Finding an Edge

Alfing said:
I watched a NT video about Order Flow indicators and another video how a guy made trades using a combination of Order Flow and supply&demand levels. Can you PM? I have a few questions.
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Questions are for here. If I am going to share any information, its for all.
 
padutrader said:
yep find the trend.....do not be in a hurry to enter when you do find it.....because the best is saved for the end....the fastest moves occur late in the trend when everyone is sure about the trend.

i used to enter early and then had to sit for a long time because the early part of the trend is the most uncertain, and most times would close before the real trend starts.

also be aware that this will give the worst risk reward but i would not worry too much about that.
i never used tight stops because you can never buy the bottom or sell the top exactly time after time after time so tight stops are senseless.
ALSO BE AWARE THAT THE MARKET DOES NOT TURN ON A DIME...but it takes time to turn around, so just look out for when the market is taking a lot of time to move in one direction so that you will know it will turn and then just sit out till it turns around and forms a well defined trend so that THEN you can enter.

before it forms this well defined trend it will chop around till it finishes off all those traders - both long and short- who are trying to get in early in the trend with tight stops.......

concentrate on the simple stuff....not esoteric theories like demark elliot gann or complicated algorithms
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There you go. The answer to scalp trading. Padu has outlined the process I understand so well. the market dangles "carrots" to lure the aggressive (greedy) traders the wrong way (fade) and then they move in towards the real market price. So, first you see as they (the big boys) want you (the retail trader) to see and then the market moves according to actual market mechanics.
I trade from 10;30 - 3:30 est. I find the edges of the day less stable than the terribly unstable day. Also applies to intraday trends.
Effective scalping is about picking a spot in and out, before you enter. So I set a bracket. How many tics do I want and how many tics will I risk. That's and individual choice called risk tolerance. Trade at 1, 2, 0r 3 tics profit and say 3 loss, and see how you do on demo. Does any method produce + results. Even losing in all three scenarios may produce a small thought for investigation.
Padu's post, to me, is the one you needed to hear. It's a path close to mine and others i have seen grown from no profit to some profit. Excluding myself, these guys all have track records of being hard working, smart, successful, and even tempered. Those qualities help everywhere.

most important concept in scalp trading, to me, is padu's claim, "ALSO BE AWARE THAT THE MARKET DOES NOT TURN ON A DIME. I do not beware that priciple, I embrace it. Find me a market that rapidly moving in either direction and I will jump on and jump off ASAP. Sometimes, a single tic in less than a second. recently had a day, 6 for 6, training my sons friend. All single tic trades. the average trade time was 39 seconds for all 6 trades. Longest one was not long, 98 seconds. Cannot lose capital while on the sidelines. being in the S and P, you biggest risk is just being in, subject to high volatility.
So, 3.5 years, 10,000 trades, 10,000 study hours and a no quit attitude has gotten me this far. I am pleased with my progress. Going to try scaling in January. Hard results makes unclear statements so much clearer. Anyone skeptic is challenged to reproduce my results. $58 bucks, Jason's end, 1k in margin, been trading live 8 days only with 2 weeks demo practice. I think he is going to do well. Hope the same for you.
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digitalnomad said:
This whole “reading price action” thing is a fallacy. Don’t buy into it, or you’ll go broke.

You make money by numerically measuring price moves within a structured model. Only then can you have the confidence to push leverage, and know what should, or shouldn’t happen. No need for complex theories, but you need to be some form of a quant.
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I'm not sure if I agree. price action and order flow equals
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tommcginnis said:
Certainly, there are many traders who fail (maybe *most* traders who fail??) at doing the proper analysis, but it's extremely *easy* to do a workable walk-forward analysis of a rules-based trading regime. (And perhaps that's where I lost the context here?). You make a lot of insightful posts, dn -- I'm betting I missed something here -- so Sorry! in advance.....:rolleyes:
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I’ll try to expand. For a black box strategy, it would indeed be easy, but I’ve yet to discover one with a sustainable life cycle. I assumed everyone here would assume that. Not saying it doesn’t exist though. It’s a big world out there.

Personally, I’ve found gray box strategies provide the most robust solution. It limits the degrees of freedom to specific inputs, and allows you to focus on the quant analysis and execution. A white box can work, with more work, but can lead you down a slippery slope of tweaking the script into a universe of clusterfuck, not to mention a curve fitting nightmare.

That said, I hope you realize how difficult it is to run efficient walk-forward analysis with the latter approaches, as they require periodical parameter adjustments. Add in context, news, AI, none of which I can, or want to manage, and it becomes obvious that a team effort is required.

I work very hard to keep up with my gray box strategies, but my analysis is very multi-layered and expansive, with the idea that I never end up with a dry well. Not fun, or exciting anymore. Just routine and boring.
 
digitalnomad said:
I’ll try to expand. For a black box strategy, it would indeed be easy, but I’ve yet to discover one with a sustainable life cycle. I assumed everyone here would assume that. Not saying it doesn’t exist though. It’s a big world out there.

Personally, I’ve found gray box strategies provide the most robust solution. It limits the degrees of freedom to specific inputs, and allows you to focus on the quant analysis and execution. A white box can work, with more work, but can lead you down a slippery slope of tweaking the script into a universe of clusterfuck, not to mention a curve fitting nightmare.

That said, I hope you realize how difficult it is to run efficient walk-forward analysis with the latter approaches, as they require periodical parameter adjustments. Add in context, news, AI, none of which I can, or want to manage, and it becomes obvious that a team effort is required.

I work very hard to keep up with my gray box strategies, but my analysis is very multi-layered and expansive, with the idea that I never end up with a dry well. Not fun, or exciting anymore. Just routine and boring.
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Black box, gray box, white... way past me...quick explain pls.
 
Alfing said:
Many are saying that finding an edge is crucial in becoming a profitable trader. What are some important steps and stages in finding an edge? If you have an edge, what advice would you give those who are still looking?
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The only true edge in trading is utilization of prudent risk management. There is no other edge period.
 
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