Quote from TraderZones:
Quote from craig:
What do you consider to be a "serious trading edge"?
Positive expectancy - you have a profit factor that, after all trading costs are factored in, is reasonably above 1.0. If it doesn't make money, it is not an edge.
Are you referring to a certain % win rate? Or could a system that had a 55% win rate but whose winners were much larger than the losers be considered in YOUR interpretation of an edge?
Win% is irrelevant. That is a stat that new traders focus on and experienced traders generally ignore. Positive expectancy/Profit factor is a measure of edge. And there are further metrics that define the quality of that edge, such as Sharpe/Sortino, Drawdowns, and many others.
Can you explain a little more why you believe a trader could Demo/Backtest a system/method for almost a year and have good results, but that data would be no more than just LUCK?
A backtest is useless. Showing that something worked in the past is usually just cherry picking or curve fitting or coincidence, etc.. A backtest that is then walkforward testing for a large number of trades and/or over a number of different market situations MAY be an edge. But if you have 1,000 traders/methods, then 100 will be in the top 10% of performers just by PURE PROBABILITY. But newer traders rarely know the difference. I have watched (such as on the sites I mentioned for auditing) 1,000s of systems that people were convinced worked. I would say out of a 1,000 that MAYBE a couple are interesting.
That is why I said an edge is not an easy thing. Most newer traders think they have edge after edge, and then find out after trading real money or a blowout or after significant time, that they were badly mistaken.
