I think that you're parsing the concept a bit but I won't argue the point. Of course you need the underlyings to move so I suppose that's directional. But you'd be surprised at how much a pair can sometimes percolate intraday as the spread b/t the two underlyings narrows and widens, enabling bias shifts and repeated substitution of players.
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Edge types, efficiency, etc
- Thread starter New2thegame
- Start date
I've gotta say, this concisely sums up my experience in finding an edge... and it took me nearly 5 years to find it.Quote from tradeshark:
I have said this many times over the years - you can turn the simplest technique into a profitable trading system if you take the time to fully understand how to use it, when to use it, what to use it on. Then you have to learn proper trade and money management techniques and get experience with your system. Then you could have your edge.
There are no short cuts - takes most day traders 1-3 years of hard full time work to become consistently profitable.
edges are mostly random. pure price action is the key
robert hoffman teches pure price action and makes thousands
guy from electroniclocal makes also thousands from order flow
there is a new guy promoting spread correlation trading spreadprofessor.com. it is highly questionable. correlation does not imply causation. if he was that good why are his charts unreadable?
we are on the verge of a 30 year ice age, yet people tell us the earth is warming. don't be naïve
robert hoffman teches pure price action and makes thousands
guy from electroniclocal makes also thousands from order flow
there is a new guy promoting spread correlation trading spreadprofessor.com. it is highly questionable. correlation does not imply causation. if he was that good why are his charts unreadable?
we are on the verge of a 30 year ice age, yet people tell us the earth is warming. don't be naïve
The common that edges are random, does this mean your stance is that any patterns that tend to recur likely will come and go and aren't as likely to be useful as price action? Just trying to clarify.
Silly question, but as much as I think I may know what it means, I want to be sure: What exactly does the term price action imply? Can you give me some examples of what it is or isn't?
I do understand that it isn't watching indicators, but I'm not clear as to whether it precludes the use of charts. Is it more related to order flow? Is it intuitive/subjective or is it pattern-based at all?
Thanks.
Silly question, but as much as I think I may know what it means, I want to be sure: What exactly does the term price action imply? Can you give me some examples of what it is or isn't?
I do understand that it isn't watching indicators, but I'm not clear as to whether it precludes the use of charts. Is it more related to order flow? Is it intuitive/subjective or is it pattern-based at all?
Thanks.
Quote from failed_trad3r:
edges are mostly random. pure price action is the key
robert hoffman teches pure price action and makes thousands
guy from electroniclocal makes also thousands from order flow
there is a new guy promoting spread correlation trading spreadprofessor.com. it is highly questionable. correlation does not imply causation. if he was that good why are his charts unreadable?
we are on the verge of a 30 year ice age, yet people tell us the earth is warming. don't be naïve
Not a bad idea. I'm not a Zen guy, but perhaps you will find these words by Ch'ing-Yuan to be thought-provoking:Quote from New2thegame:
...I'll try to focus on the simple things more to see if I can take them to profitability. Seems likely those simpler things have a better chance at being robust anyway...
"Before I had studied Zen for thirty years, I saw mountains as mountains, and waters as waters. When I arrived at a more intimate knowledge, I came to the point where I saw that mountains are not mountains, and waters are not waters. But now that I have got its very substance I am at rest. For it's just that I see mountains once again as mountains, and waters once again as waters."
It's interesting that you bring that up because I've heard traders discuss something similar before. However, the reference was to a teapot instead of mountains. Same gist though... A little mystical for my taste, but interesting nonetheless. I guess the message is you start simple, get lost somewhere along the way, but then end simple again. I can definitely see this in trading. You start off just gazing at charts seeing fortunes, you get into indicators, all the bells and whistles, making it more complicated than it needs to be, ultimately settling for something much less than that.
Quote from Gabfly1:
Not a bad idea. I'm not a Zen guy, but perhaps you will find these words by Ch'ing-Yuan to be thought-provoking:
"Before I had studied Zen for thirty years, I saw mountains as mountains, and waters as waters. When I arrived at a more intimate knowledge, I came to the point where I saw that mountains are not mountains, and waters are not waters. But now that I have got its very substance I am at rest. For it's just that I see mountains once again as mountains, and waters once again as waters."
