This is a good question. Actually very good an one I have tried to find an answer to. IMO it depends how good and robust the strategy is. If it is a good startegy, it will take much longer for it to fade. Most of what you find in books doesn't work from the start. It is stuff for losers because the authors are losers and their strategies do not worth the paper they are printed on. I have found only one multi-year evaluation of startegies published in a book here http://bit.ly/yVzz8s.
How many people does it need ???
- Thread starter HATEtheRisk
- Start date
This is a good question. Actually very good an one I have tried to find an answer to. IMO it depends how good and robust the strategy is. If it is a good startegy, it will take much longer for it to fade. Most of what you find in books doesn't work from the start. It is stuff for losers because the authors are losers and their strategies do not worth the paper they are printed on. I have found only one multi-year evaluation of startegies published in a book here http://bit.ly/yVzz8s.
Congratulations. Sincerely.
If this opinion shall be tested that's easy: Give GS a call and tell them about the successfull strategy.
Then wait a week and see whether it is still working.
But perhaps with the question ("how many people does it need ...") you were up to something else?
The main problem with this discussion is possibly that there are two (in my view) incompatible ways of thinking behind the argumentation lines:
1. There are underlying eternal principles in the ways price moves that cannot be changed
2. There are no eternal laws in the market just the main principle that players want to take money from the others at any cost
I don't see a reason why 1. should be true.
If players see opportunities they will take them.
Quote from HATEtheRisk:
Hello community,
i am wondering myself about thought i have a long time and i want to know what other traders think about this.
I asking myself:
How many people does it need, who know perfect money making strategies that are easy to trade, that the strategies stop to work ???
Example:
A successfull trader, writes a book and give all his strategies to the public. Then logical they should stop working, or not ???
What do you think about this ???
If 30% of all market participants would do the same, would it change the markets ?
Can it only work, if 10% do the right thing, and 90% do another thing ???
But, what if this strategies have worked for the last 50 years ?
Thank you for your opinions.
Yes, logically if its a profitable automated trading system it should stop working IF everybody was using it. Yet, what are the odds that everybody will use that one particular profitable automated trading system and not some other profitable automated trading system that exploits a different edge...I would say the odds are ZERO of everybody using that one particular automated trading method eventhough in theory it could happen.
In contrast, if it's not automated (as in discretionary)...the odds are even lower than an automated trading system. Thus, a profitable discretionary trading method will continue being profitable for those that are already profitable "after" the method is shared...same is true for those losing via the same discretionary method.
Simply, the odds of everybody using the same book and the odds of everybody trading the exact same trading instrument as if trading stops in all other trading instruments...
ZERO such can occur (seriously if you use logic).
Yet, if the profitable method is not automated and was on the best sellers list, promoted on all major financial networks, given to every university in the world, handed out freely at every grocery store in the world...
Some will be profitable and some will not be profitable due to that simple fact most think differently than the next person they're sitting next too.
How many users of a profitable automated trading system would it take for the method to stop working ??? It greatly depends on what exactly is the edge and capital required and I won't even bother with trying to determine an answer for those using discretionary trade methods.
It's just one of those old lady myths floating around in the markets that if you share your profitable method...everybody will use it exactly the same way you do. The possibility of every trader in the world thinking exactly the same on every trade every trading day is ZERO.
If there was ONLY one trading instrument in the world along with other variables that limits how traders can apply it in their own personal way...the theory of sharing and the method losing its edge may then have some merit amongst "retail traders".
As for big boys (e.g. institutions), those are usually different types of edges involving large capital that us retail folks don't have access too.
Quote from wrbtrader:
Yes, logically if its a profitable automated trading system it should stop working IF everybody was using it. Yet, what are the odds that everybody will use that one particular profitable automated trading system and not some other profitable automated trading system that exploits a different edge...I would say the odds are ZERO of everybody using that one particular automated trading method eventhough in theory it could happen.
In contrast, if it's not automated (as in discretionary)...the odds are even lower than an automated trading system. Thus, a profitable discretionary trading method will continue being profitable for those that are already profitable "after" the method is shared...same is true for those losing via the same discretionary method.
Simply, the odds of everybody using the same book and the odds of everybody trading the exact same trading instrument as if trading stops in all other trading instruments...
ZERO such can occur (seriously if you use logic).
Yet, if the profitable method is not automated and was on the best sellers list, promoted on all major financial networks, given to every university in the world, handed out freely at every grocery store in the world...
Some will be profitable and some will not be profitable due to that simple fact most think differently than the next person they're sitting next too.
How many users of a profitable automated trading system would it take for the method to stop working ??? It greatly depends on what exactly is the edge and capital required and I won't even bother with trying to determine an answer for those using discretionary trade methods.
It's just one of those old lady myths floating around in the markets that if you share your profitable method...everybody will use it exactly the same way you do. The possibility of every trader in the world thinking exactly the same on every trade every trading day is ZERO.
If there was ONLY one trading instrument in the world along with other variables that limits how traders can apply it in their own personal way...the theory of sharing and the method losing its edge may then have some merit amongst "retail traders".
As for big boys (e.g. institutions), those are usually different types of edges involving large capital that us retail folks don't have access too.
Thank you, this is a good post.
I agree with almost all you have said.
I was talking only about manuall (discretionary) methods.
This methods are so complicated in some way, that you cant computersize them to automatically ones - but thats offtopic...
So the happy trader, who have found that kind of master strategies, could be pretty happy, that doesnt matter, how much other persons would know them and trade them, they would never stop working............ Because the common human is an idiot and can not follow easy rules, is that what you meant in simple words........??? So, its just a legend and nothing more....
Quote from uexkuell:
If this opinion shall be tested that's easy: Give GS a call and tell them about the successfull strategy.
Then wait a week and see whether it is still working.
Nothing would happen, because they cant manupulate all markets. And they would be pretty pissed off, that i know what they know, without a college master bachelor in finance and ass kissing politics.......... LOL
Quote from uexkuell:
I think, both are correct.
Of course there are eternal principles, after fighting out where to go the price moves and you can spot that before it moves and before it ends, that - thats the basic of trading, isnt it........
All moves and setups are basically the same, nothing could change that, no, really not ??? That was my question at all.
So, nothing will stop the price from moving strong up and down, without spikes every 4 hours. There will always be calm in order moving market, ruled by the rules of itself, so how it always was.
I think the discussion is over here, nothing more to say.
Are you surprised? Why? Human belief systems existed long before Aristotle invented categorical logic. They will exist after logic dies because logic is in the process of dying not because it is wrong but because beliefs are more important than rationality in a world where the average IQ is 92.
I hope none of these surprise you otherwise you are in for big surprises in the future.
My question is still not be answered.
What is more rational, that it could really happen or that the most people are really dumbasses and too stupid to follow easy rules.
Maybe not all, but lets say 70% of the mass does the right thing, so will it change the laws of trading ???
I just made that point, to find some peace for myself, because i want preconceived opinions, because i dont have any, thats why i am questioning here. LOL
I cant find an logical answer alone, there are just too many factors, playing into this unique theoretical situation.
So, please post something useful.
A economist must know such a thing, but here on ET are none of them, only wannabe economists, isnt that a fact.
Teach me please the opposite.
I am looking forward to learn something new.
Thanx you