What is Not an edge?
- Thread starter OddTrader
- Start date
I agree, with one exception. Nor is money management, simple or advanced, an edge.
The exception has to do with MAE and MFE, used to characterize whatever market one is researching and testing. Characterizing a market is not absolutely essential to research and testing. Whatever one would learn by characterizing the market first would be learned anyway during the research and testing process. But that process goes a lot faster if one has done the characterization first.
As for using MAE and MFE as part of a computerized backtest, no. In that case, they'd be as useless as all other elements of a computerized backtest and I'd agree with your list as a whole.
Harris agrees with you and recognizes this. The SEC cannot (or will not) handle this in their analysis of those they monitor.
Brooks contributes to laying the foundation with bar-by-bar.
Recently someone notices "you start something and do not finish it...." He is seeing a leading indicator whose use is finished.
Personally I believe something is coming into view in yours and the above thinkng.
I call it n-2, n-1 and n. Bars by bars, if you will.
In News, as a simple example, there are always three significant moves and a retrun to the prior modus. BUT there is always the "fake out" move "before" the news. The fake out is the dummies who cannot frontrun correctly. We frontrunners count on them for "our" frontrunning".
bar by bar is two par "relativity".
bar by bar by bar is three bar "contextual relativity".
Edge is "an advantage" over the milleux. A pair of two bars, if you will.
Harris' frontrunners are slotted in the heirarchy he sees as those in the catbird seaIn the haze of the non incentivized workers of the government (SEC) these turkeys often convert frontrunning into "insider traders" technique.
thanks for the thread.
Most traders naively believe that risking 1 unit to make 3 units (3 to 1 risk/reward) gives them an edge.
When we play Lotto we are only risking $1 to make hundreds of millions and yet playing the Lotto does not give us any edge.
But traders still believe that risking a little to earn big gives them some sort of edge
an edge means you produce something you expect.
for example, you see a market, then you guess/predict it will go up and to what extent in what time period. and it really does as you expected, that is an edge.
another example, you read newsheadlines, and you easily figure out what bulls are thinking and so do bears. the ability to get the market theme from a little bit clues. that is an edge.
or some people act very quickly with no thinking, that is an edge too. in a fast moving market, they can produce huge profits based on the order flow and quick reflective ability under uncertainties. most people will get rational, or be frozen, but often too late end up chasing.
or some people build a system, produce statistic positive results, that is an edge too.
anything can be an edge. different people have different intelligence, personalities, qualities,... so each people should have its own edge. some people's edge may be yours shortcoming.
to an institution, they may need a machinical system, apply money management, risk control model, .... or act as Market makers to scalping do HLF aglorithm trading, very suitable to them.
but to an individual retail trader, that is not en edge. first, you are not deep pocket, you can not win statistically. but you have your own strength. you can act swiftly, your position will not affect the market at all (that provides convinece for you to get in and get out freely). you can just zoom in particular target, you can hit right with higher rate, even with 9 out of 10. you can switch from this strategy to that strategy, or from this symbol to another. this is the benefits of being small.
the big disadvantage of being small is:
you need take advantage of those big players. if you want to fly, you need an airplane (big players). since your existence to the market means nothing, you can notmove the market at all. the only youcan benefit is follow those big players.
if ant need walk 10miles, sneek on an horse, that will be fast.
for example, you see a market, then you guess/predict it will go up and to what extent in what time period. and it really does as you expected, that is an edge.
another example, you read newsheadlines, and you easily figure out what bulls are thinking and so do bears. the ability to get the market theme from a little bit clues. that is an edge.
or some people act very quickly with no thinking, that is an edge too. in a fast moving market, they can produce huge profits based on the order flow and quick reflective ability under uncertainties. most people will get rational, or be frozen, but often too late end up chasing.
or some people build a system, produce statistic positive results, that is an edge too.
anything can be an edge. different people have different intelligence, personalities, qualities,... so each people should have its own edge. some people's edge may be yours shortcoming.
to an institution, they may need a machinical system, apply money management, risk control model, .... or act as Market makers to scalping do HLF aglorithm trading, very suitable to them.
but to an individual retail trader, that is not en edge. first, you are not deep pocket, you can not win statistically. but you have your own strength. you can act swiftly, your position will not affect the market at all (that provides convinece for you to get in and get out freely). you can just zoom in particular target, you can hit right with higher rate, even with 9 out of 10. you can switch from this strategy to that strategy, or from this symbol to another. this is the benefits of being small.
the big disadvantage of being small is:
you need take advantage of those big players. if you want to fly, you need an airplane (big players). since your existence to the market means nothing, you can notmove the market at all. the only youcan benefit is follow those big players.
if ant need walk 10miles, sneek on an horse, that will be fast.