Short Time Frames Losing Their Edges?

[Ron In-a-sauna]

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.....

mental masturbation, hilarious, there is a lot of that in the trading world, prob why its so confusing for most

 

[Jim Bartley]

Quote from Corso482:

Finding an edge means finding a statistical inefficiency in the market. The trouble is that (1) the market is mostly efficient and (2) everyone and their mother is sitting around looking for the few inefficiencies left to exploit.

By statistacal do you mean something that will occur more often than not? I don't think so. There are many traders who lose on most of their trades but end up with a profit. Longer term trend traders come to mind.

Quote from Corso482:

So, it can be said, therefore, that once the first problem is over come and you manage to find an inefficiency, the second problem is that others may also find the same inefficiency and arbitrage it away.

Doesn't this assume everyone is looking for the same thing? Just because you sell and someone else buys doesn't mean you both think the price is going down.

Quote from Corso482:

Am I right in thinking that the only reason inefficiencies exist, aside from people having not found them all, is because of smaller time frames existing within larger time frames? In other words, everything would be arbed away quickly if everyone traded the same time frame.

If that's the case, then the longer the time frame that one trades, the less likely it is that his edge will disappear because of the multiple time frames that exist within his timeframe.

If inefficiencies didn't exist, then please explain how a market trends?

Quote from Corso482:

Is this why daytrading is so hard? Not only are there fewer timeframes within your timeframe to help ward off the arbitraging of your edge, but also only full-time professional traders play the intraday timeframes, meaning the people you are trying to prevent from arbing your edge are that much more skilled at doing so.

If one follows this thinking, then daytrading will only get harder and eventually impossible as more and more sophisticated computers all compete for the same inefficiencies over the same short time frame. After all, couldn't one look at day trading as an activity geared toward making the market efficient? Well, if that's the case, then the better traders become, the more efficient the market will become and the harder it will be for them to make a living.

On the contrary I think daytraders add to the volatility and hence the inefficiancy, especially in the shorter time frames.

 

[OVERtheLINE]

those of us who grind out dimes for a living are laughing

 

[stock777]

hey OvertheLine, lately my slice has been only 8 or 9 cents, tough January.

 

[vladiator]

Quote from Jim Bartley:



If inefficiencies didn't exist, then please explain how a market trends?

Ever heard of the "random walk with a drift" model?

 

[MondoTrader]

you people are mentally masturbating yourselves with this thread. None of this is usefull for making money.

 

[Andre]

you people are mentally masturbating yourselves with
this thread. None of this is useful for making money.

I dunno. Perhaps you're right. No, you probably are. However, as I've reminded one successful trader (usually after he has dismissed something or someone's rather pedestrian observation as being incredibly irrelevant)... "You've already figured this stuff out. Don't you kind of have to process this all for oneself, chose your indicators, what to use, what to ignore- before one can make it simple?" (Simple shouldn't be confused with easy.)

He pretty much agrees when I put it to him like that. In readings and in my discussions with traders, I get the sense that it’s incredibly simple. He just doesn't have alot of patience for folks still figuring it all out. He's admitted that he's not a great mentor. But I've always felt fortunate to have his ear. Even though he can be pretty abrupt and scathing, I'd rather hear it from him than the market.

André

 

[MondoTrader]

i didn't say that to be rude, but eventually you realize that all that angst and endless theory doesn't matter. If it did then every Phd. in finance or economics would be a wealthy trader.

 

[Andre]

No sweat, Mondo... didn't take them personally, or as rude.

André

 

[vladiator]

Quote from MondoTrader:

i didn't say that to be rude, but eventually you realize that all that angst and endless theory doesn't matter. If it did then every Phd. in finance or economics would be a wealthy trader.

Don't mean to be rude either, but you have no idea what you are talking about. Unless you have been truly exposed to those "endless" theories (read "have a PhD in the area"), you have no business judging them. What you were taught in an undergrad or masters finance course about those theories is a vague simplification that doesn't even begin to portray the potential uses.
Not all finance PhD's research things that are directly applicable to trading. Some are (myself including) and most of the latter greatly benefit from such research either via their own trading, or by taking part in trading ventures, consulting, being on boards etc.