"Edge Challenge" - prove us wrong!!

Yeah great

Look the idea that edge matters is funny. It is funny because it is both true and false. You see most of you folks are better off as long term investors rather than traders. Problem is the intraday markets need your cash to keep the beast alive. So we talk about edge as if you understood it.

Opinion

You have to have stationarity to have an edge

Reason

Because when a market exhibits "stationarity" if you have a rule set that has an edge, it will be repeatable on into the future unless there is a fundamental change in the market or the participants. So how many of you have THAT KIND OF RULE SET?
I guarantee you we aren't going to see one published in this thread.

FACT

Markets cycle back and forth, exhibiting stationarity and then exhibiting random or pseudo random behavior. When you trade in a market that is exhibiting random behavior your chances of making money are "random" (pure chance).

This is why the systems that some of you folks buy from developer NEVER work as advertised. They always degrade because the developer did not understand about stationarity OR he did not have a solution to the problem....get it.

So what does he do, weeeelll he just keeps upgrading and improving it and charging you more for each iteration of that system. Never solves the problem but gives you fresh hope and the developer a continuing source of income.....

Here is another reference book that MIGHT help if you have time enought to read and think abou the problem.

Mathematics of Technical Analysis by Clifford Sherry published by "ToExcel"

So I guess my final comment is "so few of you actually have an edge, and the majority who think they have one, would find that as they trade, it aint so, (and it never was)...Their edge didn't just disappear, it was never really there to begin with"

I'm going to go get some dinner.


Good luck
Steve
 
Thats a good post Steve.

To get more information on stationarity and various exercises to understand when the market may display "stationarity" can be found in Lefty62151 posts. Here are a few that I think are great:

http://elitetrader.com/vb/showthread.php?s=&postid=608560&highlight=stationarity#post608560

http://elitetrader.com/vb/showthread.php?s=&postid=610221&highlight=stationarity#post610221

The basic premises is that while a system can be profitable if it runs on both stationary and random series (where the pattern loses less in a random market than the profits made when it exploits such a window), blockbuster profits can be made if you can figure out a way to find where these temporal windows may exist.

These windows can be structural or participant caused. Take a look at the second link I posted above for a technique to see this market cycle.

The probability of a pattern being non-random is much greater when it is located in a stationary series than one that is random. The goal of profitable systems is to identify patterns which make more profits during these temporary windows than they lose when markets are random (while theoretically one may have 0 EV, due to market friction it becomes a negative one).

There have been postings made on ET regarding testing and defining edges by great posters. Just use the Search button.
 
I like to get IPOs at the IPO offering price from Investment banks and flip them out on the first print. That's my edge. My secret is out, now let's try your experiment. All of ET should try it and let's see if it stops working. Ready? Go..
 
Quote from gnome:

The ONLY thing that works [continually] is being good at evaluating developments "on the fly".
More...

I tend to agree.

Those "market template" type edges usually always fail eventually, given that markets will naturally adjust away from readily repeating patterns. To assume one is quick enough to adapt and keep up with changes in a "pattern" as it evolves over time -- well, that type of trader would be the kind that doesn't think in terms of templates, at least not in the traditional sense. This is the main difference between a trader of "coincidental" setups vs a trader understanding the market impetus behind that setup.
 
EUR Futs - when choppy/sideways (no trend evident), volume spikes tend to indicate the reversal of the most recent move. This occurs do to stops triggered and/or breakout/down traders buying highs and selling lows of a range bound trade.

The trick, as is with ALL trading methods, is to know WHEN to use your indicators and when to stay out of the market.

I highly recommend against buying indicators or strategies from seminar speakers. Put the time and effort in yourself, spend a couple of years, make your own mistakes, and look to successful traders for advice to help you through the hurdles of your learning curve. If you have the opportunity... watch successful traders trade. Not for their strategy, but to understand the thought process and focus that veteran traders posses.

Good trading.
 
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