finding an edge...simple?

On one side of the fence you have the tradestation
types who will tell you that you must spend a zillion
hours finding a mechanical system with a real edge.

On the other side of the fence, you hear traders
saying that trading is "simple", blah blah blah

I think this is a big source of frustration.

The problem is that "simple" is being used in 2 very
different contexts.

"simple" in the world of mechanical trading does
not exist, or is extremely difficult to find.

"simple" in the world of SOMP (seat of my pants) trading
does exist.

I think this is what drives many traders crazy.

"simple" in the SOMP/discretionary world is equivalent
to saying that its "simple" for a human to peak into
a room, and identify a red ball in the corner.

Now the question is.... How many traders have the
skills necessary to program a computer with a video
camera to identify a red ball in the corner???

How long do you think it would take you to develop
this "simple" system??? Its damn near IMPOSSIBLE
for most traders.

I believe the same dynamic occurs in trading.

Its EASY to program all these silly indicators, but try
and program an experienced traders "intuition" that
he/she gets from watching the markets move for YEARS.

Try programming the incredibly complex processes which
occur in the brain of a good trader when he/she
spots a price action pattern, live, on a chart.


Something to think about...

peace

axeman
 
Fruity said: "If edges are so hard to find, why can ANYONE lose money EASY?!"


Answer: Psychology/Human nature.

People are incapable of placing sums of money
in a market which whips back and forth constantly.

They panic as soon as it goes against them, and exit
every trade before it has a chance to go anywhere.


peace

axeman


 
Quote from IndexTrader:



...Problem is, MANY systems that were great in the last 6 years have recently been hit hard and blown out due to lack of follow-through.
More...

Yes, many, but not all. I suspect the problem systems are momentum and breakouts, because strength is being crushed quickly. But many long systems that exploit weakness and volatility are going great.
 
Show a chart that is going down and ask a baby what he sees, he'll say : " down? pipi, kaka... teehee... down... ?"

Show the same chart to a trader, and ask the same question, he'll say : "it's going down, however, the RSI and MACD are almost divergence... the supports are not broken yet ... stochastic is showing oversold... the 4th wave of Gann indicate differently... we gotta' have a short war... there was an article in the news stating that the economy may be good in the next quarter... Greenspan gotta keep interest rate low in this economy... I have a lot of long positions in my investing account, it could not go down further....ect..."

This is what KISS is all about.


Cheers!! :p

P.s.: by no means I am bearish nor bullish...
"Damn it Jim ! I am a trader, not an investor !"
 
finding an edge is not simple. because:

1) reluctance to share "edges" (or even methods of finding one) by successful traders
2) distraction from vendors who can't trade worth s* and make a living peddling their "keys to the safe" to you
3) the need to put in 1000s of hours of "screen time" in case of a discretionary approach
4) the need to put in 1000s of hours of backtesting in case of a mechanical approach

anyone who says finding an edge is "simple", is full of it. if it was simple there wouldnt be thousands of intelligent individuals spending years of their life trying to find it. if you found it in two weeks - good for you cause you are an ingenious exception.
 
Quote from dojibear:

Show a chart that is going down and ask a baby what he sees, he'll say : " down? pipi, kaka... teehee... down... ?"

Show the same chart to a trader, and ask the same question, he'll say : "it's going down, however, the RSI and MACD are almost divergence... the supports are broken yet ... stochastic is showing oversold... the 4th wave of Gann indicate differently... we gotta' have a short war... there was an article in the news stating that the economy may be good in the next quarter... Greenspan gotta keep interest rate low in this economy... I have a lot of long positions in my investing account, it could not go down further....ect..."

This is what KISS is all about.


P.s.: by no means I am bearish nor bullish...
"Damn it Jim ! I am a trader, not an investor !"
More...
Could not agree more - it took me 7 years to find a simple system and 1.5 years to stop using everything else I "knew" so the system could make money for me.
 
Quote from traderkay:

...anyone who says finding an edge is "simple", is full of it. if it was simple there wouldnt be thousands of intelligent individuals spending years of their life trying to find it. if you found it in two weeks - good for you cause you are an ingenious exception.
More...
I would not say finding a system is simple, but I would say from experience that once found, a simple system can make a lot of money.
 
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