I both agree and disagree on this point. I agree in that after I finally became profitable (in hindsight), my methodology is pretty darned simple (from a 50,000 foot level). But, the devil is in the details. Optimization of my strategy was extremely difficult. Understanding exactly how to place my stops. Understanding how to enter into and exit out of positions and how to properly size positions (based on estimated slippage, etc...). Execution of my strategy (to ensure maximum profit) is EXTREMELY difficult to do with perfection day-in/day-out.
I'm automated---so this greatly simplifies things for me. But, even in writing my automated trading system, the complexities involved in getting it as perfect as can be were mind-boggling. All the way from outages, partial fills, broker problems, data provider problems, co-location facility problems and the list goes on and on and on.......
Simple strategy---Yes. But INSANELY difficult to execute with perfection!!!!!
I'm automated---so this greatly simplifies things for me. But, even in writing my automated trading system, the complexities involved in getting it as perfect as can be were mind-boggling. All the way from outages, partial fills, broker problems, data provider problems, co-location facility problems and the list goes on and on and on.......
Simple strategy---Yes. But INSANELY difficult to execute with perfection!!!!!
Quote from New2thegame:
It's interesting that you bring that up because I've heard traders discuss something similar before. However, the reference was to a teapot instead of mountains. Same gist though... A little mystical for my taste, but interesting nonetheless. I guess the message is you start simple, get lost somewhere along the way, but then end simple again. I can definitely see this in trading. You start off just gazing at charts seeing fortunes, you get into indicators, all the bells and whistles, making it more complicated than it needs to be, ultimately settling for something much less than that.
Quote from spindr0:
I have no clue about the future so I do over/under valued pairs trading on illiquid stocks (realtively moderate potential loss since one side hedges the other). I suppose it's a reversion to the mean concept.
The idea is to try to capture some of the spread b/t the two. Where it gets interesting is with a group that correlates so that you can swap in substitutes for winners. IOW, if both legs rise, take the profit on the long leg and replace with a new long leg. Conversely, if the pair moves down, cover the short leg and replace it with another short. As a result, you're always booking gains which the market can't take away - as opposed to cutting a losing leg and holding the winning leg, which a gap will clobber. Gains doesn't mean profits. You need the spread to narrow or one side to reverse.
I shift my bias intraday (more long than short or vice versa) but I get close to balancing out for overnight since one never knows what the morning will bring.
There are so many ways to make money in the market. This one worked beyond belief when the market was melting down from late '07 to mid '09 - it has moderated considerably since.
I have a similar approach using futures so i understand where you are coming from-the market must pay you and it becomes money/position mangement. I also ,like you,bias towards the trend or unwind if i see weakness/strength coming in.
I also have similar problems if i am biased the wrong way at a given time but there are ways to deal with this.
This type of approach could be divulged to others with no risk of destroying your perceived edge.And of course no 2 traders would trade the same way.
I admire traders who take a view one way and back it for large swings but i admit i wouldn't be able to sleep at night.
You gravitate to what you feel comfortable with-in trading and life in general.
Good thread going here.Maybe ET is better this year,seems to be far less trolls and spammers in general.. thanks to OP for somehow getting a thread going on a subject that's been done many times in the past but somehow seems fresh....
Quote from intradaybill:
No, no, you are flat wrong and a victim of misinformation mechanisms activated by those losers to confuse people about the nature of their acts. The reason they failed was BAD MONEY MANAGEMENT and excessive risk. They blamed it on randomness for obvious reasons. Randomness cannot destroy anyone overnight or in such a short period of time like some of those losers you mentioned unless one is leveraged to the roof. Their accounts were not depleted slowly because of consecutive losers. It just happened that they lost it all instantenuously more or less. That is an act of foolishness, not because of getting fooled by randomness. There is nothing random about this world will live in. Everything has an antecedant, proximate cause. Unless you believe in magic. I don't. My mon never read to me magic books to fall to sleep.
Great post.. on several levels