Prudent Risk Management Is The Only True Edge In TRADING

How do you know we didn't listen? Maybe we did but your edge didn't work, for us, anyway.

 

Well, strictly speaking, prudent risk management is NOT an "edge" per se. But it is a necessary component to successful trading and retaining capital that is certain.

An "edge" is by widely known and accepted definition a tangible repeatable benefit which provides the central thesis for a trade entry strategy. Having a proprietary software program which keeps you at the front of the exchange order queue is an edge. Standing in the pit next your your brother-in-law who happens to be Goldman Sach's Floor Broker is an edge. Having first tier Investment Bank access to dark pool block trades and arbing that against index futures or ETF's is an edge. Sitting in a utility control room, watching a 2400 MW-hr nuke trip off-line, and then buying PJM swaps is an edge. Owning 3 super tankers of oil and arbing that against CL futures is an edge. Getting the very first meteorological reports on hurricane IRMA then buying RBOB gasoline futures is an edge. Having a desk next to the LME ring and a Globex screen with COMEX metals is an edge. Knowing that the third month Eurodollar tracks the Japanese Yen tic-for-tic is an edge. Knowing that the Canadian Dollar tracks the CL contract tic-for-tic is an edge. Knowing that the ASX 200 tracks the two Australian Mining Companies BHP Billiton and Rio Tinto tic-for-tic is an edge.

Having a simple moving average cross indicator and a very good rules set that has a 59% W/L ratio over the past five years is an edge. { PSA: Backtesting is a screening tool for potential strategy candidates and not a substitute for trading, btw. Backtesting is usually overly optimistic once thrown into the crucible of live trading. PSA concluded. }

You get the idea. And edges are not for the most part permanent fixtures. They either come and go or require periodical fine tuning.

 

And I have told you a decade ago, that money management itself won't save a losing strategy. The inevitable will just take LONGER....

 

To be fair the guys that I see that make it a career over the long haul have both cracking strategy and trade management - but your point is taken.

 

Can anyone beat Blackjack dealer applying money management? No card counting.

 

Blackjack has no correlation to trading.

 

You win at blackjack by betting more on the hands were the odds are stacked more in your favor, which is quite similar to trading.

 

Nice try but there is no correlation.

 

Careful. Buy1Sell2 is a professional poker player AND professional trader. But rumor has it that he is a pretty lousy golfer.

 

PROVE IT.