Registered: Feb 2010
01-24-12 10:37 AM
Quote from HATEtheRisk:
i am wondering myself about thought i have a long time and i want to know what other traders think about this.
I asking myself:
How many people does it need, who know perfect money making strategies that are easy to trade, that the strategies stop to work ???
A successfull trader, writes a book and give all his strategies to the public. Then logical they should stop working, or not ???
What do you think about this ???
If 30% of all market participants would do the same, would it change the markets ?
Can it only work, if 10% do the right thing, and 90% do another thing ???
But, what if this strategies have worked for the last 50 years ?
Thank you for your opinions.
Yes, logically if its a profitable automated trading system it should stop working IF everybody was using it. Yet, what are the odds that everybody will use that one particular profitable automated trading system and not some other profitable automated trading system that exploits a different edge...I would say the odds are ZERO of everybody using that one particular automated trading method eventhough in theory it could happen.
In contrast, if it's not automated (as in discretionary)...the odds are even lower than an automated trading system. Thus, a profitable discretionary trading method will continue being profitable for those that are already profitable "after" the method is shared...same is true for those losing via the same discretionary method.
Simply, the odds of everybody using the same book and the odds of everybody trading the exact same trading instrument as if trading stops in all other trading instruments...
ZERO such can occur (seriously if you use logic).
Yet, if the profitable method is not automated and was on the best sellers list, promoted on all major financial networks, given to every university in the world, handed out freely at every grocery store in the world...
Some will be profitable and some will not be profitable due to that simple fact most think differently than the next person they're sitting next too.
How many users of a profitable automated trading system would it take for the method to stop working ??? It greatly depends on what exactly is the edge and capital required and I won't even bother with trying to determine an answer for those using discretionary trade methods.
It's just one of those old lady myths floating around in the markets that if you share your profitable method...everybody will use it exactly the same way you do. The possibility of every trader in the world thinking exactly the same on every trade every trading day is ZERO.
If there was ONLY one trading instrument in the world along with other variables that limits how traders can apply it in their own personal way...the theory of sharing and the method losing its edge may then have some merit amongst "retail traders".
As for big boys (e.g. institutions), those are usually different types of edges involving large capital that us retail folks don't have access too.