By edge I didn't mean in the statistical probabilty sense necessarily...certainly a rule loophole is a legitimate edge until others figure it out. Take the overnight/overseas mutual fund loophole that Gary Smith talked about in his book "Trading For a Living". Basically that strategy took advantage of a rule (or lack of rules) that allowed for risk free arbitrage on overnight trading. This would certainly be considered an edge in my book. As more people found out about it (and funds felt the pain of money flowing out the door) the edge was quickly removed in the form of new redemption rules. I know that a lot of prop trading is/was based on taking advantage of exchange rules that are not easily exploited by the retail investor. Edges come in all shapes and sizes. If its a rule based edge as your posts seem to suggest, then hit now while the hittin' is good!
error First let me take the time to say congratulations but I would agree with WarEagles post. You have an edge not the HG. I also commend your honesty, many people in your shoes would try and package it and sell it. You seem to understand the fact that this would be very wrong because no one can guarantee that this edge A: Can be taught B: Will continue to work into the future ... so taking money from strangers claiming that it would is a lie. My advise is to continue to be honest about your system and it's risks/rewards and put together a small group and manage the money in an investment club or under discretionary trading accounts.
No, I am sorry if I confused the issues for you. The zero cap was in reference to market maker's haircut on riskless transactions. This requires regular customer margin. Actually quite a lot. And to avoid another possible misunderstanding, let's just use a hypothetical example of why a lot of margin would be needed even though I would anticipate a 100% (example) return. $1million margin per trade. 2% average per trade. 50 trades per year. (as I said, no compounding....just simple income). Hope that makes sense. Peace, RS
If you're highly certain that you have found "IT" then trade it ... and trade it with more size so that it doesn't take as long to build up the account. And I believe in a later post you expected to make 100% annually. So if your capital (trading account) is less than what you'd like it to be then consider borrowing money. Interest rates are incredibly low and the 100% expected return would make a couple percent (interest) look like nothing.