend trading and failed.They closed down.

But once a trend is identified, the most likely thing price in the trend will do is follow the trend. Trends are not just visible in hind-sight, that's what makes them trends. Break-outs and break-out failures are only visible through prediction, which is basically impracticable for the private retails trader who cannot predict that his actions will move price, whereas the big players can.

I do not accept that most private retail traders are trend-followers. Where is your evidence for this? Based on communications here and elsewhere with private retail traders, I have to suspect the majority are looking to "beat" the market, i.e. buy into something before the price rises, or sell ahead of a news announcement, or sell a trend that looks over-bought, or sell a dip in a strong uptrend.

Such strategies look dramatic on a chart when they work, but are basically hope placed above evidence. And that's why the majority of private retail traders lose.

 

[foroom lluzers]

I'll repeat my post because you can't just duck making such a stupid and trite statement (which you don't even define) by a diverting answer full of more claptrap statistics. I truly hope that no-one gets taken in by your pretended expertise.

Although 80 % of new trends breakdown , I have opened a thread showing examples , there is no method to consistently make money from these failures .It is difficult to define such a method , if one was defined it would be difficult psychologically to trade it.

A picture says a thousand words , if you look at any chart , 80 % of the time they chop within ranges. Every time a trend is spotted , it reverses.