Edge

[wrbtrader]

Positive expectancy is not able to work all by itself. Simply, its still dependent upon all those other key pieces of the puzzle that makes a trading plan.

Thus, a real edge involves many different variables working together and these variables may be trading related or something outside of trading that has a "positive impact" on trading in comparison to trading without it.

On a side note...the term edge was used in sports, wars, science, explorations long before the birth of Wall Street.

 

[dbphoenix]

Quote from wrbtrader:

Positive expectancy is not able to work all by itself. Simply, its still dependent upon all those other key pieces of the puzzle that makes a trading plan.

Thus, a real edge involves many different variables working together and these variables may be trading related or something outside of trading that has a "positive impact" on trading in comparison to trading without it.

On a side note...the term edge was used in sports, wars, science, explorations long before the birth of Wall Street.

Unfortunately, this sort of approach makes the whole notion of "edge" so squishy as to be useless, encouraging traders to think they have an edge just because they're devoted to CNBC (or whatever).

I'll go back to my original post: Your edge begins with the knowledge you gain through your research and testing that a particular market behavior offers a level of predictability and a profit to loss ratio that provides a consistently profitable outcome over time. Unless one has gone through this, he is essentially "pleasuring himself", so to speak.

 

[wrbtrader]

Quote from dbphoenix:

Unfortunately, this sort of approach makes the whole notion of "edge" so squishy as to be useless, encouraging traders to think they have an edge just because they're devoted to CNBC (or whatever)...

1) We both know I didn't say CNBC nor imply CNBC.

2) Edge is not useless.

3) Too many traders think it involves trade signals only. Simply, they put no effort or very little effort into developing those other variables and still can't determine why something with positive expectancy doesn't work in real money trading situations.

I'm assuming we aren't talking about automation trading.

4) Most traders don't realize the discussion of "edge" is philosophical regardless to most wanting (needing) it to be about that one thing they spent most of their efforts trying to perfect...trade Signals.

Yeah, philosophical discussions can be squishy to some. Thus, its been used for so long in so many types of situations...its origin is not Wall Street.

Quote from dbphoenix:

I'll go back to my original post: Your edge begins with the knowledge you gain through your research and testing that a particular market behavior offers a level of predictability and a profit to loss ratio that provides a consistently profitable outcome over time. Unless one has gone through this, he is essentially "pleasuring himself", so to speak.

I remember back in the day when I was trying to determine if using dial-up telephone internet connection was ok for trading or switching to the new cable connection when it first came out. My research and testing back then showed that using "cable internet" for trading purposes had a more "positive" impact on my trading in comparison to using the dial-up telephone internet connection.

It's not all about trade signals. We as traders need to understand there's other pieces to the puzzle that are just as important depending upon the trader.

P.S. I also discover back then not to pay twice the commission. It really does have impact on ones income level.

 

[dbphoenix]

Quote from wrbtrader:

edited

1) We both know I didn't say CNBC nor imply CNBC.

2) Edge is not useless.

3) Too many traders think it involves trade signals only. Simply, they put no effort or very little effort into developing those other variables and still can't determine why something with positive expectancy doesn't work in real money trading situations.

4) Most traders don't realize the discussion of "edge" is philosophical regardless to most wanting (needing) it to be about that one thing they spent most of their efforts trying to perfect...trade Signals.

I didn't say that edge was useless. I said that defining it vaguely and generally rendered it useless. There's nothing vague or general about it.

And, yes, it does involve trade signals only. If it doesn't work in real money trading situations, then the testing was inadequate. Involving a lot of extraneous considerations merely clouds the issue and encourages the trader to believe he has an edge when he doesn't. The development of an edge is statistical, not philosophical.

 

[kut2k2]

Quote from wrbtrader:

1) We both know I didn't say CNBC nor imply CNBC.

2) Edge is not useless.

3) Too many traders think it involves trade signals only. Simply, they put no effort or very little effort into developing those other variables and still can't determine why something with positive expectancy doesn't work in real money trading situations.

I'm assuming we aren't talking about automation trading.

4) Most traders don't realize the discussion of "edge" is philosophical regardless to most wanting (needing) it to be about that one thing they spent most of their efforts trying to perfect...trade Signals.

Yeah, philosophical discussions can be squishy to some. Thus, its been used for so long in so many types of situations...its origin is not Wall Street.



I remember back in the day when I was trying to determine if using dial-up telephone internet connection was ok for trading or switching to the new cable connection when it first came out. My research and testing back then showed that using "cable internet" for trading purposes had a more "positive" impact on my trading in comparison to using the dial-up telephone internet connection.

It's not all about trade signals. We as traders need to understand there's other pieces to the puzzle that are just as important depending upon the trader.

P.S. I also discover back then not to pay twice the commission. It really does have impact on ones income level.

The number one determinant for trading success (aka long-term profitability) is a trading plan with consistent positive expectation. Without that you got nothing. Yes, lowering commissions will save you some money but it won't make you profitable.

The whole point of trading is to make money, not just prevent losing money. If the latter is your main concern, just put your money in your mattress. Zero commissions there.

 

[dbphoenix]

Quote from kut2k2:

The number one determinant for trading success (aka long-term profitability) is a trading plan with consistent positive expectation. Without that you got nothing. Yes, lowering commissions will save you some money but it won't make you profitable.

The whole point of trading is to make money, not just prevent losing money. If the latter is your main concern, just put your money in your mattress. Zero commissions there.

Fifteen years ago, there were an awful lot of "traders" who believed that discount brokers, charting software, and real-time streaming quotes were an edge. And an awful lot of traders still believe that. And yet the vast majority of traders continue to fail.

