Prudent Risk Management + No Edge = Positive Expectancy??

Sometimes we retails can't get any break. We can try "let winners run" and most ended up a loss. So, we put a trailing stop and most got stopped out before the run....

 

Happened to me all the time.

 

Last Thur & Fri I did this experiment: Removed my constraints and simply kept trading using the same guidelines I have been using since July's paper and 6 weeks of live.

You won't believe it, both days were (significant) losses after a total of 59 trades. Does that prove if I truly have any edge, PRM is my edge?

 

Your edge is momentum. Trailing stops, or setting a target greater than the stop in the direction of momentum, are components of harvesting that edge even if you bucket them off to the side as "risk management".

FWIW the past five weeks, at least, have been extremely trendy and directional. Volatile, but not panicked or overly emotional. Conditions for intraday momentum strategies never get better than the past few weeks. It's highly likely your strategy would perform worse in more of a back-and-fill market.

 

Thanks.

You are telling me I shouldn't be too cocky about my edge or as a PRM disciple so I shouldn't confuse brains (skills) with a bull (trendy) market.

It make sense. No wonder some days nothing worked with exactly the same approach.

How can I tell when the market is trendy vs back-and-fill?

 

@Specterx is right, my edge is mainly I am trading in a trendy market. There is probably no real edge.

 

Exactly, there is no edge in trend trading. You can close your eyes, flip a coin, scratch your left nut to decide when to buy or sell, and cut short you losers and let your profits run. In a trend, any of those entries would work.

 

Combine methods, or try to gauge market state. A very wise poster in the past (starting with a) said it here.

 

True, but some certainly have beter statistics then others

 

I think I actually verified your thesis. Here is a 20,000 ft view of how I trade:

In general, there is a 50/50 I am right. My 50/50 statistics proved that.

If you are right, this is the edge: Minimizing losses in the 50% of the time I was wrong and maximizing gain in the 50% of the time I was right, furthermore, once in a while I caught a trend. PRM?