My edge isn't what I thought it was

Bugenhagen · Sep 30, 2019

speedo said:
Correct, charts are like Rorschach panels, we all see different things. Seeing things which made for technical acuity is what makes a technician, transcending that into knowing how to use that information to make profit and executing a plan from that is makes a trader.

I'll be stealing the Rorschach bit

speedo · Sep 30, 2019

Bugenhagen said:
I'll be stealing the Rorschach bit

Be my guest.

tiddlywinks · Sep 30, 2019

imjohn said:
I despise waiting. Waiting for a trade to complete right now, and waiting for conditions to improve. I've read that "Patience" is active waiting.

Take the stairs. You control your speed. No reframe. Problem solved.

comagnum · Sep 30, 2019

Regardless of how you choose your trade entries, it is the risk/trade mgmt that will make or break you in the long run. This is typically grossly neglected by novice traders, been there done that.

One of the top CTA funds over the last decade- up 150% on the year. This fund is global futures/systematic, the CTA has 14 Nobel prize laureates in physics and chemistry, & was granted 11 patents for telecom & computers.

The 1st line of the prospectus, trade identification is not once mentioned.
Predominantly focuses on proactive risk management through methods of dynamic asset allocations.

trend2009 · Sep 30, 2019

the only strategy is cutting lose quick.

Peter8519 · Sep 30, 2019

Another possibility is that the "edge" is static whereas the market is dynamic.

RedDuke · Sep 30, 2019

trend2009 said:
the only strategy is cutting lose quick.

Death by a thousand cuts is still a death. cutting losses is important, but positive expectancy is above all others.

qlai · Sep 30, 2019

Naturex said:
Sitting in a position over several weeks, risking a couple hundred or thousand $, not knowing if it will lose or win money is indeed stressfull (esp. if you need those money). If you can overcome this, I believe you already have an edge over 80% of retail traders.

Sounds like a buy and hold to me, not trading, and definitely not an edge in itself.

Orbiter · Oct 1, 2019

Naturex said:
I used to think my edge was my ability to do TA, and read charts.
But the level of TA I'm doing, most people can do by watching a couple youtube videos. So how am I then profitable? It's the mental aspect. And I believe this to be true for all profitable traders.

Why? My biggest obstacle in trading, (And still working with it). Is setting up an order with confidence, then wait for my order to get filled. And then again wait for it to hit my stop loss or target order (Over a span of days, weeks, months) Without changing anything. This sounds easy right? But for me it was/is the hardest aspect of trading. The waiting. The reason why waiting is so hard, is because in trading there is no guarantee. And waiting for something that isn't a certain, can be very stressfull. Esp. If you're not well funded, have little experience, your money management isn't good and/or you have stresses in life outside trading.

I remember reading somewhere that 90% of people would rather choose 100% chance of getting 100,000. Then a 90% chance of getting 200,000.
We are wired to pick certainty. Anything else is stressfull. Sitting in a position over several weeks, risking a couple hundred or thousand $, not knowing if it will lose or win money is indeed stressfull (esp. if you need those money). If you can overcome this, I believe you already have an edge over 80% of retail traders.

(This is why most beginners choose low time frames, less stressfull and more exciting. And the brokers love it).

Not a solution for everyone but here is the way I went about it in my 20 years of investing:
1. For the first 5 years I mostly invested small amounts, long term, using asset allocation, dividend paying stocks, mutual funds, keeping the stress in check
2. Then I started using index options without (much) leverage hoping to lower my risk and get better results. I looked into technical analysis, voodoo Elliott waves, etc
3. As I became more confident I upped the risk and I realized that the following factors increased the stress:
a. Watching closely all positions and having to manage each one of them
b. The size of the positions and the large PNL fluctuations
c. Trading on short timeframes
d. Not having clear entry and exit rules
e. Missing trades due to life commitments and missing on life due to trading
e. Everything else not mentioned above /s
4. About 10 years ago I started to become really systematic by setting clear rules, backtesting them and trying to strictly follow them.
5. Being systematic helped but the real breakthrough came about 6 years ago when I started to automate my strategies and was able that way to diversify a lot more by not only owning a large number of positions in my portfolio buy also by having the ability to use multiple strategies at the same time. Now I spend my time in strategy development. Most of the stress factors mentioned above are almost gone. ( The ones not mentioned above are still there /s)

traider · Oct 1, 2019

Orbiter said:
Not a solution for everyone but here is the way I went about it in my 20 years of investing:
1. For the first 5 years I mostly invested small amounts, long term, using asset allocation, dividend paying stocks, mutual funds, keeping the stress in check
2. Then I started using index options without (much) leverage hoping to lower my risk and get better results. I looked into technical analysis, voodoo Elliott waves, etc
3. As I became more confident I upped the risk and I realized that the following factors increased the stress:
a. Watching closely all positions and having to manage each one of them
b. The size of the positions and the large PNL fluctuations
c. Trading on short timeframes
d. Not having clear entry and exit rules
e. Missing trades due to life commitments and missing on life due to trading
e. Everything else not mentioned above /s
4. About 10 years ago I started to become really systematic by setting clear rules, backtesting them and trying to strictly follow them.
5. Being systematic helped but the real breakthrough came about 6 years ago when I started to automate my strategies and was able that way to diversify a lot more by not only owning a large number of positions in my portfolio buy also by having the ability to use multiple strategies at the same time. Now I spend my time in strategy development. Most of the stress factors mentioned above are almost gone. ( The ones not mentioned above are still there /s)

How do you know you are not overfitting your strategies