How do you know when you have found an edge

Discussion in 'Trading' started by keep learning, Nov 10, 2008.

  1. Handle123

    Handle123

    It took me a long time to find my edge cause basically I was lazy in the beginning and the market was more than happy to let me donate my money to others. No single trade has more than a 50/50 chance of being profitable, but when you backtest 3000 plus sample size and you get the results that allows you to know how bad is bad and how good is good, I started to develop my edge.

    Of course the next part is even more difficult, controling what my mind is seeing as opposed to the rules that I have made for my methods. I had to learn as well as I am sure all have found out why it takes as long as it does to make a set of rules for trading. The discovery takes years for most to find what doesn't work for them. I think for me, I was trying to "Invent" my methods, but as in all "Inventors", the final product happens by mistake and I found what worked for me.

    Now I wish I could say I found my set of rules and I don't have to tweak anything ever again, but the real facts is I work harder now refining my edge than when I was much younger.

    I think most traders don't make it because you really have to live and breath it. If you think it can be a part time endeavor, I think it be better to plan a vacation.

    Handle
     
    #21     Nov 10, 2008
  2. lol i think both of you guys are wackos.

    as to this question.. if i understand you correctly i would have to say 'no' i dont assume that the good and bad are 50% each.. how i manage the - so that the + are in my favor is by reducing it to lesser than 50% for myself primarily through risk management. outside of that it is just understanding how to trade.
     
    #22     Nov 10, 2008
  3. Putting insults aside, that is more or less the answer I expected you to give.

    By cutting your losses, your wins will be less that 50% (or put the other way your losses higher than 50%), which makes your initial statement about the edge totally FALSE.

    I concluded from what you wrote that you do not trade or that if you trade that you will lose potentially everything, and then you will understand or simply leave the market. Your are not alone. 90% of the people are like you.

    The market will teach you.

    Because of your insults, I will not help you anymore (or sorry to others who might have learned something). Bye.
     
    #23     Nov 10, 2008
  4. when you'll no longer be on this board :)

    ...I am getting there, time will tell
     
    #24     Nov 10, 2008
  5. [​IMG]
     
    #25     Nov 10, 2008
  6. by cutting your losses your wins will be less than 50%...? :confused:

    wouldn't this depend on the number of losses ones strategy would endure statistically? you got me a little lost.

    it sounds like you're saying cutting losses is a bad thing? what do you suggest doing with losses?
     
    #26     Nov 10, 2008
  7. i believe what you are actually saying is that by cutting losses ones win ratio would be less than 50% which is fine if you are able to take greater reward to compensate for the losses. although if you master your entries you can maintain 50% or greater which is the difference between profitable and very profitable.
     
    #27     Nov 10, 2008
  8. bespoke

    bespoke

    what are you guys even talking about....

    based on my experiences of my own edges:

    avg winner > avg loser
    # of winners > # of losers

    do that 100+ times a day and you'll result in

    95% winning days
    avg winning day > avg losing day


    that's an edge. well, anything with positive expectancy after commissions/slippage is an edge.
     
    #28     Nov 11, 2008
  9. Yes, there are many people here who are not consistently profitable. Many of those have developed trading rules, via much hard work and hard knocks, but sometimes lack the self-discipline to stick to them. Been there myself. The human mind is fundamentally unsuited to the markets, and has to be trained to operate in them (see Trading in the Zone by Mark Douglas - this book totally changed the way I view the markets).

    If you are wondering whether you lack edge or lack discipline, I would say you do not yet have an edge. If you did, you would know it, as an edge is simply a set of rules (however simple or complex they may be) that tell you when to get in and get out.


     
    #29     Nov 11, 2008
  10. Twenty-nine posts, all today, all this same bit of spamming shit.
     
    #30     Dec 29, 2008