Do you need a real edge trading the Bond market?

[luisHK]

The "larger players" are, as you put it, "excessively risk averse" because they know the market a lot better than you do (they've got access to better data than you do, they've got teams of staff with more combined experience than you do). They know the realities of the market and they know exactly how much risk they can take without being stupid.
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That's a thing, as mentioned by Lovethetrade above, retail/private investors don't need to avoid at all cost or be fired a drawdown of 20/30/40% and they can use riskier strategies , although it's most probably a road with far more tragedies than successes.
Lower risks/less volatile strategies make a lot of sense, but if one has enough capital or a significant extra source of income.

 

[algofy]

So maybe, I just need to change the word edge to alpha?? I actually like alpha better as I agree edge gets used to much.

 

[sle]

So maybe, I just need to change the word edge to alpha?? I actually like alpha better as I agree edge gets used to much.

Yeah, alpha is more appropriate. Or a mix of alpha and beta, if you are more of an investment type.

 

[sle]

What about if the retail trader that makes 50% per annum consistently has more "skill and knowledge" than the firm that invested heavily in obtaining a "structural edge" and only makes 20% per annum consistently. Does the retail trader have an edge?

No, this retail trader has alpha, but no edge. I am not saying that a retail-sized trader can't have an edge. For example, if you have a way to collect information that's not available to other players, it's an edge.

Knowledge and skill can be obtained by any market player and is an edge requires prohibitively high time or infrastructure investment.

 

[sle]

On the topic which I assume is corporate bonds for a retail sized guy. Fixed income is more diverse and more technical then equity. I think it's actually possible to extract alpha as a small trader, depending on your skill set, but be prepared to learn a lot of stuff.

 

[lovethetrade]

No, this retail trader has alpha, but no edge. I am not saying that a retail-sized trader can't have an edge. For example, if you have a way to collect information that's not available to other players, it's an edge.

Knowledge and skill can be obtained by any market player and is an edge requires prohibitively high time or infrastructure investment.

Well, it looks like the majority of online sources are wrong then. Better send an email and educate them as to what edge really means based on your own unreferenced, unsubstantiated definition.

 

[newwurldmn]

Well, it looks like the majority of online sources are wrong then. Better send an email and educate them as to what edge really means based on your own unreferenced, unsubstantiated definition.

Sle's definition of "edge" is what institutional traders use. Only retail traders are so insecure that they have to call their indicators and models an "edge."

 

[sle]

Well, it looks like the majority of online sources are wrong then. Better send an email and educate them as to what edge really means based on your own unreferenced, unsubstantiated definition.

My definition is consistent with anyone who has worked in the financial industry, as opposed to sources peddling bullshit online to naive general public. Those very same online sources want you to believe that making money is as easy as signing up for a seminar at the cost of $399.95

That definition of "statsical advantage due to the setup" itself comes from gambling, where the house has an edge (http://vegasclick.com/gambling/houseedge). That edge is intrinsic, you put almost anyone in the dealer seat and they will make money.

 

[lovethetrade]

Sle's definition of "edge" is what institutional traders use. Only retail traders are so insecure that they have to call their indicators and models an "edge."

Or maybe it's the other way around, "employees" of institutions are so insecure about not being able to build models or trade their own account they have to piggy back an institutions financial clout.

 

[lovethetrade]

My definition is consistent with anyone who has worked in the financial industry, as opposed to sources peddling bullshit online to naive general public. Those very same online sources want you to believe that making money is as easy as signing up for a seminar at the cost of $399.95

That definition of "statsical advantage due to the setup" itself comes from gambling, where the house has an edge (http://vegasclick.com/gambling/houseedge). That edge is intrinsic, you put almost anyone in the dealer seat and they will make money.

But you can't find one single source to back it up. No worries, we'll all take your word for it.

An edge at a casino is not the same as a trading edge.