The integrity of a trading plan has nothing to do with how it is activated. If one has an excellent trading plan that focuses on the 1m bar interval, it will become clear to the trader that he must be able to access his broker quickly and efficiently, e.g., with an internet connection, not dial-up. But if for whatever reason he can't, that doesn't mean that the plan is crap. It means only that he must use the necessary tools. The tools themselves, however, do not provide the edge; the plan does. With the right plan, he can use jungle drums to transmit his order and he'll still be successful.

 

[kut2k2]

Quote from dbphoenix:

I didn't say that edge was useless. I said that defining it vaguely and generally rendered it useless. There's nothing vague or general about it.

And, yes, it does involve trade signals only. If it doesn't work in real money trading situations, then the testing was inadequate. Involving a lot of extraneous considerations merely clouds the issue and encourages the trader to believe he has an edge when he doesn't. The development of an edge is statistical, not philosophical.

Excellent.

Quote from dbphoenix:

Fifteen years ago, there were an awful lot of "traders" who believed that discount brokers, charting software, and real-time streaming quotes were an edge. And an awful lot of traders still believe that. And yet the vast majority of traders continue to fail.

The integrity of a trading plan has nothing to do with how it is activated. If one has an excellent trading plan that focuses on the 1m bar interval, it will become clear to the trader that he must be able to access his broker quickly and efficiently, e.g., with an internet connection, not dial-up. But if for whatever reason he can't, that doesn't mean that the plan is crap. It means only that he must use the necessary tools. The tools themselves, however, do not provide the edge; the plan does. With the right plan, he can use jungle drums to transmit his order and he'll still be successful.

More excellence.

 

[tradingjournals]

Quote from dbphoenix:



The integrity of a trading plan has nothing to do with how it is activated. If one has an excellent trading plan that focuses on the 1m bar interval, it will become clear to the trader that he must be able to access his broker quickly and efficiently, e.g., with an internet connection, not dial-up. But if for whatever reason he can't, that doesn't mean that the plan is crap. It means only that he must use the necessary tools. The tools themselves, however, do not provide the edge; the plan does. With the right plan, he can use jungle drums to transmit his order and he'll still be successful.

A plan does not do it either: when something is necessary, it does not mean it is sufficient, even if it is written.

 

[wrbtrader]

Quote from kut2k2:

The number one determinant for trading success (aka long-term profitability) is a trading plan with consistent positive expectation. Without that you got nothing. Yes, lowering commissions will save you some money but it won't make you profitable.

The whole point of trading is to make money, not just prevent losing money. If the latter is your main concern, just put your money in your mattress. Zero commissions there.

Maybe we're talking about the same thing.

I have about 10 important variables in my trading plan and a trade signal is just one of them. Simply, trade signals are just one chapter in a book regardless to its location in the book.

A good trade signal can not compensate for a poor trading plan.

Quote from dbphoenix:

...And, yes, it does involve trade signals only. If it doesn't work in real money trading situations, then the testing was inadequate. Involving a lot of extraneous considerations merely clouds the issue and encourages the trader to believe he has an edge when he doesn't. The development of an edge is statistical, not philosophical.

I strongly disagree that an "edge" only should involve trade signals.

You give me a trader with trade signals that show positive expectancy in their backtesting and then ignores discipline, money management, proper capitalization, proper position size management, proper stress management, adequate computer, adequate ISP connection, poor commission rates and so on...

You're going to see a losing trader because all the other pieces in their trading plan weren't adequate or ignored in real trading.

A good trade signal can not compensate for a poor trading plan.

I have support about the above from the countless of trade journals here at Elitetrader.com and across many other trading forums where traders posted positive back tested results with programmers chiming in to say this is "good work".

Then the trader starts live (real money) trading their so called positive expectancy method and it mysteriously doesn't make money. You know the drill and have seen these journals. Oh well, back to the drawing board. Gotta re-design those trade signals because its the only thing that matters while ignoring every thing else.

Maybe the issue is the word "edge" consider its origins and use is used in many different situations like sports, wars, exploration, social media and others.

Therefore, maybe there should be an independent thread that talks about "edge" because it really a philosophical discussion and a separate thread about "positive expectancy" that deals exclusively with trade signals and not anything else...

Makes sense to me.

 

[Redneck]

Quote from Yukoner:

Reading through 200 plus pages of another thread on edge, which quickly turned into something else, wasn't what I wanted to reply to... So here is the start of ways we can gain EDGE as traders.

We all have the possibility of an edge, because the one thing we can control is ourselves.
Here are some fast examples that will give you an edge over other traders.

1) only take trades were you expect to make 3 times your risk (helps create positive expectancy)

2) only trade when you have had a normal nights sleep (8hrs for most of us, we take on more risk when we are tired)

3) only risk 1% of your account balance on any single trade (makes for fairly boring safe trading)

4) only trade a system that is robust and will work in all time frames and all markets (this helps stop you from using TA to fit the market to your bias)

5) limit your trading hours to only trade your peak performance time (imagine the problem if a pro quarterback was trying to play three games a day, 5 days a week)

6) take lots of breaks away from the market to recharge your mind and body (something prop traders can't do, as they are expected to show up every day)

Anyone of those 6 are factors that any trader can control, and those factors will give you an edge... And there is plenty more out there that can be done.

Edges exist!

Good Trades,
Yukoner

Yes Sir, they do...

Unfortunately your list is not it.. or them

And unless you're strictly trading fundies and / or news - or some BSD who doesn't care - discounting TA is plum crazy


RN