The thing about edge

[tradingjournals]

Quote from dbphoenix:

It's not especially difficult to determine who trades and who doesn't when it comes to things like this. It's also not especially difficult to understand why so many people fail for so many years. Though one wonders why at some point at least some of them don't stop and look at what they're doing and think fuck this and search for a better way.

Be that as it may, I've never encountered anyone who has a 30% winrate who can resist the temptation to cut his profits short if for no other reason than he finally has some. A 30% winrate does not mean after all that one loses two and wins one, then loses two more and wins another one. It can quite easily mean that one loses ten, or twenty, before coming up with a winner. And we are to believe that this individual when he finally gets his winner is going to let it run? Please.

But let's assume that this guy is disciplined and cuts his losers short as well. So he cuts his losers short and cuts his profits short. Even here he can make some money IF he has a relatively high winrate. But if he has a 30% winrate, he will before too long go broke. It's simple arithmetic.

And when he does what your post say he should do, he will hold to his winners long and finally realize he is now an investor! He then quits trading and does investing which ultimately leads him to buying an index. All this time to understand and accept the meaning of holding long to a long index.

 

[dbphoenix]

Quote from tradingjournals:

And when he does what your post say he should do, he will hold to his winners long and finally realize he is now an investor! He then quits trading and does investing which ultimately leads him to buying an index. All this time to understand and accept the meaning of holding long to a long index.

Holding a winner for as long as it's a winner does not make one an investor; it makes one a winning trader. You may eventually understand that.

 

[OddTrader]

Expectation is the right/proper word, technically in mathematics. However, personally I think expectancy (=expectation value) is better.

http://en.bab.la/dictionary/german-english/erwartungswert
Erwartungswert
{m}
expectancy value

http://dictionary.reverso.net/french-english/espérance
espérance de vie
nf.
life expectancy

http://en.wikipedia.org/wiki/Expected_value

http://www.amazon.com/Expected-Returns-Investors-Harvesting-Rewards/dp/1119990726

http://www.elitetrader.com/vb/showthread.php?threadid=174550

Quote from TraderZones:

Rule #1 Drawing up a list of trading rules, like this, will likely not help you become a profitable trader

Rule#2 A trader finding a profitable backtest will likely find it does not work in the real market

Rule#3 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#4 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#5 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#6 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#7 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#8 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#9 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#10 You need 1+ outperformance edges (very rare) and solid money management skills.

Rule#11 You need 1+ outperformance edges (very rare) and solid money management skills.

etc. etc.

 

[NoDoji]

Quote from tradingjournals:

Let us assume you have a positive expected value on past trades. What do you do with these problems: the variance, the drawdown, the probability that the expected value can become negative with you not knowing it yet, and the probability that your drawdown (in absolute dollars) hits the size of your account? There is no control over the probability distribution of the losses.

You ask questions all day every day, but you're not a consistently profitable trader, are you? (My guess is that you're not a trader at all, but that's just a wild-ass guess.)

dbPhoenix has active threads that demonstrate very clearly how to trade profitably in a manner that automatically adapts to changing market conditions.

It just doesn't get any better than that.

 

[tradingjournals]

Quote from dbphoenix:

Holding a winner for as long as it's a winner does not make one an investor; it makes one a winning trader. You may eventually understand that.

You are very bad at assumptions with me. I do not know why you do not seem to understand that there are people who understand what you think they do not.

Winner great than (PercentLoss)*StopLoss/(PercentWin).

Now let pull numbers from the imaginary world:

Example: 0.6 * 1/0.40 = 1.5

So I can jump and repeat loud: you see if you let your win only be 1.5 the size of your loser, you go no where in this business! Correct, I agree.

But if you let it go to $3, then you are winning! Correct, I agree!

Lose 1, make 3 and if you only win 40% of the time, you are will be successful! Correct, I agree

End of imaginary talk.

Is this enough for you to understand that people understand what you think they do not?

Another one from the imaginary: the key in this is to limit losses and put no cap on rewards? (you can say it in one word: call (option)!)

What you write is correct in THEORY! People know the theory, they want what works and which is worth their time.

PS: Run those numbers again, there might be typos in there. The point is that our friend understands that there are people who understand.

 

[tradingjournals]

Quote from NoDoji:

You ask questions all day every day, but you're not a consistently profitable trader, are you? (My guess is that you're not a trader at all, but that's just a wild-ass guess.)

dbPhoenix has active threads that demonstrate very clearly how to trade profitably in a manner that automatically adapts to changing market conditions.

It just doesn't get any better than that.

I was in his thread, and they were long Nasdaq100 at 3400. I opined that it was heading to 3300. It did it in that nasty one day sell off. I can repost what I posted there. He knows the story of the parabola/quadratic, and saw the right side of it on that day.

Do not get me wrong: I like both of you (Nod and DB)!

 

[NoDoji]

Quote from tradingjournals:

I was in his thread, and they were long Nasdaq100 at 3400. I opined that it was heading to 3300. It did it in that nasty one day sell off. I can repost what I posted there.

From what I've seen, db teaches you how to trade. I had no idea he started calling his trades.

I'm simply shocked that someone who states "Just exit the short when the supply line is broken and take the first long thereafter" bought the NQ at 3400 and never switched to the short side during 6-day move to 3300 (which, for some unknown reason, hasn't yet occurred on my daily chart).

Wait, I think I know what db did! Although he's teaching day trading using a 1-min chart, when he went long at 3400, just a few ticks from the top (back then), instead of going short when the demand line was broken, he decided instead to utilize the professional trader's method of avoiding losses by allowing a day trade to become a swing trade!

http://www.elitetrader.com/vb/showthread.php?s=&threadid=279904&perpage=10&pagenumber=1

 

[tradingjournals]

BTW, NoD: I was surprised when you posted that you get paid for your time in the market. If someone makes money, it does not mean that the time spend in trading is labor/work.

 

[dbphoenix]

Quote from tradingjournals:

You are very bad at assumptions with me. I do not know why you do not seem to understand that there are people who understand what you think they do not.

I understand quite well that you don't have the least idea what goes on in the threads I sponsor. Not that I care. I just wish you'd stop pestering the people who are actually working, as opposed to, say, you.

 

[NoDoji]

Quote from tradingjournals:

BTW, NoD: I was surprised when you posted that you get paid for your time in the market.

I have re-entered the Twilight Zone.