Has anyone lost their edge/system b/c too many people knew?

spindr0 · Mar 22, 2009

Quote from Z.O.G.:

Jack Hershey?

And now you're posting pictures of me on the internet???

I hope you find stretch marks on your honeymoon

Pekelo · Mar 22, 2009

Quote from spindr0:

Isn't that more of a self fulfilling prophecy where you just have more peeps chasing the same pattern?

As long as it works, who cares???

Pekelo · Mar 22, 2009

Quote from Specterx:

This isn't so. Just think about it: as more people crowd into the trade and try to get long on the same signal, the bounce becomes sharper and the divergence becomes less pronounced.

1. Then how come that this strategy still works after decades?

2. Not everybody uses it thus just because lots of people have the same opinion and get long, lots of others can have the opposite opinion based on something else thus they get short.

3. Even if your scenario worked, after the strategy stops working because what you just described, people would abandone it, thus it should start to work again.

(we could say it is cyclical)

Specterx · Mar 22, 2009

Quote from Pekelo:

1. Then how come that this strategy still works after decades?

2. Not everybody uses it thus just because lots of people have the same opinion and get long, lots of others can have the opposite opinion based on something else thus they get short.

3. Even if your scenario worked, after the strategy stops working because what you just described, people would abandone it, thus it should start to work again.
(we could say it is cyclical)

I don't know from my own experience that DB with MACD divergence is an edge, but I'll take your word for it

Your points 2 and 3, I think, show why many edges are fleeting, why they undergo "drift," and that ultimately they are "edges" because only a limited number of market participants recognize them. It's always in every edge-holder's financial interest to keep that information to themselves, even if revealing an edge on an ET thread might not be enough to have any real effect.

Pekelo · Mar 22, 2009

Quote from Specterx:

I don't know from my own experience that DB with MACD divergence is an edge, but I'll take your word for it

RSI, not MACD, and you don't have to.

Just take a look at Friday's 5 mins chart. Beautiful DB at 2:10 and 2:40 with HUGE RSI divergence, ended up in an almost 10 ES pts rally....

slapshot · Mar 23, 2009

Quote from Pekelo:

I don't think anybody has mentioned yet but giving away an edge can actually strengthen the idea.

Let's say double bottom with RSI divergence. The more people use it to go long, the better it works. So it is a fallacy to think that more people using the same strategy automaticly destroys it...

Exactly

TraDaToR · Mar 23, 2009

Quote from Z.O.G.:

Holy crap. Where does that Jack Hershey guy find the time to write those book-length responses? Does anybody actually read all that stuff? :eek:

You are missing his point.

Edges are infered by traders, known as physical entities using their brain function to co-interact with markets in the form of impulses, thus creating velocity. Velocity along with S.C.T, B.S, C.R.A.P and R.O.T.F.L provide an answer to the granular network of the universe, the planet cycles, the terrian markets and the corriolis force when you flush your toilets. By admitting this idea in the whole information theory, you acknowledge that edges are infered by traders, and traders by edges, which will OFFSET each other by their acts. True.

NoDoji · Mar 23, 2009

Quote from TraDaToR:

and the corriolis force when you flush your toilets.

Thank you for finally clarifying why a trader's money goes down the toilet in the opposite direction when trading from south of the equator.

volente_00 · Mar 23, 2009

Quote from Pekelo:

I don't think anybody has mentioned yet but giving away an edge can actually strengthen the idea.

Let's say double bottom with RSI divergence. The more people use it to go long, the better it works. So it is a fallacy to think that more people using the same strategy automaticly destroys it...

You can give 10 people your strategy and you still end up with 10 different outcomes when THEY trade it compared to your results. Ever study the turtles ?

trader#21 · Mar 23, 2009

For trend following systems I guess it's easier to have followers. There's a guy who trades very well India's Nifty (http://tradersaint.com/ and his SAR levels are being used by tipsters and brokers from last two years, apart from updating them live on a public forum. No trouble yet to his trading.