What defines an "Edge".

SunTrader · Nov 29, 2016

lawrence-lugar said:
This is highly subjective from person to person...depending on what they trade, and their strategy and risk tolerances, etc etc.

Most people would be happy to earn anything above .001% -- to simply have no losses
I don't want to say what are my healthy returns...because this is not about me, and besides...it would most likely drum up ridicule and skepticism.

Highly subjective yet you believe you know what others would be happy with?

Anyway I was thinking generally what you consider fairly consistent returns, not yours in particular.

Humpy · Nov 30, 2016

I doubt if anyone who has a real edge would be foolish enough to tell the world because the more people that use it the more watered down it will be until it is useless.

JSSPMK · Nov 30, 2016

This thread is funny, I'll attempt to make it slightly more comical.

Isn't it better to know how to wipe your ass properly after a dump rather than ask what does it feel like to go to the toilet and come out with a clean butt every time?

Buy1Sell2 · Nov 30, 2016

algofy said:
So do you enter at random?

I enter at areas where I can place a close stop outside the noise. It's part of PRM

Buy1Sell2 · Nov 30, 2016

A trader using random entries, cutting losses short and letting winners run will be vastly more successful than a trader priding themselves on being right.

Spectre2007 · Nov 30, 2016

the bid-ask spread is the 'edge', when you can buy at the bid and sell at the offer... you can extrapolate out the 'bid-ask' to larger timeframes... ie .. ATR or peripheral of market profiles.. so all those algo's that try to market make at high frequency at 1 tick spreads.. can be switched to higher timeframes.

the key with this is only 'offer' or 'bid' according to which ever trend filter you use for entry's.

algofy · Nov 30, 2016

Buy1Sell2 said:
A trader using random entries, cutting losses short and letting winners run will be vastly more successful than a trader priding themselves on being right.

I don't disagree. What about a trader that understands probability and applies an entry methodology that is more likely than not to succeed over a series of trades AND also applies PRM??? Wouldn't that person have an edge or just a random entry trader with PRM?

algofy · Nov 30, 2016

Spectre2007 said:
the bid-ask spread is the 'edge', when you can buy at the bid and sell at the offer... you can extrapolate out the 'bid-ask' to larger timeframes... ie .. ATR or peripheral of market profiles.. so all those algo's that try to market make at high frequency at 1 tick spreads.. can be switched to higher timeframes.

the key with this is only 'offer' or 'bid' according to which ever trend filter you use for entry's.

What? I don't understand. How you move a bid offer spread to a higher timeframe?

Spectre2007 · Nov 30, 2016

algofy said:
What? I don't understand. How you move a bid offer spread to a higher timeframe?

most of the pit traders would constantly quote the market based on mental idea of intraday trend. They would only offer if the trend was down or bid if the trend is up. If they get filled they immediately try to offload quoting the current bid/offer. Sometimes both sides will get hit within seconds. Meaning he will make 1 tic spread on size. Some will wait for a test of the daily high or low before willing to enter the market based on their perception of the intermediate term trend or daily trend. You can view the daily high as the offer and the daily low as the bid. Or weekly...monthly.. If your on the correct side of trend, your entry will only entertain minor amount of 'heat'.. especially in fast volatile unidirectional markets.

trdes · Nov 30, 2016

Spectre2007 said:
most of the pit traders would constantly quote the market based on mental idea of intraday trend. They would only offer if the trend was down or bid if the trend is up. If they get filled they immediately try to offload quoting the current bid/offer. Sometimes both sides will get hit within seconds. Meaning he will make 1 tic spread on size. Some will wait for a test of the daily high or low before willing to enter the market based on their perception of the intermediate term trend or daily trend. You can view the daily high as the offer and the daily low as the bid. Or weekly...monthly.. If your on the correct side of trend, your entry will only entertain minor amount of 'heat'.. especially in fast volatile unidirectional markets.

That's pretty interesting don't have any first hand knowledge of this, or never really thought about it, but makes a lot of sense.