Strategy/method with high percentage of losers
- Thread starter bln
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Quote from 1a2b3cppp:
So what's a trader to do?
Profitability comes from one's ability to "execute" consistently over time. Just as in sports, there is no magic formula for winning the super bowl. The guys who "outplay" the other team win. It's not terribly complicated.
Test it out all you like, to show conclusively it will not work. Life is just not as simple as some of the people on the planet.
This kind of reasoning is typical of beginners. The market actually has three directions - not two. Most have no idea what they really trade nor who they really trade against.
Here is a thought experiment for you. Imagine that a strategy using technical analysis is widely known. If you used it and it worked consistently to earn you profits, then what would happen to it in the long run? Please explain your answer, the reasoning, and its implications. Some time spent thinking like this will repay you enormously in my view.
Just my thoughts.
Exactly, vig is huge part of the equation and people don't even realize it. That's why I prefer to trade something liquid, volatile, and good $Tick size so commish/slippage becomes a lower percentage of each win or loss. CL ect. If you're an intraday trader vig is very important. Longer timeframes not as much.
Ability is not enough. You need an edge. If a team doesn't have an edge in terms of player skill, consistency will not suffice.
I have met many people who were diligent, consistent and hard working but they did not make it because they did not have an edge in their business. Trading is many things all together
1. edge
2. discipline
3. money management
4. adequate capitalization
5. luck (you do need some of that too)
Order of importance changes based on strategy type; TF has 2 first. HFT has 4 first. Swing has 1 first.
Not one single answer.
Of course you need an edge. But if you can't execute, the edge is worthless.
Or it could be that all successful traders just got lucky for a while and the smart ones quit while they were making money while the rest lost it all or will eventually lose it all. You put 1,000,000 monkeys in front of trading screens for a year and their PL distribution will form a Gaussian. The positive tail end of that Gaussian might even spill into profitability. Do those monkeys have an edge?