I don't think most traders on ET have an edge... they think they do but it's based on random stuff that works for awhile and is fraught with all the thinking errors pointed out in another recent thread in this same forum. VanTharp, a trader's coach, said as much, at least about the people that were using his services.... that's why he concentrated on money management so much... it was his advice for people with no edge basically.... sort of funny when you think about it...
Do most traders even have an edge?
- Thread starter empee
- Start date
Quote from empee:
A) "Statistically Signficant" -- how do you quantify that. Do you have a sample size of N? I do considerable backtesting, Monte Carlo, and probably the hardest question to answer is -- IS IT STATISTICALLY SIGNIFICANT. To say that as a being a "given" is obtuse viewpoint at best. How many ppl who backtest have seen a system work great and then when say the test period changes it fails miserably?
Backtesting and similar methods is not a sample size. It is someone looking thruiogh a universe fo possibilities, nad wrongly believing that those few that outperform will continue to do so. It is a similar problem to relying on testimonials from vendors. You are seeing a cherry picked set that does not represent the truth.
b) Wrong and wrong. How can you say charts do not definitively provide an edge? As Taleb says (Black Swan) one instance disproves what you're saying. Until you can disprove say, head and shoulders don't work (I don't think they do) but there may be traders who can statistically show they do, you can't make blanket statements like that. I've seen ppl/trading with violation of every trading rule that have historically made money (not saying that it was STATISTICALLY SIGNIFICANT). There many be edges that you have or haven't thought of, once again to say "anything" can't be an edge is not true. Just because YOU haven't figured out an EDGE someone else has, doesn't mean it doesn't exist.
Most studies show little to no value-add for indicators or pattern methods. The problem is those who disagree without any significant proof to the opposite. Traders who can " statistically show they do" rarely do and prefer to provide worthless anecdotal or gut feels instead.
A) "Statistically Signficant" -- how do you quantify that. Do you have a sample size of N? I do considerable backtesting, Monte Carlo, and probably the hardest question to answer is -- IS IT STATISTICALLY SIGNIFICANT. To say that as a being a "given" is obtuse viewpoint at best. How many ppl who backtest have seen a system work great and then when say the test period changes it fails miserably?
Backtesting and similar methods is not a sample size. It is someone looking thruiogh a universe fo possibilities, nad wrongly believing that those few that outperform will continue to do so. It is a similar problem to relying on testimonials from vendors. You are seeing a cherry picked set that does not represent the truth.
b) Wrong and wrong. How can you say charts do not definitively provide an edge? As Taleb says (Black Swan) one instance disproves what you're saying. Until you can disprove say, head and shoulders don't work (I don't think they do) but there may be traders who can statistically show they do, you can't make blanket statements like that. I've seen ppl/trading with violation of every trading rule that have historically made money (not saying that it was STATISTICALLY SIGNIFICANT). There many be edges that you have or haven't thought of, once again to say "anything" can't be an edge is not true. Just because YOU haven't figured out an EDGE someone else has, doesn't mean it doesn't exist.
Most studies show little to no value-add for indicators or pattern methods. The problem is those who disagree without any significant proof to the opposite. Traders who can " statistically show they do" rarely do and prefer to provide worthless anecdotal or gut feels instead.
Your viewpoint seems to come from your vantage point. Too bad.
Try coupling the statistical characterisics of the zero sum game of ES (weighted winners and losers over time) to prove the null hypothesis of the universe of possibilites (especially focussing on where black swans are eliminated). "Eliminated" means the limiting cases of the winners in the extremes of the distribution.
i think if you cant gamble and win you cant trade and win. i am not a gambler but i can win at gambling. i understand things that few could accept exist in the first place. thats the edge.
and i would like to say its not about the money if it is i will show you a looser or a soon to be run out of luck looser. it must be about the passion of figuring it out. the money is a side product that finances the continued passion.
and i would like to say its not about the money if it is i will show you a looser or a soon to be run out of luck looser. it must be about the passion of figuring it out. the money is a side product that finances the continued passion.
fair enough MB.
If that is what you believe then stick with it and go where it takes you.
The reality of trading is that it is all about making consistent big money.
