Did Your 'Edge' Come Easy?

Edge is anything that helps you make profits consistently, meaning any technique, combination of techniques, use of advanced hardware/software, math, psychology, philosophy, you name it. Michael Harris has shown mathematically that the positive expectation formula reduces to the trivial equation: Profit > 0. This means to me that this expectation formula pushed by some authors describes only a tiny subset of all possible edges. Please pay attention to this: a tiny subset of all possible edges. Traders get stuck with this trivial formula and waste their time looking for a mathematical edge when there are many other possibilities. This is the link to the original Harris' derivation:

http://bit.ly/ndeJUa
 
Quote from N54_Fan:

It seems that we are debating what "edge" is defined as and I think the OP just wants to know how long did it take to become profitable.

Assuming that definition,... it has taken me 3 1/2 years to be profitable. I studied charts for 8-9 hrs/day for most days of the years. I studied everything I could get my hands on and always tested my newest startegies using real money in a small account I could afford to lose. I am a firm believer that you should examine a strategy in old charts as some form of back testing but that you must try it in forward testing for a while. Essentially you need to get behind the wheel to learn to drive. Just theorizing/simualting it will not get you far....you must have money in the trade to know how you would react when the ticks start going against you. Review your system at least monthly and evaluate every trades. Do more of what is working and less of what is not working. In time you will become profitable.

The last thing I will say is that I learned everything I could about trading until it is now quite simple in my thoughts and all those minutia details I looked at before are now boiled down to a few key things I look at to keep it simple. So dont be afraid to get into the little details on a chart because with clearer understanding you can eventually achieve simplification and efficiency.

At least that's what's worked for me.
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N54,

Although it's fun watching everyone debate, I created this thread solely for the reassurance that I'm not the only one going down the path I'm on. I suspect that I'm on the right path, given that others I've talked to and respect happen to agree, but it just helps for motivational purposes.
 
Quote from alexandermerwe:

Edge is anything that helps you make profits consistently, meaning any technique, combination of techniques, use of advanced hardware/software, math, psychology, philosophy, you name it. Michael Harris has shown mathematically that the positive expectation formula reduces to the trivial equation: Profit > 0. This means to me that this expectation formula pushed by some authors describes only a tiny subset of all possible edges. Please pay attention to this: a tiny subset of all possible edges. Traders get stuck with this trivial formula and waste their time looking for a mathematical edge when there are many other possibilities. This is the link to the original Harris' derivation:

http://bit.ly/ndeJUa
More...

So you're saying we shouldn't worry about having Profit>0? I've been wasting my time thinking that was important? How could I have been so stupid. :confused:
 
Quote from Chris_Anonymous:

This question is for anyone who has a viable, tested edge that allows them to consistently profit from the market. :)

How easy was it? Or how hard?

Was it simple or complicated for you?
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I've been trading long options for about a year. Talk about having the odds stacked against you! But you gain a great sense of anticipating exits because of the flame shaped price profile.

My edge took about a year to sink in, even though it was presented to me in my first month, via one of the subscription services I had.

I eventually studied all my winning trades, screened for what they had in common, and suddenly saw waves of green in my account statement.

The lesson: study your winners, then clone them, then develop them until it becomes a consuming obsession for the underlying dynamic which drives them........
 
Nice post. Great advice. I'm not sure it helps the absolute novice without enough winning trades to study but it does give them a template to keep handy as they accumulate wins to study. And of course it helps those further along immediately.

Given that this is only your third post I am looking forward to hearing more. I'm guessing it will be interesting.


Quote from Wide Tailz:

I've been trading long options for about a year. Talk about having the odds stacked against you! But you gain a great sense of anticipating exits because of the flame shaped price profile.

My edge took about a year to sink in, even though it was presented to me in my first month, via one of the subscription services I had.

I eventually studied all my winning trades, screened for what they had in common, and suddenly saw waves of green in my account statement.

The lesson: study your winners, then clone them, then develop them until it becomes a consuming obsession for the underlying dynamic which drives them........
More...
 
Your edge is the recurring non random market behavior you are looking to profit from.

Profitable edges can be found quickly by back testing with standard trend following price behavior. But these basic systems come with large draw downs. A novice trader will curve fit this type of edge to try and reduce draw downs.

An expert will use his expert trading knowledge honed over many years of trading to create rules that reduce the draw downs.
 
Quote from Businessman:

Your edge is the recurring non random market behavior you are looking to profit from.

Profitable edges can be found quickly by back testing ....
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Backtesting is only a very small part of the equation:

BACKTESTING TO UNCOVER POTENTIAL EDGES -> FORWARD TESTING -> SIMULATED TRADING TO WORK OUT THE KINKS -> LIVE TRADING WITH VERY SMALL AMOUNTS OF MONEY -> REAL MONEY TRADING -> INCREASE SIZE WITH THE MARKET'S MONEY = WINNING EVERY TIME GUARANTEED
 
Quote from monti1a:

Backtesting is only a very small part of the equation:

BACKTESTING TO UNCOVER POTENTIAL EDGES -> FORWARD TESTING -> SIMULATED TRADING TO WORK OUT THE KINKS -> LIVE TRADING WITH VERY SMALL AMOUNTS OF MONEY -> REAL MONEY TRADING -> INCREASE SIZE WITH THE MARKET'S MONEY = WINNING EVERY TIME GUARANTEED
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actually backtesting is the holy grail......
there you find all answers of your questions....
and the you have to check it in "real time" to fix the last bugs....
 
For me...

It did not come easy, not even challenging, it was actually very hard to see it and even harder to master it and polish it. Years and years and years of very hard work. Not to mention an insane amount of losses, I did not know any better, just like everyone else starting.

My specialty is failed breakouts against a dominant trend, and I try not to trade anything else. By incorporating this and only this, I have become a master of failed breakouts and this allows me to determine quite quickly when I'm wrong, which means take the loss and run, or when I'm right, which means, press those winners as hard as you can because I got a lock on direction and upcoming momentum.

In other words, I like to trade only when one side is getting royally and absolutely fucked and this usually happens when a breakout against the trend, fails.

At first the money was motivational, now I'm just bored out of my mind, but I'm glad I'm done with the beginner and intermediate stages, they truly sucked.

Crazy A
 
Quote from crazyAtrader:

For me...

It did not come easy, not even challenging, it was actually very hard to see it and even harder to master it and polish it. Years and years and years of very hard work. Not to mention an insane amount of losses, I did not know any better, just like everyone else starting.

My specialty is failed breakouts against a dominant trend, and I try not to trade anything else. By incorporating this and only this, I have become a master of failed breakouts and this allows me to determine quite quickly when I'm wrong, which means take the loss and run, or when I'm right, which means, press those winners as hard as you can because I got a lock on direction and upcoming momentum.

In other words, I like to trade only when one side is getting royally and absolutely fucked and this usually happens when a breakout against the trend, fails.

At first the money was motivational, now I'm just bored out of my mind, but I'm glad I'm done with the beginner and intermediate stages, they truly sucked.

Crazy A
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There is no easy way.....
the harder the battle - the sweeter the vicory....

Once you be the master, then its not anymore just about money, then its just about to master the process itself each and every time. Its a martial art of finance and not everybody can master it.
U have to find yourself in the learning process and recreate a new personality with becoming a master of your business - its a never ending proccess.....

The money and financial freedom is your reward, but it have no affects on you anymore, bcuz you are focused on your mission to be perfect - and perfection does not allow mistakes.

Pro traders dont make mistakes, thats why they are pros.
 
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