The Theory of Edge Diminishing

[.sigma]

Think of it this way. Other than a couple of Super Bowl boxes each year I've never bet on a sporting event with a local bookie, Vegas or online. Although not sure we Americans can do that last one.

But if I was a degenerate gambler (j/k sports junkies) and had a online presence like say, Kim (big azz make that yuge ass) Kardashian and all my followers wanted in on my winning "system" and we all used that same gambling venue (absurd of course but play along for the example) the bookie or casino would adjust their odds/payout when hit with all similar plays.

The other casinos such NYSE/CME/etc and their other players aka traders all do the same.

Markets adjust.

Edges, big and small, come and go all the time. Why accelerate the process voluntarily.

I've always enjoyed gambling/trading similarities and metaphors.

But the odds/payout of lets say blackjack is different than trading Snapchat. Very different in fact, yes the market adjusts but so do you as a trader.

 

[murray t turtle]

I've read a lot on forums about how traders don't tell their "edge" to the public because they are fearful if by doing so, this current method that feeds their account would suddenly disappear, or maybe gradually, becoming fully arb'ed..

.........Lets say you tell this forum your exact money maker.. lets say a few thousand people start using your method (highly unlikely), would you really see your edge disappear? These strangers would have to trade exactly like you to accomplish this, and of course the trading will differ no matter how similar the set up.

IDK about you but I'm not buying this. Thoughts?

Discuss

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Actually public info can help you Sigma;
200 day moving average/IBD/Investors Business Daily proves that. But like the other elite noted =one good billion dollar fund manager could goof you up; + turning points are not very liquid anyway- even in liquid markets.

Some money making methods are not easy to goof up;
buying/investing loNg term to make millions, still works, trading is much different. And there are so many different kinds of 200 dma,different vendors,200 ma, simple, smoothed, weighted, exp moving average.......................................................................................... But like my banker/Christian dad warned =dont tell everything you know!!

 

[murray t turtle]

I really like your examples, and they make sense in my brain, but something about it doesn't seem "reality like" to me. You're explaining a best-case scenario, assuming people will trade your strategy through the cyclicality of markets and trading the same underlyings as you (highly unlikely)

%%
MR SIGMA ; [1ST ]; trading /investing is not gambling; to prove that start counting cards /winning in the silver state= see how far you get,LOL] WE jerked quarters out of a pool hall,as youngsters; so that is why some commercial traders use quarters/levels?? {HINT, that reason is nonsense; even if some use/profit with quarters]`

AT '' the turn point on a super liquid'' ETF like QQQ, ANY size moves QQQ; if you cant grasp that , then try 10 years of reality/chart study= you will get it by then, most likely??. OF course a small cap or med cap stock can be much worse of better ,depending on ones trend analysis.

Tough thing about trading;
as they say in Chicago-the smarter you are-- the longer it takes .LOL,

 

[wmwmw]

Talking about my prediction on 10 years bond:

"I now make a prediction here that 10 years bond will rally big for the next a few weeks.
And this kind of prediction doesn't depend on any trading ability. It is simply a knowledge that market participants do not know. If they know, 10 years bond would not drop for the past a few days."
https://www.elitetrader.com/et/threads/the-theory-of-edge-diminishing.338469/page-3

I was not saying for the next a few weeks, there would be one or two day that 10 years bond would have big up days.

My prediction should satisfy 3 things:
1. For the next a few weeks, 10 years bond will be significantly higher than its 12/3/2019 high;
2.During this period, its 12/6/2019 low will not be broken;
3. It is a continuous rally during which up days significantly outnumber down days.

If any of above 3 things is not satisfied, my prediction would be considered failed.

 

[Sig]

Talking about my prediction on 10 years bond:

"I now make a prediction here that 10 years bond will rally big for the next a few weeks.
And this kind of prediction doesn't depend on any trading ability. It is simply a knowledge that market participants do not know. If they know, 10 years bond would not drop for the past a few days."
https://www.elitetrader.com/et/threads/the-theory-of-edge-diminishing.338469/page-3

I was not saying for the next a few weeks, there would be one or two day that 10 years bond would have big up days.

