It is interesting how if I use the word predict 90% of people will jump in and say that you cant predict but use words like guess or feel and suddenly guessing is allowed cause one assumes it is based on something that has an edge. Likewise, the word "edge" is not only accepted but encouraged. But the word holy grail is laughed at. A holy grail actually IS some thing that gives an edge. So to beat the odds one needs a holy grail. Lets not fool our selves here. Just because a holy grail is hard to find/create or understand does not make it no longer a holy grail.
I am starting to think that traders feels they have failed because they think that they are building ideas on top of other ideas and adding it all up. Worst case scenario, they think is that they have a 1% advantage. but its all just a pile up of garbage. Why would you say that I may be better of working in a job ? I think that could go for 95% of us. The other 5% may not need money for one reason or another .
well, some of us don't need money because we guessed right but that was after many years of understanding the odds and managing money I don't know what kind of short cut you are looking for, but you are not going to find it find a virtual craps game or roulette table or coin toss program and work out your 50/50 mm then start guessing for instance, you bet heads and it came up tails, now what do you do? You should already know that before you ever place another bet
Other ideas brought to the subject thus far are : 1. A. money management, -an art of keep you in the game longer B. averaging down, -has no edge if you do not know where price is going C. varying position sizing - has no edge if you do not know when you will be right. D. adding to winners -Adding is the same as putting in another order when you are right. The assumption here is that if you are right once you will be right again. Besides the money management (only cause it is vague) All the above require you to predict or guess what is going to happen. If you know what is going to happen then you do not need any of the above techniques. Just buy when you know. Why go through the loop of averaging or adding ect ? Average down during a bubble pop and every penny made is gone. 2. "reading the market, buying when the ma crosses over, or a new five minute high takes out something" Excluding volume, this is Technical analyse and has never given an edge. It seems to be just a place to enter where something big may happen in any direction. You can play with R:R WRate but as we said its all the same in the end. We will always see a pattern in things. TA is given to us in a form that the mind can manage so it stands out. A channel looks so convincing, put it in another channel and you have quadrupled its convince factor. Take support and resistance, It either bounces or penetrates. As convincing as this may be we all know the truth, its just eye candy it is not a magical thing that beats the laws or randomness. On your next chart you open, draw a line across the screen. buy when it is crossed. now you need not have to worry about retests or people manipulating price to take the majorities stops 3. "1st it's about making a profit" Sadly this is the best answer so far. 4. "Then it's about seeing if the risk is acceptable" Risk and reward is not separable unless you speak of fees. If the fees are none, then you are at 50 50. That being said *getting paid to trade should be an edge. *
5. "Eliminating" bad trades. This can fall under optimization or not. What is a bad trade? It is not a single trade, so it must be trades that are bought under certain situations (lets say a moving average (MA) trade to simplify). How can a MA trade be consistently bad ? That is like saying every 10th coin toss is bad. It is an invalid statement. A bad trade is a trade that takes much longer to even out. If one has trades that are consistently bad why take them out ? All you have to do is simply take the opposite position when ever that trade presents its self. This is important, it means optimization may not only be a wast of time, but it can take out potentially "profitable" trades (if one takes opposite side) The "bad trade" set up occurs for one reason. When a black swan pops up this is where ones bad trades will be the profitable ones. They consistently didn't work because from time to time they work REALLY well 6. Having a an "edge" 7. Volume Volume is the only one that I cant decide on. Keep in mind I am discrediting things based on the little that I know. I would not be surprised if I was wrong. But to have potential an idea must make have a minimal amount of logic. Volume stands out cause I do not see it in a coin toss. It is an added variable. The coin toss gives us 1 variable that I am sure about (heads or tails) the market gives price and volume. It is dangerous to assume that an added variable gives ANY edge. This one is just of interest cause it is not a variable from out side of the market such as astrology. I would like to think that a variable from inside the market follows different math concepts. Ill see what the professor has to say about it if I can get to see him. I think the only thing volume will give us is possibly things like volatility.
This leaves us with 1."1st it's about making a profit" 2. Get paid to trade 3. Volume (look at in conjunction with price) 4. holy grail (formally number #6) To this I would like to reluctantly add, 5. Go in the direction of the trend and 6. Take trades that are very unlikely to even out(Buy and hold and astrological type trades) 7. Identifying stops on the level 2 that are not likely to be lies. 8. economic laws. I do not mean to brush off peoples ideas, I am just replying at a faster rate so instead of waiting for replys I proceed. By all means feel free to take things that I have put in the garbage bin out. It would be nice if there were some newbees here.
If this is a short cut of any kind it is both expensive and it does not seem short, the ideas are recent, but they are built off years of work. Participating, for some one who says they dont need money will be frustrating. He or she just may be in such a situation cause their trading is bringing in profit and may have been getting better and better every year. I see new traders start of entering with a "system" weaker then a moving average. A new trader compares him self to a better when they start. They do great ! They have not lost their money over the time span of a sport. They are loosing money at such a slow rate they must be on to some thing ! That is week 1. Assume a newbie places 5 bets on a moving average crossover, try to explain to him that it may not be that easy. He will show you his charts. He will point out where it works and then come to an area of congestion and he will skip through it assuming the buying and selling back and forth breaks even cause price is congested and looks flat relative to the previous trend. Or maybe there is no such area and he sees multiple wrong entry's. It does not take long for him to learn how to change the variables of the moving average to "fit" the chart. Explain that he is cheating and he will say; OK I will just use an average of the two MA variables. Or look at the charts presented on many threads. The possibility that some one is the group of the "newbie" and not know it is not erased because of experience, system development, and consistent profit. If you are in this group, you may not know it. If you are not in this group you know you are not in it. In both cases one is sure they are not in the group. I use the word "you" and "newbie" only because I know my posts are long. Please do not be offended. From my observations your trading is much better then mine. As for the coin toss, to be done fairly I THINK that it would have to be done with other people some how as we are not to bet on the coin but rather how others will react. For some reason being a zero sum game has different laws, I have not seen a law that has an advantage to it that can be exploited yet. If any one want to be on coin toss or even if a market will close up from its open I am 100% ready to play I think we would need a couple of players. I did dice toss with some one recently, naturally they were not as enthusiastic as me and she was betting on the die it self. The numbers were way to small, but I remember saying that if it was 2000 rolls instead of 20 the ratio of the results could be very peculiar. A virtual site with good randomness, no signing up or email registration would be great. Better would be one where people can play against one another instead of the dice. I saw one where one can buy and sell stocks and it kept a record, but I think I felt that the charts given may have at one point started repeating. I have never seen a good sim trading system yet.
Nice, I do not know that much about slippage but if indeed it is negative when one buys and sells what you say may be a bonus. For some reason I feel at best it could reduce loose caused be slippage,But who knows, maybe it can actually create profit ? ?? If my instinct is right it would be one of then many things I but in the garbage bin that will have to pulled out once we find our "Edge". An edge should put us on top of 50 50 it could put us at 51 but we would never know it is an edge. I feel an edge to be statistically valid should be at LEAST above 10%.