If edge is hard to get, why traders keep trading?

dozu888 · Jun 24, 2009

Quote from ElCubano:

does positive expectancy guarantee winning?

if the sample size is large enough.... yes.

and that goes with everything else in life... you go on the road knowing that there is always a risk to get hit by a truck.

marketsurfer · Jun 24, 2009

Quote from OddTrader:

'You can't win without an edge, even with the world's greatest discipline and money management skills. ... If you don't have an edge, all that money management and discipline will do for you is guarantee that you will gradually bleed to death. Incidently, if you don't know what your edge is, you don't have one." --- (New Market Wizards, page 463)

"Good money management alone is not going to increaese your edge at all." --- (NMW, Page 175)

Interesting. I hear this all the time from traders. My contention is even though good money management isnt an edge, it will keep you in the game long enough to take advantage of LUCK. Those huge winning days that are guaranteed to happen if you are in the game long enough.

it isnt edge, but LUCK will arrive if you can stay in the game via money management.

just a thought, surf

marketsurfer · Jun 24, 2009

Quote from dozu888:

if the sample size is large enough.... yes.

and that goes with everything else in life... you go on the road knowing that there is always a risk to get hit by a truck.

one needs to create the sample size by staying in the game long enough via money management for the "expectancy" to work out.
not to mention the inevitable role of luck,,,,,,,

otherwise its just academic rhetoric.

surf

OddTrader · Jun 24, 2009

"I bet the best traders on ET do this..."
http://elitetrader.com/vb/showthread.php?s=&threadid=167166

In the above thread, some of them have very different views:

Quote from chrisdunn:

Anybody who's actually making money knows trading is 90% psychological...

Quote from RatioTrader:

You couldn't be more right. IMO trading is 100% Psychological. If you go to "traders" houses, most of them have books on "how to trade" or how to get rich, and have no books on the brain and psychology.

Managing your trading state is by far the most important.

dozu888 · Jun 24, 2009

Quote from marketsurfer:

Interesting. I hear this all the time from traders. My contention is even though good money management isnt an edge, it will keep you in the game long enough to take advantage of LUCK. Those huge winning days that are guaranteed to happen if you are in the game long enough.

it isnt edge, but LUCK will arrive if you can stay in the game via money management.

just a thought, surf

surf, your statement contradicts the definition of negative expectancy. it's like saying that if you have enough discipline and capital to sit at the slot machine long enough, you will hit the jackpot.

The definition of negative expectancy, or lack of edge, determines that the chances are you will run out of coins before hit the jackpot.

people still hit jackpots, but odds are against that.

So the discussion needs to be on statistical terms, not anecdotal ones.

Scataphagos · Jun 24, 2009

Quote from marketsurfer:

Interesting. I hear this all the time from traders. My contention is even though good money management isnt an edge, it will keep you in the game long enough to take advantage of LUCK. Those huge winning days that are guaranteed to happen if you are in the game long enough.

it isnt edge, but LUCK will arrive if you can stay in the game via money management.

just a thought, surf

And a good thought it is!

I've been trading a long time. I don't have an edge now, nor do I expect to find one. (Years ago I had one, but the SEC determined it was too good and made a regulation against it... bummer.)

Discipline is the key.... not making poor decisions due to "hope".

u21c3f6 · Jun 24, 2009

Quote from ElCubano:

does positive expectancy guarantee winning?

No. This is where money management comes in.

Joe.

dozu888 · Jun 24, 2009

Quote from Scataphagos:

And a good thought it is!

I've been trading a long time. I don't have an edge now, nor do I expect to find one. (Years ago I had one, but the SEC determined it was too good and made a regulation against it... bummer.)

Discipline is the key.... not making poor decisions due to "hope".

this confirms my point about bliss.

marketsurfer · Jun 24, 2009

Quote from dozu888:

surf, your statement contradicts the definition of negative expectancy. it's like saying that if you have enough discipline and capital to sit at the slot machine long enough, you will hit the jackpot.

The definition of negative expectancy, or lack of edge, determines that the chances are you will run out of coins before hit the jackpot.

people still hit jackpots, but odds are against that.

So the discussion needs to be on statistical terms, not anecdotal ones.

no, its more like sitting at the roullette table with only a black and red bet with no zeros. however, this roullette table can offer way more than double your money on each bet, but you can only lose the amount you put up from your stash. the slot machine analogy doesnt work when compared to the market.

best, surf

ElCubano · Jun 24, 2009

answering the OP question; traders keep trading because an EDGE is not needed to make money in the market. A funded account is the only thing needed. I know this for a fact, from experience.

a positive expectancy on a moving target does not gaurantee anything. If the edge doesn't last you will never have a big enough sample size.