Do you consider money management an edge?
- Thread starter LeeD
- Start date
There are guys who can walk into vegas with an edge. Once it's figured out that they have an edge (yes that means they are winning more than the house wishes to pay out), the casino will kindly escort you out. They have the FULL right to refuse services to anyone for ANY reason, and sadly, that means if you win too much=goodbye as they know you have an edge.
Check out the History Channels "Do's and Don'ts in Las Vegas." Interesting show.
Again, go into any Vegas Casino with THE best money management system ever devised, and no edge, see what you come out with...
Jack Schwagger was giving a very deep thought analogy. Once a person realizes that the markets are not random nor efficient, they will NEED TO HAVE AN EDGE as NO money management system will cut the mustard without an edge... Just a slower, more painful death.
You can try...lol... Make the wrong call and patiently wait for the market not to hit your stop but turn around and hit your target.
Gee guys... timing is everything in the markets. Timing requires an edge. Money management assures you will not get a margin call even if you have the right timing and that your winnings will grow better than linearly, if you have an edge.
Friendly advice to some of you, do not risk a penny in the markets, you will lose it...
Your egde is the car, and your money management is the kind/grade of fuel you choose/develop to use for desired performance.
http://en.wikipedia.org/wiki/Automobile
"Fuel and propulsion technologies
Main article: Automobile propulsion technologies
See also: Alternative fuel vehicle
Older automobiles were generally powered by a steam engine, which was fed by burning gasoline.[18] Most automobiles in use today however are propelled by a internal combustion engine, fueled by deflagrating gasoline (also known as petrol) or diesel. Both fuels are known to cause air pollution and are also blamed for contributing to climate change and global warming.[19] Increasing costs of oil-based fuels, tightening environmental laws and restrictions on greenhouse gas emissions are propelling work on alternative power systems for automobiles. Efforts to improve or replace existing technologies include the development of hybrid vehicles, electric and hydrogen vehicles that do not release pollution into the air.
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http://en.wikipedia.org/wiki/Automobile
"Fuel and propulsion technologies
Main article: Automobile propulsion technologies
See also: Alternative fuel vehicle
Older automobiles were generally powered by a steam engine, which was fed by burning gasoline.[18] Most automobiles in use today however are propelled by a internal combustion engine, fueled by deflagrating gasoline (also known as petrol) or diesel. Both fuels are known to cause air pollution and are also blamed for contributing to climate change and global warming.[19] Increasing costs of oil-based fuels, tightening environmental laws and restrictions on greenhouse gas emissions are propelling work on alternative power systems for automobiles. Efforts to improve or replace existing technologies include the development of hybrid vehicles, electric and hydrogen vehicles that do not release pollution into the air.
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Card counting will get you thrown out. In the context of playing against the casino, it is illegal.
You'll come out with exactly what you started with, as the best money management in such a situation is to keep the money in your pocket.
0 bet size.
Not complicated at all, and you'll beat 95% of people who try trading.
What's really being dodged here is the question of what constitutes an actual trading edge - nobody in the history of ET posting has ever produced one that is actually confirmable in the same robust manner as, say, the edge gained in blackjack from card-counting. What gets declared as "edge" here is calculated in exactly the same way as a gambler in Vegas calculating trends from rolls of the crap dice.
businessstaxes
Guest
an edge is a 'competitive' advantage that your competitors don't have or competitors don't do.
HFT is a competitive advantage since most retail traders can't do HFT thing becuase of commissions and buying power etc. or have access to the servers or software.
money management isn't an edge since anyone can have money management.
HFT is a competitive advantage since most retail traders can't do HFT thing becuase of commissions and buying power etc. or have access to the servers or software.
money management isn't an edge since anyone can have money management.
Just my opinion - money management is not an edge, but position management has the possibility to be an edge. I am referring to money management as position sizing and risk capital allocation, and position management as profit targets and stop/loss targets.
I might be different than some other traders in that I lump position management into the domain of entry signal. The reason I do that is in my case I set the profit target and stop/loss level before I actually enter the trade. My position management does model as a statistical edge which increases the Win/Loss ratio in my system compared to using the exact same methodologies for entry and exit. My entries are mechanical signals but the exits are rules-based by specific design. That's the way I have arrived at doing it over the years - it may or may not be in agreement with other trader's definitions of money management.
I might be different than some other traders in that I lump position management into the domain of entry signal. The reason I do that is in my case I set the profit target and stop/loss level before I actually enter the trade. My position management does model as a statistical edge which increases the Win/Loss ratio in my system compared to using the exact same methodologies for entry and exit. My entries are mechanical signals but the exits are rules-based by specific design. That's the way I have arrived at doing it over the years - it may or may not be in agreement with other trader's definitions of money management.