Edge Trading.......does not work

Discussion in 'Strategy Building' started by nwbprop, May 15, 2004.

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  1. I just wanted to share my revelation as a former edge trader. I use to be an edge trader that used the 5 min fractal on ES for my edge. Sometimes it would work and sometimes it would not. I traded for a good 6 months before coming to the realization that edge trading was not the way to go.

    I was reading Trading for a Living by Dr. Alexander Elder. The part in the book that hit me like a bolt of lightning was his triple screen trading method. It uses the market as a migrating entity.

    What I was lacking in my edge was using 1 fractal up. While I would get the same setup on my 5 min, the higher fractal would be in different setups. This has allowed me to see when I took my edge, that it had a higher probablilty of failing and i would wash before losing money. It has also allowed me to ride Big trends. When i enter my setup on the 5 minute and it shows(migrates) a big trend on the longer timeframe, i dont worry about the give and take of price as I know their is more momentum in the longer timeframe that will push the price again toward "more" profit.

    I am sure their are a lot of people who have had this experience but I thought I would share it anyway.

  2. honestly, i don't think you really know what you're talking about, sorry.
  3. Dont be sorry that you dont understand. I have been where you are and see where you are coming from.

    Have you read Trading for a Living by Dr. Elder? IF you have, can you enlighten me on what you find wrong in his logic. It would be great to discuss. We can learn from our difference in views on the subject.

    I am probably not being articulate in my revelation which is my fault. I have a Systems Engineering and Economics Degree. Writing is not my forte.

    Best of Luck

  4. ig0r


    I agree with Party Animal, what you speak of is not an edge but merely gambling
  5. I assume you enter on a 5m timeframe and look to 2 higher timeframes for your guidance ?

    What are the higher timeframes that you look to ?
  6. I use the 1, 5, and 15 minute fractals for my trading decisions. The Signals for entry are on the 5 minute and i use the 1 minute for timing my entries. The 15 minute gives me the "probablility" of the 5 min working out.

    When the 5 min signal for a trend works and gives a strong trend, you will find that the same signal will come up later on the 15 min fractal. This tells you that their is strength in the trend.
  7. Hello:
    In my opinion gambling is placing a bet on a process that cannot be quantified without research and the gambler has done no research. In contrast, the poster (nwbprop) seems to be engaged in the research. This is clearly not gambling. Also there are other examples where an author or trader uses multiple time frames to confirm a signal. Books by Clayburg, and Lukeman use similar logic.

    That said, the signal may or may not offer the trader a statistical edge. We do not know from his statement whether the "5 minute fractal" or the "1 min fractal" display correlation or dependency.

    What would interest me is knowing what a "fractal" signal is, and how it is used to trade. Also I would be interested to know how one determines whether a fractal offers a significant edge over random chance. Finally, I would like to know how the addition of another fractal signal adds value to the trading process (when it seems that you don't know yet whether the "fractal" concept really offers an edge or not).

    That should give you plenty to think about
    Good luck, Steve46
  8. I use Jack Hershey's setting for indicators. I also use his "fractal signal" on the 5 min.

    In answering your final question:
    When you get a 5 min signal for a possible trend, the 15 minute could be showing 3 possibilities. A trend in the same direction, a trend against the trend direction of the 5 min signal, or a no trend(lateral) on the 15 min timeframe.
  9. fractals is NOT a trading term, it's a mathematical desciption.

    and I think both you and I don't have any idea what it really means, especailly when you have a economic or whatever engineering background.

    stop using words you don't understand to make yourself sound sophisticated. edge trading? you have a clue...man..

    most ppl here read elder , so stop using authority to back up your argument.
  10. ig0r


    a fractal is a simple concept, a geometric pattern that is repeated at continuously smaller scales creating shapes and patterns that can not be represented by classic geometry (basically, infinitely complex)

    as he follows jack's methods, and jack is the only trader i know that uses this term when talking about trading, he must have gotten it from there

    by saying that different timeframes are fractals (calling them fractals), you are basically trying to tell yourself that patterns repeat themselves in price at different scales. im sorry, i was at this stage also a few months ago, but the market is not some magical fractal or analysable entity, it is a constantly changing (caused by influx/removal of capital and market participants) entity and the FACT is that liquid markets will never stop changing, therefore it is futile to try to analyze the past when trying to predict and trade the future; therefore gambling, if you win it is merely by chance, in time you will lose it
    #10     May 16, 2004
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