I won't bore you with the textbook definitions of edge as i am sure you have done enough searching already but in my opinion you would be wasting your time looking for an edge in the true sense of the word at the retail level. I have traded numerous true price edges over the past 10 years(none in the last 2 or maybe 3) and they were all a temporary deviation from fairval due to supply/demand dislocations. Some came back in line within minutes while others took days or even weeks. They lasted anywhere between a few weeks up to a year or maybe two before they got saturated. Trading a true price edge doesn't feel like executing a trade at some perceived positive expectancy or a higher winning probability but rather like you are literally printing money or even stealing it. Given all the HFT shops and all this liquidity sloshing around the system your time would be wasted seeking one of those. What you should rather do is focus on growing as a trader by developing better pattern recognition skills and enhancing your adaptability. Let me paint you a picture. After some vigorous backtesting and simulations you discover a strategy that seems to have positive expectancy so since you are still unsure of your skills as a trader you decide to paper trade it first. A few months go by and everything goes as simulated so your confidence grows and you start trading it with real money. You now think you have an edge. You are profitable for a year or so and your confidence has grown exponentially. You think you have the holy grail so you increase size to capitalize on it. Just a short month later you start to lose money consistently and can't quite figure out why. Your confidence vanishes and you decide to shut down and go back to the drawing board. What you then realize is that you were simply riding a favorable market environment and it wasnt the edge that made the profits. Another month goes by and you have now figured out what has changed in the market. After adjusting your strategy you start trading again making money month after month. You now think that this time you have really found an edge. Guess what happens next? That's right, the market throws you a curve ball and you are back to losing money consistently. But this time having gone through this before building on your experiences it only takes you 2 weeks to adjust instead of a month before you are back to making money. Rinse and repeat years upon years, after a whole market cycle or two you get to a point where almost nothing surprises you anymore and you can adjust almost instantaneously to the changing market environment while minimizing losses that occur at the turns. Trading starts to feel like printing money. You my friend now have an edge. Having said all that, if you are a retail trader and after 2 market cycles you are still trading for a living or a paycheck then you have done it wrong. You have failed to embrace risk and didn't seize the opportunity while it was right in front of you.
This is completely false and demonstrates a total lack of understanding of what is being requested. It is subterfuge and only adds to confusion, sorry to say. Testing has nothing to do with DBs or anyone's results-- in any form of scientific testing personal results are irrelevant and considered to be anecdotal. I could care less if DB profits or does not in the market, what concerns me is his use of terms like probabilities and statistics when he doesn't know the first thing about what these terms mean and how to use them to test his trading method. If he would just admit that its a discretionary system that can not be tested, then I would back off--- It is just the incessant parroting of terms and other things that is quite annoying, surf
No.There wasn't any mention of the only true edge in trading which doesn't change over time and that is capital and the prudent use thereof.
I like "consistency" as a definition of an edge [via Don & Bob Bright] there are probably others marc