Ok Ok what edge

And btw, how does one prove a trading method still has a "statistical advantage" on the market?

If the setup once had some positive expectancy in the past, how can you tell when it no longer holds up? The market isn't a random deck of cards with constant odds -- how many times does a setup need to fail in order for you to decide it no longer works? How can you tell if you are just going through a "period of drawdown" versus "this thing just doesn't work anymore"?

I asked this question in the "trend-following delusion" thread a while back. How do you prove something in the market provides a "reliable" edge and is not just "temporarily" profitable?

 

Let's say I make a market in the S&P's. I sell 1000 contracts at the ASK. Now, instead of buying some random index to lay off the risk, I buy a basket of stocks which my company is already long. That's 1 edge. There's other small edges like that which over time add up to a HUGE difference compared to joe schmoe the poor speculator. All these exchange operators/market makers have *some* edge(s)! Not like your average trader.

 

Hey oliver.. you dont anticipate pre-announcements.
You record them, and ride the stock before its actual earnings date knowing it will be better. Your welcome.

 

I'm an M&A guy myself

 

2bottoms - 3rd time through- 2tops - 20ema bounce try to take losses real quick, walk away from computer when it's looking good
stop at wash

 

if you have a "real" edge, such as with arbitragare, that's great

but you can still play the game well by being better than the next guy, even using information known to all participants

sorry for beating the poker analogy once again, but in that game there is no hard edge to any single player, it's just about being better than the next guy (or two), and good players consistently win

 

You'll never be better than the big institutions, simply because their costs are lower than yours - not to mention their better/faster information and countless other "hard" edges. Sorry, try again.

 

Try what again?

You don't have to be better than the institutions to make money.

 

Correct. Exactly what is ig0r trying to say/prove?

 

Individuals can compete in areas big institutions wouldn't bother because of their size, plenty of advantage to being small as well. You might think of it as getting "leftovers", but lots of species thrive quite nicely on the carrion left behind by others.