S/R Emini Journal
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I wish I was a Dr...I think people just try to over analyze things too much these days. If you make money you have an edge. If you lose its because you don't have a good method. I think part of the reason I can make money is because I am consistant and I study and practice a lot. But the main reason I think a lot of people fail is bacause they look at trading as an easy way to make millions of dollars. They want to get away from their jobs so bad that they run these wild-ass senarios through their head about how quick the can turn 5K into a million and quit their job.
So if I do have an edge I would say that it is time. I am not running from anything. I like working with patients and meeting people. I get just as happy when I can help diagnos a seizure patient as I do winning a trade.
I have never really been a traditional kind of guy and this edge thing I think is a bunch of BS. Either you can trade or you can't. It is only as difficult as we make it. I don't know everything about trading and often ask for help. Nothing wrong with that. Romik has helped me several times as well as others. I think we will just keep things going as is. I hope everyone is making money.
Some have crashed and burned by over analysing with the help of Nobel prize winning mathematicians. Think for a moment here, who the f... are we to match the best minds in the world. We are nobody (from that perspective). All we can do, intraday, is react to other peoples' errors. One thing here, greed HAS to be kept on a tight leash (hope that's the right spelling) so in ES 2 points is sufficient enough. 10 pointers are for the brainy ones and/or smaller size initial entry positional/swing trading. I am not a genius, never been great at geometry or physics, or algebra. Done OK in business though. Trading is business.
Gary, I will try not to intrude too much on your thread with my response. I feel compelled to reply.
In my opinion, discussing edge is a lot like discussing trend. There is no definitive answer. Some might say that an uptrend trend is in effect with higher highs-higher lows and point to a chart. But when another person looks at the chart, they might recognize a non-trending market or even a downtrend depending on their own perspective and timeframe.
The biggest traders in the world made money before a bunch of quants came in and told them when to buy or sell to have a statistical edge. Do you think that Lewis J. borsellino has lost his edge in the pit if he went there and traded today? Do you think that while he was trading, he knew his edge through backtesting? No, I don't think so. He traded a method. He never knew if he had an edge today on price or not. He did what you are doing which is to follow a method and, more importantly, know his strengths, his weaknesses and those of his competitors across the pit and on the screens.
All this stuff about backtesting, Sharpe, etc is well and good for a certain type of trader. In the end, many forget that this is an auction market. It runs the exact same way a cattle auction or an auction at sotheby's runs. It is based on price discovery to probe for interest by buyers and sellers and then participation by others who feel that the supply/demand sentiment has changed. That's the simple reality of it. You end up with price as a data point, time as a data point and quantity as a data point.
From there, all kinds of simple and absolutely absurd analyses can be done and some conclusions are derived based on that. But remember, this information is in the past. However, price discovery and the auction are happening here and now as you trade. This is where it is important to understand the bigger picture of what the major money is probing for and then going along with that goal as pieces of the puzzle fall in place with every contract traded.
Trading without a perspective of how the market feels about every price as it goes through the discovery process is a dangerous thing. It puts you in a vacuum and does not allow you to see the story as it is written.
Your edge, Gary, may be the fact that you know how you screwed up in the past and the pain that went with that. So you know when to avoid trading, how much leeway the market gets on your bias and what your emotions are when you are in a trade. This is the biggest struggle for those who don't automate (like myself); understanding their own attachment to winning/losing money and then doing something about it.
I have come to believe, over the years, that every method will probably make money if it is based on KNOWING rather than BELIEVING the overall probable outcome. This means that one has to do his own homework and test his own theories against the momentum of the market. One can get by if he simply followed someone else's plan, but one cannot stick to something that might momentarily not work. This is a crucial fact.
The questions that are important to your method might be: why would breaking a S/R level cause participants to seek higher prices? Why would participants see my current S/R level as a fair price (this is what the market spends all of its time looking for) and will therefore bounce from it? In what situations would my S/R level be broken only to create a hammer or hanging man and head right back into its prior range?
The main momentum of the market is created by people. This is who analyzes, factors in and attempts to account for as much political, technical, environmental and other data as possible into a decision. Everyone else is just seeing the prints on the tape and then jumping along for the ride. Hence, it is ultimately the edge that cannot be backtested that generates the movement which all the backtested and "edge-ful" systems will follow along and exaggerate. Does that make sense?
Again, this is just my opinion and theory. My opinion changes with time and as I learn along the way. I know a few good traders, big ones, and I feel that their edge is what I described in addition to many others too long to list. These are the guys who move the market and sometimes follow it. They wouldn't know what a backtest is and why you would ever need one. This, of course, is strictly a function of style. Everyone has his own.
I hope that helps.
ft71
Well, pretty much everything in trading is a gimmick other than the tape. The question: What are you comfortable with as far as a tool to organize the data?
It is much like handing a spoon to someone who has never seen one. They might think it is a gimmick (they are doing fine without it), but once they use it and understand it.... they realize how much easier life is with it.
To me, any derivation of price that lags the market is a tool that I would not use. I do respect its power those to others who are making a very good living with it. What doesn't make sense to me doesn't necessarily constitute non-sense. I try not to dispose of anything until I fully understand it and find that it doesn't fit how I like to see things.
Just a thought...
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