Do you have a EDGE over the market?

trendmomentum · Jul 21, 2005

... and it didn't take long .... the fateful boasting fit .... and this unsuccesfuly concludes this thread.

ElCubano · Jul 21, 2005

you guys dont litsen to me....but the only edge is in the otcbb....while the edge may not be able to handle a huge amount of money it will most definitely crank out a good living....peace

resurrector · Jul 21, 2005

i guess in simplicity, he is trying to ask is it mathematically possible to increase the probablities of tossing a coin between head and tail from 0.50/0.50 to 0.51/0.49.

nononsense · Jul 21, 2005

Quote from resurrector:

i guess in simplicity, he is trying to ask is it mathematically possible to increase the probablities of tossing a coin between head and tail from 0.50/0.50 to 0.51/0.49.

You can by vigorously rubbing with the appropriate rabbit's foot.

benysl · Jul 21, 2005

Quote from resurrector:

i guess in simplicity, he is trying to ask is it mathematically possible to increase the probablities of tossing a coin between head and tail from 0.50/0.50 to 0.51/0.49.

you read my mind, in coin toss enviroment it is not possible and not that I know of.

But in trading environment there is a MATHS edge,
I am not talking about TRADER edge (backtest, forward test, MA stochastic etc etc)
Assuming market at Random, can you improve your MATHS edge?

that is what I am asking. I have a way just want to hear some view.

Dantheman · Jul 21, 2005

i would be interested in hearing the general principles of your method bensyl.

i'm not asking you to divulge details, but the general assumptions or postulations.

cause i can't think of how you would go about doing what you say you can do.

illiquid · Jul 21, 2005

Quote from benysl:

I am not talking about TRADER edge (backtest, forward test, MA stochastic etc etc)
Assuming market at Random, can you improve your MATHS edge?

You might want to take another look into what you believe is 'edge' in the first place if you truly believe in the above, before you get all the quants stiff rubbing against each other.

sunnyskies · Jul 21, 2005

Yea, basically as you try to increase your average win size to average loss ratio, there is a tendency to bring your win % down to eliminate the edge we're trying to achieve. I call it "edge elemination tendency". So what we do as traders is we try to find situations where we can have outsized gains, yet win % is not reduced proportionately or have outsized win %, yet sizes of wins are not reduced proportionately.

Like we're trying to have 50% wins AND having wins twice as big as losers. That's an edge. That's not random. That cannot be random.

For me a more interesting question is: what is the most efficient way of finding such "setups"? One way was described by PetaDola. There's probably others.

Remiraz · Jul 21, 2005

Quote from benysl:

Someone posted this

*****************************
How to win with 30% accuracy:

Expectation = (Win% x WinSize) - (Lose% - LoseSize)

E = (30% x $1000) - (70% x $300)
E = (0.3 x $1000) - (0.7 x $300)
E = $90
*****************************

From Maths view the above is not VALID

What the scenario describes is a system that wins $1000 30% of the time and $300 70% of the time, which is shown by Expectancy to have an edge.

The above is valid according to the laws of mathematics. I'll like to see you explain why it isn't. (Whether is it possible for you or not is another point altogether)

Quote from benysl:

haha not a hard time trading. I have a couple of system running on that is my traders edge that I have. Now that I discover how I can improve the maths edge, I am trading live over the next 2 weeks to see if the maths edge has a advantage for me.

An edge is an edge is an edge. There is no difference.

Discovering how to create an edge using any methods is the ultimate goal of all traders and finance mathematicians.

Here read these:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=52147

http://www.elitetrader.com/vb/showthread.php?s=&threadid=52417

Remiraz · Jul 21, 2005

Quote from trendmomentum:

... and it didn't take long .... the fateful boasting fit .... and this unsuccesfuly concludes this thread.

lol, most thread starters always *had* to say they're successfully trading although I have no idea why as it has nothing to do with the thread itself. to add credibility to their posts maybe?