Do you need to understand where the edge comes from?
- Thread starter qlai
- Start date
You've dug a deep enough hole.
It's probably time for a good old fashion ad hominem attack, but I'll ignore it.
If > 70% of the time, when a TA does X in bar 1 and price does Y in bar 2, it's a leading indicator. No precise predictors available.
There is no leading indicator, not even Price, TA represents the past but so does charting, but tests base on history and out of sample back testing either shows high/low probabilities of possibilities for the future. You can have a 99.99% probability of price going to do "X", and if it doesn't, "Y" is produced.
We make predictions on every single trade.
"1) Find a trade that you believe will have a positive expectancy
2) Don't listen to what @Buy1Sell2 is saying
3) Manage your risk based on already documented and public theories."
Any trade that I hedge has positive expectancy, that is not to say I won't have losses, there is nothing in mankind, with exception of death, that is 100%. In 2010, I changed my style of trading to Risk Management first and profits second, it has made my equity curve much more stable, more stable means more size and confidence. Where I once would disagree with B1S2, I now agree. Why would anyone want to manage risk with the masses? This makes no sense to me at all, find a different way than the masses.
People don't know expectancy of their trades as risk management is not much of an important part of their methods, until it is to late. It is similar to studying dozens of systems that under funded traders would be doing to know where they place there protective stops, so when volume forces price in that direction to trigger stops, that is the time to hop on board. When under funded see the market going in their intended direction, it is generally too late to be getting in, but they help push market to go further and volume be going other way. LOL
Longer I stay in trading, I find where I get in means less, rules in place base on time management and options(risk Mgt). Good entries are a fluke, profits have an unknown, risk is controlled to fair degree.
To those who don't know how to program so you can back test, hire someone, as markets become more and more professional, more automated, going to be tougher for under funded traders. Have to know the stats, otherwise be like song "Dust in the Wind".
We make predictions on every single trade.
"1) Find a trade that you believe will have a positive expectancy
2) Don't listen to what @Buy1Sell2 is saying
3) Manage your risk based on already documented and public theories."
Any trade that I hedge has positive expectancy, that is not to say I won't have losses, there is nothing in mankind, with exception of death, that is 100%. In 2010, I changed my style of trading to Risk Management first and profits second, it has made my equity curve much more stable, more stable means more size and confidence. Where I once would disagree with B1S2, I now agree. Why would anyone want to manage risk with the masses? This makes no sense to me at all, find a different way than the masses.
People don't know expectancy of their trades as risk management is not much of an important part of their methods, until it is to late. It is similar to studying dozens of systems that under funded traders would be doing to know where they place there protective stops, so when volume forces price in that direction to trigger stops, that is the time to hop on board. When under funded see the market going in their intended direction, it is generally too late to be getting in, but they help push market to go further and volume be going other way. LOL
Longer I stay in trading, I find where I get in means less, rules in place base on time management and options(risk Mgt). Good entries are a fluke, profits have an unknown, risk is controlled to fair degree.
To those who don't know how to program so you can back test, hire someone, as markets become more and more professional, more automated, going to be tougher for under funded traders. Have to know the stats, otherwise be like song "Dust in the Wind".
These people are the people who first make money and lose it all because they stay in too long. Why? Because of the reasons @sle explained. The perfect example is Bitcoin. All clueless people first made (maybe) some money, and stayed in when the bitcoin crashed, and finally lost money.
If you don't understand what you do, you don't understand when to get out too.
I agree with everything you said. But they don't have a strategy or edge, they have a belief. They are basically a cult member.
The question was about an edge or strategy...
This is basic glossary you don't understand.
Think about why "leading indicator" is not a repetitive redundancy.
Look up the rest of the family: coincident indicator + lagging indicator.
You'll thank me later.
I'm not knowledgable on DSP nor have an informed opinion on it's efficacy or non-efficacy. Would the following be a good resource to get acquainted with the subject?
http://www.dspguide.com/filtexam.htm
To say that all market models are wrong is a conclusion based on an incomplete dataset or it's one's way of saying the 'map is not the territory.'
I'm not knowledgable on DSP nor have an informed opinion on it's efficacy or non-efficacy. Would the following be a good resource to get acquainted with the subject?
http://www.dspguide.com/filtexam.htm
To say that all market models are wrong is a conclusion based on an incomplete dataset or it's one's way of saying the 'map is not the territory.'
That whole guide is an excellent introduction to DSP. All models are wrong because they don't capture enough of the complexity of the underlying process. Random walk with all of it's known problems, is still probably the best description of how prices evolve through time.
Even guys with Nobel prizes in Economics can't adequately account for the skew and kurtosis that develops in price and return distributions. Looking at you LTCM. Taleb is difficult to digest, but I like his alternative thinking.
You don't need a Nobel Prize in economics to understand price behavior or learn how to trade from that knowledge but you do need to learn just that...and that is a whole another skill set. Random Walk and many posts of gaseous emissions on this site speak to that lack of understanding.