Skill Vs. Edge
- Thread starter Purple Barney
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Quote from malaka56:
edge is derived from a characteristic of the market.
skill is a characteristic of a trader.
or so i've been told...
I also don't know if "every" system works.
Buy high, sell low seems to not be very profitable. Or maybe that style just doesn't fit my personality and skill set...
Heh, ok MOST systems, at least the ones that make some sense, can work for someone out there, unless it was just created as a con.
Your definition makes alot of sense. The question is, can superior skill acquired by a trader create an edge for him compared to other traders?
If whatever that skill is helps him exploit a market inefficiency or "edge", why not. But I would be hesitant to call something as fuzzy as "skill" as edge in itself.
Look into some of the past "edges" that these guys are talking about and have since disappeared. May be interesting you see how money was made on them... No skill necessary...
This skill helps him exploit other TRADER's inefficencies, traders with less skill, this is why I said SUPERIOR skill. Since this does not deal with market inefficiency, does it still constitute as "edge"?
And to further elaborate, i know what you mean by "market inefficency", but since any market is just a collection of traders, would a collection of said traders' inefficiencies = a form of "market inefficiency"? And the ability to exploit this inefficiency then constitute as an edge?
the markets have gotten so much tougher I find myself agreeing with surf.
However I know someone who has kicked butt over the last decade with very little edge.
His account just hit the high water mark. He swing trades actively and invests.
since about 93 or 94 he has has turned 850,000 into 4 million. And he has also taken out close to 2 million to live on.
He suffered a huge draw down in 2001 and it almost killed him. However, he was trading a few weeks out of the hospital.
His entire edge is garnered from reading IBD, a few financial mags and doing research online while sitting at Panera bread drinking coffee and having a muffin for two or three hours a day.
I am not sure he has any edge, but he seems to have great market timing and and idea where the next big sector is going to boom. He has amazing confidence in himself and a distrust of the market.
However I know someone who has kicked butt over the last decade with very little edge.
His account just hit the high water mark. He swing trades actively and invests.
since about 93 or 94 he has has turned 850,000 into 4 million. And he has also taken out close to 2 million to live on.
He suffered a huge draw down in 2001 and it almost killed him. However, he was trading a few weeks out of the hospital.
His entire edge is garnered from reading IBD, a few financial mags and doing research online while sitting at Panera bread drinking coffee and having a muffin for two or three hours a day.
I am not sure he has any edge, but he seems to have great market timing and and idea where the next big sector is going to boom. He has amazing confidence in himself and a distrust of the market.
interesting jem, thanks! swing trading stocks still can and does work--its nice to hear success storys such as this. i was speaking strictly of active day trading wherein without an edge, skill is equivalent of banging ones head on the wall given enough time.
surf
From my own personal experience, my edge started with seeing annomalies in the market. When I continued to see this certain annomly over a few years, I finally researched it and found out that it would work, but was not profitable enough and/or scalable to where it would be profitable. However while researching this annomoly, I came up with a few more interesting observations, etc. and researched those until I found something that gave me an edge.
In the end its a tough call because if I didn't have skills (such as bankroll management, control of my emotions, determination not to give up) I would not have had staying power (plus a part time job to pay bills) to find that elusive edge!
So I voted
Edge has nothing to do with skill
EDIT: PB - If you don't have your edge yet, I would suggest you continue to stay in your job or at least have a part time income. Only until you have that edge should you quit your day job.
In the end its a tough call because if I didn't have skills (such as bankroll management, control of my emotions, determination not to give up) I would not have had staying power (plus a part time job to pay bills) to find that elusive edge!
So I voted
Edge has nothing to do with skill
EDIT: PB - If you don't have your edge yet, I would suggest you continue to stay in your job or at least have a part time income. Only until you have that edge should you quit your day job.
PB - I would be curious if in 6 months you came back and still felt the same way.
I have been following this discussion since it was in the prop forum.
I have these same arguments with people. I am stead fast in my beliefs and don't budge on my opinions. I respnd to everyone, trying to restate my opinion over and over again. Then later I realized that people were giving me a lot of great advice and my FEAR prevented me from hearing what they were saying.
Try this, instead of responding to everyone, read their posts and do some research as to what they are writing about. If the research isn't helpful, then feel free to come back and repeat yourself over and over again.
Learn to recognize fear.
I have been following this discussion since it was in the prop forum.
I have these same arguments with people. I am stead fast in my beliefs and don't budge on my opinions. I respnd to everyone, trying to restate my opinion over and over again. Then later I realized that people were giving me a lot of great advice and my FEAR prevented me from hearing what they were saying.
Try this, instead of responding to everyone, read their posts and do some research as to what they are writing about. If the research isn't helpful, then feel free to come back and repeat yourself over and over again.
Learn to recognize fear.
Why haven't you been banned already?
