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But you said you disagree with point one. Positive expectation is necessary for consistent profits. What's the disagreement? So how many trades do you use to determine winrate and consistent profitability? People were performing successful tape reading long before charts came along. The notion...

:confused: No sarcasm was intended. When did consistent profits become incompatible with positive expectation? And do it manually? Wm Eckhardt doesn't trust any strategy tested on fewer than 1800 trades. Try doing that manually, just for the testing phase of each candidate strategy. I'm...

So a winning trader needs three things: 1) a trading strategy with positive expectation, an arguably rare quality. 2) the ability to overcome the psychological challenge of a low winrate, a not-rare-enough component of many PE strats. 3) the application of good money management, of...

In this thread, edge means positive expectation. Positive expectation is absolutely real. Rare but real. Frankly I don't understand this need on the part of some ETers to treat "edge" as if it was in same category as unicorns or Bigfoot. Is it trolling or some undiagnosed neurotic tick?

Good riddance.

I was thinking in terms of strategies with positive expectation that have the added challenge of low winrates. Tf strategies do appear to have the highest expectations as a rule but traders still fail for the reason we discussed previously: the challenge of a low winrate. I'm just positing...

I think the most popular form of trend following is breakouts and I don't think their winrates are anything to brag about.

You should read the preceding posts before replying. Dp and I were talking about the psychological challenge of low winrates. Robots can ignore low winrates, human beings aren't typically as detached from repeated losses.

Rumor has it (and I have no idea how true this is, just commenting on the "conventional wisdom") that trend following strategies tend to have low winrates and counter-trend strategies tend to have high winrates. If true, perhaps this is an argument to stick to counter-trend strategies or to...

You're in the wrong thread. People who want to discuss the existence of edge should go here: http://www.elitetrader.com/vb/showthread.php?s=&threadid=279873

Amazingly this appears to be little discussed if at all in the Psychology forum. :eek:

+1 Winrate isn't mathematically necessary but it does have an undeniable psychological effect. Unless one can adopt a Vulcan-like detachment, it's very tough putting up with a meager winrate regardless of how great the expectation.

mathematical expectation noun Mathematics. the product of the probability of the occurrence of an event and the value associated with the occurrence of a given event. Statistics. the summation or integration, over all values of a variate, of the product of the variate and its...

Edge is one thing and only one thing : positive expectation. Either you have it or you don't. And if your trading plan doesn't have positive expectation, you don't have an edge. I know a lot of you don't agree. I don't care. This isn't a matter of opinion, it is a matter of fact...

Given the ambiguity of your question, I have to say no. What the heck is a "trade signal"? And 'trading plan' is very ambiguous. It can mean anything from a bare bones trading strategy to that plus everything else up to and including hardware choices and broker choice. Just looking at the...

This isn't philosophy. The word 'edge' originated in this context is just a slang synonym for advantage. In sports, you have an edge if you have an advantage however slight over your competition. In other words, you have an edge if you possess something that your competition doesn't possess...

Excellent. More excellence. :)

The number one determinant for trading success (aka long-term profitability) is a trading plan with consistent positive expectation. Without that you got nothing. Yes, lowering commissions will save you some money but it won't make you profitable. The whole point of trading is to make...

OK let's cut through the BS. Edge is one thing and one thing only: positive expectation. If you have it, you can be a successful (aka long-term profitable) trader. Notice I said 'can', not 'will'. Edge alone isn't enough. You also need good money management, which is best exemplified as...

Why so defensive? I was talking about well-off people who hadn't planned on eating their principal because they wanted to leave it to the kids, the grandkids, charity or their cats. Most people in the top 5% or whatever think they can live off their investment interest and social security and...