My prediction should satisfy 3 things:
1. For the next a few weeks, 10 years bond will be significantly higher than its 12/3/2019 high;
2.During this period, its 12/6/2019 low will not be broken;
3. It is a continuous rally during which up days significantly outnumber down days.

If any of above 3 things is not satisfied, my prediction would be considered failed.

And this reveals a complete and utter lack of understanding of basic statistics. Because you see I can have a hundred random number generators throw out 10 year bond "predictions" like yours and the first period about 50 of them would have, by your measures of success, correctly "predicted" the future results. At the end of the second period, about 25 would have been right 2 weeks in a row. Or depending on how many criteria you add, the numbers may be less but still positive given enough random generators. And so on... keeping in mind none of them actually "predicted" anything, they just generated a random choice. Yet using your standards of success, you would attribute incredible predictive skills to the random generators that by pure random chance were correct for several periods in a row. Even worse, you appear to think simply being correct once somehow "proves" some kind of predictive skill. You've been fooled by randomnesses, highly suggest you go read the book of the same title. Turns out it's a basic human instinct you have to train yourself not to do.

 

[Saltynuts]

I have forgotten name of a trader who had very good methods back in the 1990's, he use to use TV ticker tape to find the highs after so much time and do a breakout of the S&P500 futures, he use to post I believe to "Club 3000" and he wrote a thin manuals for cheap costs cause he got tired of all the methods being sold for $3,000, once the manual was sold, guys in the pit caused protective stops to be hit on and off for over years time, so he wrote another manual to offer different entries and that one wasn't any better.

In 1989, Curtis Arnold made a method called "Pattern Probability System", selling it at $3,000, in 1993 he had it programmable and then he wrote a book in 1995 and masses had it and the pit would nail the protective stops. I believe the feds nailed him on some ballooned advertising, but the first few years, it was doing very well, I had even bought it.

I think very few get their edge in first few years, they gone through much mental anguish, financial losses, lose of time for family and themselves. Comes down to why hand others your edges as they not put in the effort or discovered for themselves, perhaps they refuse to learn how to program? If you have one or few golden gooses, keep it to yourself, and you won't have to compete and getting worst fills. You family comes first.

Wow, very interesting on the Pattern Probability System Handle 123. Sounds like an interesting system to understand if for no other reason to see what used to work but which does no longer. I googled - is it this? Out of print for long time.

Curtis Arnold's PPS Trading System: A Proven Method for Consistently Beating the Market

 

[SteveH]

Its an imaginary fear. Backed up by delusional self-importance.

For realz. No such thing as "disappearing edge" in a trend on a volatile instrument. There's trends galore on a 1 min NQ in the mornings.

 

[tomorton]

For realz. No such thing as "disappearing edge" in a trend on a volatile instrument. There's trends galore on a 1 min NQ in the mornings.

1 min? Don't think I've ever even opened a M1 chart.

but this must be something you're familiar with - lot of people say TA features on such a small time-frame are illusionary - with so many bars per hour and per day, its inevitable you going to see uptrends and downtrends and head and shoulders and double tops etc. etc. but they don't mean anything.

What's your view based on your own trading?

 

[.sigma]

1 min? Don't think I've ever even opened a M1 chart.

but this must be something you're familiar with - lot of people say TA features on such a small time-frame are illusionary - with so many bars per hour and per day, its inevitable you going to see uptrends and downtrends and head and shoulders and double tops etc. etc. but they don't mean anything.

What's your view based on your own trading?

The market is fractal. What you see in one time-frame occurs in all. Longer-time frames have and build the emphasis/setups for the shorter time frame.

Find which time frame best curtails to your personality and strategy.

 

[tomorton]

The market is fractal. What you see in one time-frame occurs in all. Longer-time frames have and build the emphasis/setups for the shorter time frame.

Find which time frame best curtails to your personality and strategy.

I don't accept that market behaviour is infinitely fractal at infinitely smaller time-frames.