The application of probabilities is the journey not the end ... gambling never enters the room, when you are trading.
regards
f9
when i got involved in trading i had money - i got involved from a challenge that some friends threw out. they had been trading and it was boom and bust foir them. they knew me and said hey if anyone can do it maybe mark can. so armed with a nothing i set out to do it. it cost me dearly i lost and won and lost and won and come to the conclusion no one i was around or hung out with was a pro and knew really what they were doing.
so when i had a chance to work for a pro trader i jumped and became a systems developer for a professional trading company which had lots of money to spend on just searching for models. i was not the brightest guy they told me but i had the right combination of passion for the business and some computer skills. that is what got me the job, mostly the passion. had i been money motivated i would never gotten in.
in fact the head trader there told me that it was my refusal of a million dollar account to trade that sealed my future. i told them i would just blow it cause i really didn't have a grasp of what i was doing. they said given the choice 99.9 of all applicants told them they would take the money. my refusal proved i was hungry and passionate for the truth.
i stay focused as i buy all my toys nowdays and live the life i do. i love cars, art, computer hardware, buildings, boats and copters. but i would throw it all away if i needed to in order to keep my passion of discovery and perfecting the edge. i have been broke time and time again but each time i make it back quicker and quicker cause i am perfecting the edge.
i used to despise gambling - i in no way think i can be a gambler like a pro. but i can apply my computer modeling and beat just about any gambler on the planet. i have conducted real life experiments where i hit house limits on several occasions. i know something about having an edge, the first step is that you have to belive one is obtainable. then you have to find it.
mb
so when i had a chance to work for a pro trader i jumped and became a systems developer for a professional trading company which had lots of money to spend on just searching for models. i was not the brightest guy they told me but i had the right combination of passion for the business and some computer skills. that is what got me the job, mostly the passion. had i been money motivated i would never gotten in.
in fact the head trader there told me that it was my refusal of a million dollar account to trade that sealed my future. i told them i would just blow it cause i really didn't have a grasp of what i was doing. they said given the choice 99.9 of all applicants told them they would take the money. my refusal proved i was hungry and passionate for the truth.
i stay focused as i buy all my toys nowdays and live the life i do. i love cars, art, computer hardware, buildings, boats and copters. but i would throw it all away if i needed to in order to keep my passion of discovery and perfecting the edge. i have been broke time and time again but each time i make it back quicker and quicker cause i am perfecting the edge.
i used to despise gambling - i in no way think i can be a gambler like a pro. but i can apply my computer modeling and beat just about any gambler on the planet. i have conducted real life experiments where i hit house limits on several occasions. i know something about having an edge, the first step is that you have to belive one is obtainable. then you have to find it.
mb
in reply to original post , i'm certain most traders here don't have a real edge ( my definition is to have probability in your favour), whats more surprising is the lack of importance placed upon having an edge , so many traders here think that they will win without any edge at all, if they apply what they call "good money management". ( i've had that inane discussion on here before ), For me 99% of trading is about finding and widening one's "edge" the rest can be worked out once this is done, without edge one is going nowhere fast!!
Henry,
You are generalizing what you define as an edge. Can you elucidate what you mean by probability in your favor?
I remain of the opinion that there is no such thing as an edge and its not required to make big money trading. Most guys quote this edge thing just because some market wizard in Jack's books said so.
Forget spending sleepless nights looking for it, it does not exist.
Whats real is human psychology, win/lose probabilities, trading methodology with a positive expectancy, capitalization to trade the methodology and discipline to trade the method ( and this does mean you have be a robot either, you can still make mistakes provided the ultimate goal is to make losses linear and winners exponential. To do this requires no mystical edge or posses information others dont or a technique thats unique. Non required.
But then again maybe Im talking to myself.
You are generalizing what you define as an edge. Can you elucidate what you mean by probability in your favor?
I remain of the opinion that there is no such thing as an edge and its not required to make big money trading. Most guys quote this edge thing just because some market wizard in Jack's books said so.
Forget spending sleepless nights looking for it, it does not exist.
Whats real is human psychology, win/lose probabilities, trading methodology with a positive expectancy, capitalization to trade the methodology and discipline to trade the method ( and this does mean you have be a robot either, you can still make mistakes provided the ultimate goal is to make losses linear and winners exponential. To do this requires no mystical edge or posses information others dont or a technique thats unique. Non required.
But then again maybe Im talking to myself.