Prudent Risk Management Is The Only True Edge In TRADING

Is Prudent Risk Management the only true edge in trading?

  • Yes

    Votes: 53 29.9%

  • No

    Votes: 124 70.1%
  • Total voters
    177
JSSPMK said:
IMO no retail trader has an actual edge over other market participants. All we really need to establish is whether an instrument is more likely to go up or down (overbought/oversold), is there a predominant uptrend or downtrend. You don't want to be trading against professional trading entities. So considering the above, if you agree that you don't actually have an edge over anyone, why bother spending years to seek one out? When you could just try and develop a feel for a market you wish to trade and employ PRM - position correctly & always have your target a multiple of your stop loss (at least three times). Some days/weeks you'll have more winners, other times you'll have way more losing trades, being in control of your own payout schedule vs the loss is key, whether you're right or wrong only this will create an edge over losing traders. I have observed tons of real time calls on ET & other portals - win rate ALWAYS fluctuates, if a target is equal to a stop loss there is no edge, a temporal edge maybe, but nothing that will survive the test of time (especially in short term trading). Peace!
More...
JSSPMK...have you considered there are scalpers out there who do very well. These scalpers need a unique advantage over other traders because their risk to reward ratio is frequently equal or even NEGATIVE (as in my case). I would never survive with a 1:3 or 1:2 ratio. Why don't I prove this with live calls? Scalping and live calls seems very difficult, difficult enough to to possibly screw up my trading results, although I've been considering for some time on how to figure out a way. Effective scalping has taken many years to accomplish, but I agree that changes in market conditions prove many edges a short life span. Accessing market conditions and volatility changes is very important in my methodology. Some of my setups only show up when volatility is high, others when volatility is medium or extremely slow (like summer). I always like to add...I never scalp ES (S&P). I specialize in the 30yr. bond and gold futures. From what I remember, HANDAL 123 has successful scalping setups too.:)
 
Buy1Sell2 said:
Ask a losing trader ( the more than 95%) and you will find that they all picked price well, but stayed in positions too long on the wrong side and pulled profits too soon on the right side. The edge in trading is trade management, not picking entries and exits.
More...
I have to ask any losing trader out there or any traders that use to lose at one time, did you ever feel like you "picked price well" CONSISTENTLY OVER A LONG PERIOD OF TIME, but you screwed it all up consistently because of bad money management? I usually find traders that have bad money management techniques/discipline is because traders believe their NOT PICKING PRICE WELL! I don't see how Buy1Sell2 continues to believe losing traders pick price so well all the time.:confused:
 
JSSPMK said:
IMO no retail trader has an actual edge over other market participants. All we really need to establish is whether an instrument is more likely to go up or down (overbought/oversold), is there a predominant uptrend or downtrend. You don't want to be trading against professional trading entities. So considering the above, if you agree that you don't actually have an edge over anyone, why bother spending years to seek one out? When you could just try and develop a feel for a market you wish to trade and employ PRM - position correctly & always have your target a multiple of your stop loss (at least three times). Some days/weeks you'll have more winners, other times you'll have way more losing trades, being in control of your own payout schedule vs the loss is key, whether you're right or wrong only this will create an edge over losing traders. I have observed tons of real time calls on ET & other portals - win rate ALWAYS fluctuates, if a target is equal to a stop loss there is no edge, a temporal edge maybe, but nothing that will survive the test of time (especially in short term trading). Peace!
More...
Do institutions have an edge over retail traders? If so, what is it? Also why do so few retail traders end up being successful? Is it because the successful ones are the only ones that employ expert PRM?
 
JSSPMK said:
All we really need to establish is whether an instrument is more likely to go up or down (overbought/oversold), is there a predominant uptrend or downtrend.
More...
The skill to do that effectively and consistently is within itself an edge is it not? Most traders cannot do what you just stated. Why?

Stretch it a little further. THE ABOVE NOT EVEN NECESSARY. Market is 100% random so no need to determine if it is likely to go up or down because that cannot be determined. JUST TAKE A POSITION anywhere, at any price level, at any time, and let PRM do its magic........Hogwash!
 
pinabetal said:
Do institutions have an edge over retail traders? If so, what is it? Also why do so few retail traders end up being successful? Is it because the successful ones are the only ones that employ expert PRM?
More...

Yes. They generally have more intel, tools, education, risk management, OPM.
 
pinabetal said:
The skill to do that effectively and consistently is within itself an edge is it not? Most traders cannot do what you just stated. Why?

Stretch it a little further. THE ABOVE NOT EVEN NECESSARY. Market is 100% random so no need to determine if it is likely to go up or down because that cannot be determined. JUST TAKE A POSITION anywhere, at any price level, at any time, and let PRM do its magic........Hogwash!
More...

I don't believe anyone stated that there is no place for research & experience, but it's the effective implementation of PRM that will transfer a trader that possesses those two skills from unprofitable into at least a breakeven trader. Without PRM those two skills are meaningless to the extent they won't make you money long term.
 
JSSPMK said:
I don't believe anyone stated that there is no place for research & experience, but it's the effective implementation of PRM that will transfer a trader that possesses those two skills from unprofitable into at least a breakeven trader. Without PRM those two skills are meaningless to the extent they won't make you money long term.
More...

I once knew a person that was dealing in imports of paintings (value ones, unknown artists) from EE block to the West. He had understanding of what MAY be a sellable painting (cute children vs nudes, etc), basically he did his market research. Over the long term that he had that business he must have purchased few thousand works of art, sometimes buying wholesale from the family of a deceased unknown artist, shipped them to the West and straight to the auctions. I remember he told me that he did lose on some paintings, because they never sold, but he made a killing on the ones that did. So what was his 'edge'? Market research paired with PRM & of course luck contributed to certain paintings selling for x100+ the premium.
 
BONECRUSHER said:
JSSPMK...have you considered there are scalpers out there who do very well...
More...

I will believe it when I see it, at the same time I don't deny possibility of someone's ability to do so profitably over a long sample range. Most likely it's going to be the case of being few and far between, like great magicians, great poker players, great rally racers. The vast majority will never be able to find the 'holy grail' (very high win rate) and/or will eventually fail.
 
JSSPMK said:
I once knew a person that was dealing in imports of paintings (value ones, unknown artists) from EE block to the West. He had understanding of what MAY be a sellable painting (cute children vs nudes, etc), basically he did his market research. Over the long term that he had that business he must have purchased few thousand works of art, sometimes buying wholesale from the family of a deceased unknown artist, shipped them to the West and straight to the auctions. I remember he told me that he did lose on some paintings, because they never sold, but he made a killing on the ones that did. So what was his 'edge'? Market research paired with PRM & of course luck contributed to certain paintings selling for x100+ the premium.
More...
Honestly...I thought his "understanding" of what could sell was his unique edge that would be most difficult to duplicate for someone else...the ART of the trade...so to speak.
 
You must log in or register to reply here.
Back
Top