The way I see it is this: if you don't do anything better than your competition, then you will lose money. You have to be doing something better than others. Otherwise, everyone will be making money and that's impossible. That's what I call an edge.
I agree with that if you are in a competition where you using the same strategy and tactics as your competitor. But most of us aren't. There is just an incredible matrix of ways to do it correctly, without having to worry about what all of the other guys are doing. People get so hung up on what others are doing. I used to, but now it just doesn't matter.
this works for small and large traders like at banks (well not anymore after volcker) and hf's. paulson, burry, cornwall capital, lippmann at db all saw what everyone else was doing and said they're crazy and these people at every one of the edges listed in the op's post.
The market is what you believe it to be. You trade your beliefs about the market. I perceive that you believe the market is full of people who are trying to outdo, one-up, check-mate, bait & switch, HFT steal, or otherwise take away your stake so you must beat them to the punch. It may work, but seems like a very unhappy existence. It seems you're focused on your competition, not the service you will provide to the market. Take any known good strategy and write an essay about how it makes the market a more functional place. Hint: the function of the market is to allow instantaneous trade of goodz, services, money, securities, or pollution credits around the world. How does your strategy permit and / or advance this ultimate function of the market?
hey man, if you want an edge, just trade against me. I always enter and exit at the market. If you are good at capturing the spread you have an edge on every trade I make. And the guys I'm trading against are more than willing to give me a days move, they are looking for something much bigger. It's just one big happy family and we all make money. When it comes to taking losses we all take our turn. But, hopefully nothing I've done has caused you to lose more than your fair share. Like Karl said, "Each according to his ability, each according to his means." You lose the spread which you can certainly afford, I lose the days move, no big deal, and they lose the big move according to their means. When it goes the other way we are all happy.
I don't think I'm being a pessimist here, just being logical; not everyone can win in the market. In a small town school, it might be okay to give everyone As and Bs, but when those kids get to college and then later start working in the real world, well reality might just hit them in the face. By the way, I think that the only useful service that the financial sector provides is: lending, providing capital for business, and investing on people's behalf using expert knowledge. Trading is only useful in my mind in terms of execution, i.e., getting the best deal on behalf of a client. It is very hard to justify prop trading or trading one's account for gain as a service to society. "Providing liquidity" is the biggest BS excuse out there I think. The only people who find liquidity useful are traders themselves. Most people on main street don't want to or need to trade and would be happy waiting for a good deal more than a few seconds at a time. They want to invest in the long term, and are willing to wait for real capital appreciation, i.e., a company expanding and providing more goods and services at less unit costs, or the GDP expanding due to increased efficiencies and technological innovation. I suppose another function that people like to bring up is making the most efficient use of capital in society. But again, that could be done by investment banks competing for your capital to invest, not short term trading on your own account. So take away this service notion, and all you have left is a dog eat dog world. Just my humble opinion.
Interesting how you have never considered the farmer, the miner, the rancher, the company CFO, or other hedgerz who are not looking to make a profit trading, only raise capital and eliminate price fluctuation risk! Also interesting how you have avoided arguing for / against the market's adjustment mechanism to changing company fundamentals! Do you want to make the grade in this business or not?
Farmers miners ranchers and CFOs don't need to trade short term. Prices would not fluctuate so wildly and should track fundamentals if it weren't for all those liquidity providers (aka speculators) out there. Markets will adjust to fundamentals in a world consisting only of investors. Investors are actually the ones reading the quarterly reports, not traders. They will get out of a stock if they see the business is failing. They will enter into new companies if the business is thriving. Short term trading is not needed here at all.