What constitutes edge / why is my system working?

Discussion in 'Trading' started by radiusvector, Dec 28, 2017.

  1. Sell dear and buy cheap. If such an edge exist, all algo traders are millionaires.
    It so hard to know the market.
    #31     Dec 28, 2017
  2. ET180


    That's what I would expect as well, again, knowing nothing about the OP's system. My reasoning is that if it's something that can be simply coded up in NinjaTrader or some other common retail platform in a few hundred lines of code, then someone has probably already found the edge. So if you're a software engineer, I'd start by looking at strategies that are very difficult if not impossible to implement in common retail platforms. For example, I don't know of a single "money flow" or net exposure indicator that exists for a retail platform that merges option market data with underlying data.
    #32     Dec 29, 2017
  3. Humpy


    Inter trader brokers have a great ad about making your trades in the real market and only making money if the client makes money.
    Haven't tried it yet but it sounds promising.
    #33     Dec 29, 2017
  4. Xela


    I originally started off there with a $3,000 account, after spending a very long time on a demo account first (their "FxTrade Practice" one). And gradually grew my account over the years until it was worth my while switching to IB and paying commissions instead of spreads.

    No reason you shouldn't, I'm sure. My own reading of Oanda is that they're super-efficient and automated at laying off their own net liabilities in the underlying market, however they do that, so they don't really care which clients win and lose.

    There's also some independently published research (of audited broker accounts) showing that they hold a higher proportion of profitable customers' accounts than other brokerages.

    Good luck!
    #34     Dec 29, 2017
    777 and radiusvector like this.
  5. Why are there casinos,slot machines,cam girls etc etc etc.Gamblers/basic human needs/foolishness are always there.They farm the weak and there will always be replacements for those exhausted of their funds.
    #35     Dec 29, 2017
    Xela likes this.
  6. I think this is fair, but I'd doubt that that is actually the primary intent of the brokers, i.e Oanda - to make money of the weak.

    Simple calculation: If there are 100 traders in world. Let's say 90% of them are unprofitable and have $10k accounts. And 10% of them are very profitable, making 50% y/y on average.

    Revenue from unprofitable traders with $10k account sizes: Assume they win atleast 50% of their original money into Oanda's pockets in a year: 90*0.5*10k = $450k per year.

    Spread Revenue from profitable traders making 200 trades a year on $100k account sizes (assume the profitable traders will stick with the platform for atleast 5 years, average spread revenue of 1.5 pips per trade):

    $100,000 * 0.015 pips * 200 trades/year * 5 years * 10 accounts = $15m dollars over 5 years, or $3m dollars per year.

    Sure, this is a broken calculation with lots of assumptions. But if I were Oanda, I'd be stupid to be betting my business on primarily trading against unsophisticated accounts.
    #36     Dec 29, 2017
  7. Yep, I would say it is in the broker's best interests to actually make sure that their customers are all profitable if possible. Is that even mathematically possible? I doubt it.
    #37     Dec 29, 2017
  8. Yes, there will always be more losers than winners. And by nature of hedging their market risk, any good broker will pocket the money from the losers. This makes people pissed off.
    #38     Dec 29, 2017
  9. Handle123


    You ask more than one questions, the questions are harder than the answers. What makes you car move and then move faster? "Power" or more gasoline to engine or as simple as pressing gas pedal. Markets move on volume or Chan's "capacity. Most hedge funds and HFTs actually trade with the trend, there trend definitions might be different than the masses. Couple hundred contracts might seem like much to retail but really small water drop at exchanges. You can only control entry and most of the time exits, unless you been playing the game a decade, stay with the trend, learn to breakdown completions of swing movement to get better idea when swing is coming to an end then stop taking signals deep into trend, Learn to spot ends of trend so you take profit at these spots and less intraday drawdowns.

    You might be getting in just before volume coming in. Only way to tighten risk is buying lower and selling higher, or going for less profits.

    I prefer to trade currency futures, but use Onada as backup, more important for me to be able to call desk than be on hold 20 minutes with IB
    #39     Dec 29, 2017
    Xela and radiusvector like this.
  10. 777


    The choice of broker is obviously a matter of great importance.

    Your having mentioned IB as an ok non-counterparty broker in a number of your posts should be valuable information to a number of ET members.
    #40     Dec 29, 2017
    Xela likes this.