I've been going back and tweeking old trading setups I used to use and I came across an idea that sucked so bad, it was a perfect setup to take the opposite trade on. That got me thinking, how did most of you come up with your edges? Did you come up with an idea on your own or out of a book and then just keep working it till it started showing results? Did you happen to find something on accident? Were you trained by a mentor? Or some other way?
The opening post prompts a restatement. Instead of looking to find an edge where little else matters about how a market works, its the other way around. Learning how a market works will make you realize that looking to find an edge, so-called, doesn't matter. So you get to know the metrics of your market and then apply a reliable methodology. You are going to recognize that you are looking at the gyrations of price, namely each upswing is sequentially followed by a downswing (and vice versa), preferably happening in a volatile liquid market (eg CL) And in your finished studies, your daytrading methodology, successfully tested and trialled, will give you the signals to buy those upswings and sell those downswings.
I'm still looking for my edge @Cheese - Are you basically saying to look for patterns in specific instruments?
I came up with 4 setups that I believe work. However, nothing is 100%. The goal is to not over trade, and to not revenge trade on days when the edge does not work. Some edges can be had by watching price action that has occurred previously on a chart to come up with patterns that duplicate in the future. Some of these patterns may also require a second confirmation.
hard work, trading across all the instruments and timeframes, beeing beaten numerous times, several winning streaks, and then final hit in shape of large loss - 5% of NAV, got me to accept the reality and look in the right direction.
Got most of my edge at WorldCo. A hot russian chick recruited me along with an ex-trader from Goldman and an ex-Nasdaq market maker. Before that I was a lost trader. Spent thousands of dollars on books, software, data services, and trading/investing advisory websites. Learned the hard way that none of these helped. In fact, they caused me to lose tens of thousands of dollars. My biggest loss was from listening to my brother who was supposed to be the genius wall street hot shot with all the academic accolades. He blew out my retail trading account and never reimbursed me to this day. Not even a dime. My second biggest loss came from listening to the posters on a Motley Fool forum. I blew out my retail trading account again. I kid you not. True stories.
"EDGE" = Entry, Exit, and Reverse Signals, Proper Capitalization, Position sizing, Money Management, Stress Management, Cost Structure, Platform, Data feed, Computer system, Internet provider, Internet speed, News Service, Black swan protection measures, Power outage protection ect. My edge came from refining all of the above until it all worked together to make money.