Prudent Risk Management Is The Only True Edge In TRADING

[Buy1Sell2]

Its not the Only True Edge

Actually it is. There is only one reason that over 90 percent of traders fail---------inability to utilize PRM. It's a fact.

 

[Jzwu2017]

Risk management is huge in trading but I think there are other edges. So many great traders didn’t/don’t use the same edge.

 

[ironchef]

Excellent posting and thanks for the extra look. Yep, PRM is the only true edge in trading.

I am the one that should thank you for creating this thread. It was one of several favorites I re-read after been away from ET for two years. This time it changed my thinking.

The majority argued and disagreed. I think because many missed the meaning of the word "TRUE". To me if TRUE means universal, then I agree because there are other edges that are local and not universal.

That was why I ran a simulation using randomly generated stock prices.

 

[taowave]

Stop,your universe is 1 inch big..

Actually it is. There is only one reason that over 90 percent of traders fail---------inability to utilize PRM. It's a fact.

 

[taowave]

Wrong...ONLY is the issue..
Beyond absurd

I am the one that should thank you for creating this thread. It was one of several favorites I re-read after been away from ET for two years. This time it changed my thinking.

The majority argued and disagreed. I think because many missed the meaning of the word "TRUE". To me if TRUE means universal, then I agree because there are other edges that are local and not universal.

That was why I ran a simulation using randomly generated stock prices.

 

[ironchef]

Wrong...ONLY is the issue..
Beyond absurd

I don't want to be a lawyer. Is there a difference between ONLY TRUE EDGE vs ONLY EDGE?

 

[taowave]

Many traders have A TRUE edge..
That's the whole point

The "ONLY" True edge???
The "Only" Edge??

Cmon

 

[ironchef]

Here is a quote from @ETJ's thread on the interview of Renaissance CEO Brown:

Another principle is not imposing any judgment on how the markets behave and putting a huge amount of effort into controlling risk.

Brown said: “There’s a danger that comes with success and to avoid this we try to remember that we know how to build large mathematical models and that is all we know. We don’t know any economics, don’t have any insights in the markets and just don’t interfere with our trading systems.”

Sounds like they could make money by controlling risk, i.e. risk management is their "TRUE" edge?

 

[ironchef]

I generated this stock price chart using GBM, i.e., assumed a perfect Markov stock price movement. It is a one minute stock price chart, has no long term drift (zero growth) looks no different than many of the price charts I traded. Question for the day traders on ET: Is this stock tradable?

 

[taowave]

Yeah,pretty sure Simmons did ALOT of optimization of stops before coming up with big mathematical models

Here is a quote from @ETJ's thread on the interview of Renaissance CEO Brown:



Sounds like they could make money by controlling risk, i.e. risk management is their "TRUE" edge?