Yeah. We are talking two different things.
I was thinking of real advantages (like information, funding, access) vs just having alpha.
You (I think) are talking about the two ways to generate alpha.
defining "edge" with discretionary trading
- Thread starter KMeriwetherD
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Yeah. We are talking two different things.
I was thinking of real advantages (like information, funding, access) vs just having alpha.
You (I think) are talking about the two ways to generate alpha.
Yes, my assumption is that real advantages don't really exist, or, if they do, are accompanied by large costs. Obviously, this is based on the parts of the mkt that I am familiar with.
Huh? Did I say something wrong?
My answer to your question is that my process (of trade identification and portfolio construction) is my edge. It allows me to identify liquidity provision opportunities, which are likely to deliver superior risk-adjusted returns when part of a portfolio.
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It's worked out in advance in the system's logic?
apologies. I lumped you in with the conversation that seemed to be focused on "edge" equating to unfair advantage. When I started the thread I was looking more to discuss the advantage you get though skill, research or statistical analysis. Good old "wholesome" edge
An Advantage is always unfair.apologies. I lumped you in with the conversation that seemed to be focused on "edge" equating to unfair advantage. When I started the thread I was looking more to discuss the advantage you get though skill, research or statistical analysis. Good old "wholesome" edge
Because it's a zero sum game Bro'.
Anticipatory based or Payoff based edge,
Are also available to retail traders.
However one has to dig deep.
Well yes..... "edge" is a little silly. However, when there is a discussion about knowing what your's is as a trader, the context holds more water. I think it is really important for a trader to understand SPECIFICALLY WHY they think they will win a zero sum game with consistancy. As I formulate my strategy as a discretionary trader, part of that process is defining WHY I expect it to work. That is more complex than it seems. It seem like a cop out to just say..."oh, I expect to win because I know a lot about technical analysis"....... or even to say something like..... "l expect to win because I have spent over 1000 hours watching and analysing markets"(which I have not done yet, but plan to do). That being said, the true edge as a discretionary trader probably closely resembles my second statement. I think that's the catch. No one can teach you to read market context. You have to do your own work.
@lawrence-lugar ..
.. bravo on the Indiana Jones reference.
What of methods/algos that are profitable "in trend" and the discretion is market selection.
One example(hindsight) would be to avoid trading the euro in favor of the yen for the last 6 months.
Trend definition can be generally defined or loosely fit (not oberfit) and maybe combined with some correlation discretion/analysis/experience (ie: REITS and rates -corr) to make a method that does not pound away blindly. Just thinking out load here as i have no details on such systems.
Is this the type of TA context you refer to?
What I think you are looking for is rule based discretionary trading.
All the insight about the rule based discretionary trading one can find is here: http://www.vantharp.com/tradersandmistakes-pt1_2_3.htm
For my perspective, Tharp explains this greatly. How I understand and practice about rule based discretionary trading is that I have set of rules which put me in a position where I have to look for clear set of criterias (like RR Ratios, market overview, risk management per trade, entries, exits etc)
So with that I still have my methodology/approach/rules but what I have is a)adaptability b) an opportunity to trade what I see c) to think in multiple perspectives or in terms of different scenarios.
The thing with edge in this kind of trading is that mostly you trade the probabilities and experience, combined with the current market situation.
So with this kind of trading the edge comes up in two places: a) your rules b) your psychology/emotional control aka disciplined thinking process.
One cannot work without another in this kind of trading.
Regards,
Andrin
All the insight about the rule based discretionary trading one can find is here: http://www.vantharp.com/tradersandmistakes-pt1_2_3.htm
For my perspective, Tharp explains this greatly. How I understand and practice about rule based discretionary trading is that I have set of rules which put me in a position where I have to look for clear set of criterias (like RR Ratios, market overview, risk management per trade, entries, exits etc)
So with that I still have my methodology/approach/rules but what I have is a)adaptability b) an opportunity to trade what I see c) to think in multiple perspectives or in terms of different scenarios.
The thing with edge in this kind of trading is that mostly you trade the probabilities and experience, combined with the current market situation.
So with this kind of trading the edge comes up in two places: a) your rules b) your psychology/emotional control aka disciplined thinking process.
One cannot work without another in this kind of trading.
Regards,
Andrin
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