If you have backtested 10-20 years, most likely it would show 80% or higher weeks. I have 4 systems that fall as grails, each very different. At least one week a year each gets no losses cause cycling happens of perfect patterns. The more we place rules of patterns, reduces signals. I.e. triangle breakouts, if we require pivots 2 or 3 bars on each side of a pivot to form as opposed to one bar on each side of a pivot, more bars reduce over all setups. My learning years, I didn't follow bulletin boards or on the web. I worked hard. Long hours of programming tick data, I did my own work. And I found counter trend and hedging were my edges.
If the system works at least 50% of the time and sometimes up to 80%, and has a decent risk reward (i.e., at least 1.5x), then you definitely have found something. Now you just need to focus on studying all the nuances under different market conditions.
@Handle123 Thanks for a informative and useful post -- I share a similar view on Patterns, Counter-trends and Hedging. I would that those who have not found their Edge will carefully read and work to understand .
Jinxu has made a very good point about "edge" people just brushed aside. He mentioned speed as the edge for a trader. While not actual speed because they have sub second algos. i'm thinking he means size / speed advantage. The overall maneuverability the retail trader has over large institutions is arguably the only "edge" we have. They have sub second algos and actual quant scientist working on finding stat arb and pair trading opportunities. So our only edge is the ability to weave in and out of the market with no impact on order flow. Which is funny because you guys will sit there and backtest useless indicators. Which have no statistical validity whatsoever. You think X crossing over Y means jack shit when millions of parties are buying and selling on higher and lower timeframes for God knows the reason. Retail makes it hard on themselves because of ignorance.
Yeah it’s easier to flip 1 contract than 1000c But it depends the length of the move. Good luck catching market noise There are small accounts edges, But trading noise isn’t one of them.
The Holy Grail of trading has nothing to do with trading indicators or trading systems. There are millions of profitable trading systems out there. The Holy Grail is actually 100% based on position sizing and risk management that will prevent FOMO. Stop looking for the Grail. It's sitting right in front of you. Case in point: yesterday makes 41 green (profitable ) days in a row for me scalping stocks. My account is up more than 55% over that time frame (Aug. 20 to Oct. 25). I simply found someone else's trading system that I can trade with confidence and I know is profitable. Then I focused on position sizing and risk management to kill FOMO. That's all the Holy Grail is. I wasted 25 years looking for the Grail, only to find it was so ridiculously easy all along.
I wonder how many ET participants really value and understand the importance of This Post you made here -- Thanks @vanman72001 !!
I'm sorry, But that sounds more like an edge then a holy grail. For a Holy Grail I would expect at least 100% every month if not every day or every week. An edge is anything that gives you a slight advantage over everyone else. Let me tell you how the Holy Grail came to be. It is a system made of multiple different systems I was testing together to see what works only to discover that they work best when combined together to form a holistic approach. When these system were used separately they would sometime work sometime didn't so I get 50% success at best.