How to know if my edge is going away?

Discussion in 'Strategy Building' started by Oadmani, Oct 15, 2021.

  1. hilmy83

    hilmy83

    breakeven at least?
     
    #11     Oct 15, 2021
  2. bln

    bln

    You know then it breaks the expected range of draw down. Lets say you have a expected long term draw down range of negative 0-20%, if it drops beyond the floor at -20% you know something is wrong. It's an anomaly. Your strategy/system/model is not working as expected.
     
    Last edited: Oct 15, 2021
    #12     Oct 15, 2021
  3. SteveM

    SteveM

    Profitable over the last 18 months, flat over the last 8 months, negative over the last 6 months....If I didn't have the built up equity curve over the last 18 months, I doubt I would have the mental strength to keep showing up day after day and running the system....it's been painful.
     
    #13     Oct 15, 2021
  4. jnbadger

    jnbadger

    Is this a joke, or do you really have no idea when it comes to basic risk management? Not to mention Monte Carlo, etc?
     
    #14     Oct 15, 2021
  5. Nobert

    Nobert

    Then, we're doing just fine.

    hsrsfh.jpg external-content.duckduckgo.com.jpg George-Soros6.jpg
     
    #15     Oct 16, 2021
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  6. tomorton

    tomorton

    To be certain your edge is fading it is vital to understand firstly what is your edge and how it works. This will almost certainly tell you why it would fade.

    However, I side more with the belief that true edges don't fade but lucky trading always does.
     
    #16     Oct 16, 2021
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  7. Bad_Badness

    Bad_Badness

    If one cannot tell when the edge is gone, then one does not know what the edge is in the first place. Any system should have its limits and stress tests done BEFORE trading.

    One should be able to tell over a series of trades what is "normal" and what is not. If one can't do it that, then the system is unconfirmed. You should have a boat load of measurements and tolerances to those measurements as @userque points out.
     
    #17     Oct 16, 2021
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  8. NazSherpa

    NazSherpa

    The trend is your friend. Lots of traders use something like a long term moving average 50 - 200 days to determine it. (Even traders who are multibillionaires.) Any 'long only' strategy has been very successful of late. Just using simple logic like 'buy the SPY @ any price - sell next bar @ all time high' would have an impressive win rate (maybe perfect?) and track record.

    There's an old adage - don't confuse brains with a bull market.

    Paul Tudor Jones leans on the 200 day MA. He calls it his most important metric. He might be worth listening to.

    As a broker in the late 1990's I witnessed a lot of people becoming immensely wealthy during the tech boom. I also witnessed most of these people giving everything back plus some.

    Draw a line in the sand. If the Nasdaq or S&P500 goes below X then stop trading from the long side. Yes, you'll never buy the bottom - but you'll also never go broke. Get out of the way and let the carnage happen.

    Some of us who have been trading a long time actually like bear markets. Things, and profits, occur quickly. But, if it's not your cup of tea - just get out. Take a break. Go on a vacation.

    The most important thing that I can convey is this - you have to have a tap out point - a place where you say 'uncle'. There's a possibility that you 'edge' is nothing more than circumstance. If you've been trading stocks 'long only' for less than 10 years - this is quite possible.

    Another cliché - "when in doubt - get out" The markets will always be here.
     
    #18     Oct 16, 2021
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  9. virtusa

    virtusa

    Is this a serious question or are you joking???

    Buy a cristal ball and check the future.

    You can never see if in future your system will still works.

    There are several possible scenario's:

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    Last edited: Oct 16, 2021
    #19     Oct 16, 2021
    Nobert likes this.
  10. deaddog

    deaddog

    It has been said if you can't define your edge you don't have one.

    Without giving your edge away what process do you use to define it?
     
    #20     Oct 16, 2021
    twstn likes this.