hmm.no edges in the markets
- Thread starter chimera
- Start date
I don't question that psychological aspect is critical, it's not an edge. An edge is something like arbitrage that functions mechanically once you crack the code. I'm not trying to dismiss the importance of self control, and other psych factors but to call these thing edge is a misunderstanding of the term. All the psyche in the world can't make a losing system profitable.
Just to be clear edge is over the market, not over yourself
Like how to buy and hold and forget about it? Or how to automate and hand off your code to a broker and forget about it... for 1 year 6 months after you begin trading professionally?
Psychological aspects don't usually involve being part of the edge, so I'm thinking psychology of being a trust fund baby more or less is the attitude it takes to have edge?
+1
It's obvious like lower financing cost; access to information; access to investments; access to high quality capital; access to non-profit driven counterparties.
It reduces the need for merit by the trader/PM.
Professional baseball players all compete on their talent, psychology, and strenght. Those that take steroids or use corked bats or use sandpaper to scratch up the ball have a real edge.
It's okay to not have an edge. Most participants don't but it helps a lot to have a seat where there is real edge.
Wrong.
The first time I heard the word edge was an Olympic documentary on TV about the 1904 (3rd) Olympics in St. Louis, United States. A few of the athletes in U.S. and England were quoted using the word.
I didn't think much about that word until I heard my baseball coach use it a few times when I was a kid. Later as I got older and played high school sports like football, I continue hearing that word used commonly in sports along with hearing it a few times about floor traders and F1 race drivers (a sport I love to watch).
Like I said, the word edge has different meanings. My favorite edge occurs in the psychological aspects of trading. Most traders don't have it and a few do. Just the same, I do notice the improved performance of those that had a psychological edge when they played sports. It didn't guarantee a win but most of the time they played better in comparison to those just not mentally into the game.
P.S. I do strongly agree with you that all the psyche in the world can't make a losing system profitable.
In formula1 some teams and drivers have an edge. Ferrari has an edge because they can outspend virtually every team. It's why mediocre drivers: Barricelo and Massa can win races and great drivers struggle with mediocre teams.
Edge negates the need for a good trader.
It comes from the tools and the platform.
Access to deal flow: Top tier VC firms whose stamp of approval can make a start up. Those who get hot IPO allocations.
Access to non-profit motivated counter parties: Banks who trade with hedgers who are okay with losing money on that particular trade.
Access to information: corporate executive who has his pulse on his industry better than anyone on the outside could. Bud Fox on a motorcycle.
Market Participant Inefficiences: you know a central bank has to devalue; it will be too big for anyone to stop the currency move.
Financing: big bank can hold certain trades because they can finance them cheaper.
These are real edges.
Everything else is battling. Some are better at it than others. That's a hard game and few succeed. When you have a real edge, the money just flows in and you don't have to be that smart.
Edge negates the need for a good trader.
It comes from the tools and the platform.
Access to deal flow: Top tier VC firms whose stamp of approval can make a start up. Those who get hot IPO allocations.
Access to non-profit motivated counter parties: Banks who trade with hedgers who are okay with losing money on that particular trade.
Access to information: corporate executive who has his pulse on his industry better than anyone on the outside could. Bud Fox on a motorcycle.
Market Participant Inefficiences: you know a central bank has to devalue; it will be too big for anyone to stop the currency move.
Financing: big bank can hold certain trades because they can finance them cheaper.
These are real edges.
Everything else is battling. Some are better at it than others. That's a hard game and few succeed. When you have a real edge, the money just flows in and you don't have to be that smart.