Secret edge , loophole .....

Discussion in 'Trading' started by Surprise, Mar 5, 2011.

  1. Surprise


    I believe that there is no secret edge and there is no static set of rules which will make u money always . I found these posts useful it is in FF from Porkpie :

    " Most noobs are taught to trade what they think or see which by default puts you on the same side as the herd. If 95% are losing, what are the chances that a new approach using a variation of the same old defunct concepts using the same old indicators is going to put you on the winning side of the curve?

    Making a living in the markets requires that you identify and react to the behaviour of others, not analyzing patterns and using indicators to time trades.

    The market makes sure that nobody has a static edge by repeating the same exact strategy. Otherwise, it would get massively exploited with huge capital. If there was such a loophole that developed, it would be quickly closed. If participants instantaneously catch onto it then the price returns to complete efficiency. This action is not created by any individual or specific group, it is the auction itself and all the participants acting in the entirety that create the movement. "

    " The bars, indicators, patterns, systems, structure, and action are all driven by what the other party is doing. The other party is the cause and everything else is the effect.

    This is why some of the best "setups" you see still often fail to produce winning trades. We use tools and visuals to have context in what we decide to do relevant to direction and timing but the outcome after the entry is made is driven by the other party.

    There are no "winning" entries. There are no winning trades that are decided in advance as many would like to believe. It is a game of who has the will to hang in there and who will push the other out. It is a game of poker and a game of chicken. I best compare it to a tennis match in which one player will wear the other down to the point that an unforced error is made.

    Many of us are correct in direction and premise on our winning trades but still end up donating to the market. This is the a result of the trader on the other side having the ability to wear us down and force an error. "

    "The market cannot be defeated with a static set of rules because it is dynamic. The players have to constently change up the action in order to keep the price fair. Those that play poker will agree that you can not win repeatedly at poker by making the same bets on the same types of hands. Same goes for trading. Either you are going to get pushed out or your opponent is. Successful trading is about engagement with the other traders. You get a random hand each time. Whoever plays the hand the best wins. The player with the best hand is not always going to be the winner.

    Judging by all the systems/methods and discussions on FF, very few traders think about the person on the other side of their trade (ok we know its the broker but their prices come from the interbank of competing traders). This is the single most important factor in trading imo and will often decide the outcome of your success. Next time you stick an indicator on your chart, think about what you are doing and why. "
  2. A while ago someone posted this old Taleb interview, and highlighted this excellent quote from it:

  3. NoDoji


    The reason so many traders fail is contained right here in these two statements, minus the words I placed in brackets.

    If traders traded the way they're taught to trade by experienced profitable traders, they'd be trading on the same side as the herd and making money because the bigger, more powerful herd drives price in a given market. It's all about supply and demand in a given time frame.

    Having taught several traders a powerful and profitable trading edge ("best hand") which involves trading with the herd, I agree totally that the player with the best hand is not always going to be a winner, because the majority of traders cannot bring themselves to trade the way they're taught.
  4. My experience has been different. Market moves the same today as when I started about 13 years ago, it just depends on the way in which you view price action.

    Think of the Apple Slogan "Think Different" :)

  5. With all due respect, that is just another flailing trader posting his frustrations without merit. He simply hasn't figured it out yet. Any moving market makes repeated, predictable, highly predictive pattern sequences for exploitation. That never changes.

    Any market that moves up or down has inefficient moments that are highly patterned and predictable. Lots of them. Most traders never last long enough to figure this out.

    The other side of our trade is meaningless and irrelevant. Those who think the secret of success lies on figuring out who has the other side of our trades is merely chasing ghosts until the account runs dry for keeps.
  6. Excellent!

  7. Trading what you see is fine, in fact it's more than fine, it's the correct approach.

    The problem lies in educating yourself as to how you view price.

    What if you are trying to trade what you see but through a wrong glass prescription ?
  8. pwrtrdr


    Interesting, thread ... and on a wekend!
  9. Sometimes these things happen :)

  10. I disagree. You cannot make money by fighting the market. They will always have more money then you and can hold out longer. You want to be the feeder fish that attaches to the shark. Go along for the ride, let the market (hedge/mutual funds and banks)pushout those bluffing with a weak hand. If the market wants to go up and you have a shitty hand (short) no amount of bluffing will make you money. Play the other players and not your hand. Chart patterns are the poker face/tell of the market.

    Also if more people know abot the edge it is beneficial to you. It means there is more volume behind the move/idea meaning there is a higher chance of it going and moving for a longer direction. More buyers mean more demand means higher prices, not lower prices.
    #10     Mar 5, 2011