So, if recently discovered "edges" lose their edge...

S

Saltynuts

Does that mean that maybe some edges from "long ago", which previously lost their edge, might come back into edgyness? There has been like a billion trading methods, secrets, systems, etc. over many decades (or more). Can they really ALL lose their edge? Can that many people be watching each and every one, and trading them, to make them all lose their edge forever? I would guess not. I would guess there is a huge swarm of people trying to determine what the lastest "edge" is so they can trade on it, which naturally makes the edge go away. But doesn't that mean that many long lost edges might very well come back into good excess-profit making territory? I think maybe the way to develop a new edge is to go back and study the long, forgotten ones. Maybe from like the 1920s and stuff. Heck, maybe from before, like the tulip trading days or whatever centuries ago. Were there any trading materials written way back when?

Thanks!
 
I have touched upon this subject many times...

you asked a very legit questions... this is why 99% of traders can't make a living... people are just going yo-yo from 1 random method to another based on some back test results, which can only discover some pattern that worked in the past and would sure self defeat.

the only true edge is the trader himself, his logical analysis ability that is better than the others.. something that can't be taken away.
 
Edges come and go. What's gone today may come back a few months from now, next year or years from now.

This is why you should just moth-ball (put in on the shelf in back of the pantry) something that lost its edge and use something else that's currently working. One day that moth-ball strategy will start working again due to changes in market conditions.

In fact, as dozu888 stated...you're the real edge involving how you apply those strategies and trading plan.

That would then imply as you change (learn more, gain more experience), you'll be able to adapt to changing market conditions and that may be a reason why you're now able to use something successfully in current market conditions when you weren't able to use the same strategy / trading plan in a different market condition many years ago.

wrbtrader
 
Saltynuts said:
Can they really ALL lose their edge? Can that many people be watching each and every one, and trading them, to make them all lose their edge forever?
More...

The 3-bar reversal has been around a long time, probably longer than any of you have been trading. Yet it still works and people still follow it (and, to no surprise, this is why it still works). IT WORKS BECAUSE PEOPLE ADHERE TO IT.

The edge doesn't "go away" because others are using it. On the contrary, it's when others are using it that makes the edge even more powerful.
 
schizo said:
The 3-bar reversal has been around a long time, probably longer than any of you have been trading. Yet it still works and people still follow it (and, to no surprise, this is why it still works). IT WORKS BECAUSE PEOPLE ADHERE TO IT.

The edge doesn't "go away" because others are using it. On the contrary, it's when others are using it that makes the edge even more powerful.
More...

certain patterns work long term because they appear during a major sell off and the dumb money participation is extremely high... in this case the pattern is reliable.

but generally speaking, more people using a pattern is why the edge self-defeats, because once a pattern is crowded, it becomes more profitable to trade off the failure of this pattern, which means you lose more dollars more often on the failures.
 
dozu888 said:
I have touched upon this subject many times...

you asked a very legit questions... this is why 99% of traders can't make a living... people are just going yo-yo from 1 random method to another based on some back test results, which can only discover some pattern that worked in the past and would sure self defeat.

the only true edge is the trader himself, his logical analysis ability that is better than the others.. something that can't be taken away.
More...


I'm not sure your post was responsive, I am not talking about yo-yoing, I am talking about trying to find an edge. My suggestion is that, just maybe, an edge lies in going back to long forgotten edges from long ago. Back-testing THOSE, not the newest "edges" on the street, to see if there is something to be had there... again.... Maybe not, but maybe, just maybe?
 
schizo said:
The 3-bar reversal has been around a long time, probably longer than any of you have been trading. Yet it still works and people still follow it (and, to no surprise, this is why it still works). IT WORKS BECAUSE PEOPLE ADHERE TO IT.

The edge doesn't "go away" because others are using it. On the contrary, it's when others are using it that makes the edge even more powerful.
More...


Sorry, that makes absolutely NO SENSE, and is manifestly wrong. The only "edge" that could get stronger is some edge based on momentum that never stops moving in one direction. Everyone knows that does not happen, and cannot happen in any regular trading market.
 
dozu888 said:
certain patterns work long term because they appear during a major sell off and the dumb money participation is extremely high... in this case the pattern is reliable.

but generally speaking, more people using a pattern is why the edge self-defeats, because once a pattern is crowded, it becomes more profitable to trade off the failure of this pattern, which means you lose more dollars more often on the failures.
More...


Exactly. Thank you dozu!!!
 
Different things work in trending periods vs consolidating or choppy periods.

The methods I like to use, stop working when there's no clear direction on any of the instruments / time frames I trade. When the market is consolidating in a narrow range, what I want to do, simply stops working. It takes me very little time to recognize these conditions and adjust. Sometimes there are several consecutive days, weeks, or even months when conditions suck for what I want to do. It's frustrating, but not account ending.

I think if a trader can't recognize when conditions are unsuitable for their methods, they're going to experience some brutal (and unnecessary) drawdowns, at which point they'll probably start thinking their "edge" or whatever has disappeared.

There's no "one size fits all conditions" method.
 
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