Short Time Frames Losing Their Edges?

[inandlong]

Quote from Corso482:
Finding an edge means finding a statistical inefficiency in the market.

I have to disgaree with this brah. Unless you are defining the term statistical edge.

Too much is made of having an edge. Way too much is made of defining it statistically. And hoping to find an inefficiency etc etc, by now you must know that you can make statistics show whatever you want.... much the same as settings on an indicator.

Like larrybf does, why not try to find something that occurs again and again, perhaps even call it an efficiency, a normality, a common occurence? The market is full of these. Don't look for the esoteric, the unusual, the unique.

 

[daniel_m]

inandlong, wouldn't a positive expectancy (whether developed through backtesting or experience) that you just apply by grinding out trade after trade be considered a 'statistical edge'. well, personally, that's how i conceptualize (my) trading.

 

[iceman1]

Quote from dbphoenix:

I'll go with Ditch as well. An edge need not be just a "statistical inefficiency" in the market; it can also be something that enables one to take advantage of the psychological weaknesses in other traders.

--Db

db...

great definition... ought to be in every trading glossary

 

[jem]

I find it interesting that people on the whole seem to accept the market efficiency hypothesis, and at the same time accept the theory that buy and hold is a legitimate money making strategy. Should not market efficiencies wipe out returns to investors?

To me they are both B.S. put forth by institutions and fund companies trying to trick people into "investing responsibly." I am sure that if you want to go back and read Grant Noble's book. Which I read years ago you would see that you adjust for inflation the Dow has not gone up since the 1929 peak. And if you figure out how many Dow stocks went down before being kicked out to the Dow, you probably lost money if you were a Dow indexer after inflation.

So my statement is if you are a little doubious of biased claims and studies, you can invest and hope or you can figure out how to trade. But there is nothing in the universe that states the market will be up 10 20 30 or 40 years from now, for every stat I have heard from the Wall Street B.S. machine, I can create the equal but opposite stat. Now if you missed the 20 worst trading days of the last five years through market timing your portfolio would be up __ %.

Now back to the point of the thread, I think the shorter time frames have gotten tougher because the absolute range has gotten smaller, so slippage and commsions are a greater percent of the trade.

 

[daniel_m]

Quote from jem:

I find it interesting that people on the whole seem to accept the market efficiency hypothesis, and at the same time accept the theory that buy and hold is a legitimate money making strategy. Should not market efficiencies wipe out returns to investors?

it is kinda amusing isn't it. "don't trade, you might lose. better invest for the long term". and how do they recommend you invest? well, obviously no one can beat the market so you'd buy and index fund (and lop off 1-2% pa in fees too). which, as you mention, is so laughable considering that since the 29 peak, the dow has returned a whopping 4.3% pa (by my calc, and without dividend reinvestment) with inflation running at 3.2% through the same period. (and ignoring, the very important, effect of survivorship in the Dow).

i don't wanna totally put down investing, not at all. but, as great a story as monkies throwing darts makes, i think you'll need something a tad more sophisticated than that...

 

[inandlong]

Quote from dbphoenix:

An edge... can also be something that enables one to take advantage of the psychological weaknesses in other traders.--Db

Oh please... don't fool yourself here. This is nothing but mental masturbation.

What do you have, little plastic green army men pointing at the screen and each time a trade goes a tick in your favor you go "pow pow, got ya!"

As if.....

 

[iceman1]

Quote from inandlong:


Oh please... don't fool yourself here. This is nothing but mental masturbation.

What do you have, little plastic green army men pointing at the screen and each time a trade goes a tick in your favor you go "pow pow, got ya!"

As if.....

you seem pretty sure of your comments... but don't explain why?

Or do you think it is your feudal relationship with db?

Regards,

 

[inandlong]

Quote from iceman1:

you seem pretty sure of your comments... but don't explain why? Or do you think it is your feudal relationship with db?
Regards,

I appreciate your question ice. Try disagreeing with db and see what you get. Do it elsewhere, not here, on another thread, and give it some time, after he has forgotten your compliment. You'll see what I mean. You'll see the arrogance and the defensiveness, the caustic attitude. I cannot stand bs iceman, nor lies, nor misquotes, nor twisting others' words, all of which I have seen db do.

While I don't explain why, as you say, are you also questioning db that he doesn't explain how? The answer is no, or it would seem to be no because you agreed with his statement to such an extreme, although he offers nothing more than rhetoric, that you claim his statement should be in the glossary... etc.

I disagree. And I said so... using the same degree of enthusiasm as you did.

However, maybe you can provide an example of how you take advantage of the psychological weaknesses of other traders... I mean since you agree so enthusiastically, maybe you know exactly what db is talking about. Maybe not. Just asking! Or PM me, I would love to read how this works. And I promise I won't use it. Anyway, Remember the Titans is on again, I love that movie. Gotta go.

 

[wally_]

Quote from inandlong:


Oh please... don't fool yourself here. This is nothing but mental masturbation.

I agree with you. This could work well in, say, poker and it certainly does. As we all know bluffing is an element of the game and in fact without it the game is not optimal as everyone whoever studied the theory of poker will tell you. I happened to do that for a living a few years back.

Now, in the market you do not interact directly with the other side, so you cannot influence them in the same way as you can in the game of poker. It is actually the complete opposite that you can do, that is you can only gain advantage here by improving your psychological strengths and not by taking advantage of others' weaknesses, because you even do not know them. In fact, your opponents can be stronger in this aspect of the game than you.

As Mark Douglas would tell you: 'it is not you and the market, it is only you.' Your greed and your fear and not what others do.

 

[GD2KNO]

Quote from wally_:

As Mark Douglas would tell you: 'it is not you and the market, it is only you.' Your greed and your fear and not what others do.

This is so true! It took me years to identify then get over my only obstacle: ME!