I agree with OptionGuru the word 'edge' means nothing because it means everything. If you are going to say why a certain person succeeded when his competitors failed was his 'edge' so what? You haven't said anything. I am a good basketball player because I am tall...it's my 'edge' ...so what?? http://en.tradimo.com/learn/trading-strategies/trading-with-an-edge/ Everybody who is unusually successful, much more so than can be accounted for by chance and in a consistent fashion has a reason for that success. Most likely multiple reasons. Maybe he's just smart. Calling his high IQ his 'edge' adds exactly nothing to the discussion except a buzz word. Maverick: I am confusing nothing. I was discussing risk not 'edge'. You are the one who is confused. YOU'R talking about edge. I'm talking about risk.
You're welcome. I agree, we may be reaching the zenith in quality here. The "I don't need no stinkin edge group" is about to show up. LOL.
Ah but my friend I DO know what 2 and 20 is. VN being rich absolutely does matter. Who on ET is trading to prove to the world they are the best and smartest? Probably no one as we are all here to make money. So why not take whichever way can get you there faster. VN traded for 17 years and didn't blow up in 1987, he grew too big for options and tried to find alpha elsewhere and got killed (actually this is very common for option traders because 2 and 20 gets very profitable indeed so you keep wanting to grow AUM but many option strategies can't be implemented past as little as 100mil AUM). But in the end wouldn't you say he "won"? Maybe he wasn't the best trader but if the object of trading is to make money he's pretty high up there.... I agree this thread, while being a good discussion so far, seems to have reached its peak. The only thing remaining is for Maverick to explain his edge. That would help everyone understand what edge truly is by your definition and also understand why your edge is so much more effective than what others see as their "edge". Cmon man don't disappoint us I've been very open with you and shared as much as I can except my real name and how much money I manage lol. Time for you to do the same....
Overall "investing" is more interesting than trading anyway I hav will this happen ? The only thing remaining is for Maverick to explain his edge. That would help everyone understand what edge truly is by your definition and also understand why your edge is so much more effective than what others see as their "edge". Cmon man don't disappoint us I've been very open with you and shared as much as I can except my real name and how much money I manage lol. Time for you to do the same....
Mav, i have learnt a ton from your posts on ET. But i will be the devils advocate here; as a retail trader, i dont think one should hang their hat on predicting vol or price. Cause what is the chance that their forecast is better than the tons of other doing so? Forecasting intrinsically assumes market is wrong and your forecasts are better - well that sounds like the reasons why genius fails. So i would say you will have to make your trading totally agnostic to any forecasting; yes you can have market opinion but that should be irrelevant to the business of trading. As an aside, i do not believe anyone actually can predict the market (price or vol or anything for that matter) with any accuracy due to the non-stationary nature of the markets. Not even the goldies of the world; whatever money has been made has been mostly made due to enjoying structural edges - or by taking blind chance. -gariki
He said to sell ATM strangles ..seems like good advice given that this market seem intent on going nowhere .
I wholeheartedly disagree with this. First of all, if one is not predicting vol or price, what exactly is your position? Random? Theta is not an edge neither is blindly selling premium. When you sell options you are implicitly making both a vol and price forecast whether you want to or not but it seems like you are simply making it blindly. Second, your views on forecasting are unfortunate. Data science has made unbelievable advances. We can model traffic, weather, the human body, and the movement of terrorist cells. All data can be organized, classified, structured and interpreted. There is lots of noise in data, this is true, but there are millions of signals within the noise. And it's not a matter of "prediction" as much as it is "approximation". For example, if you were asking me to forecast the drive time for you leaving work and on a normal day it takes you 45 minutes. So I model that and come up with a forecast to estimate your drive home. While I may not be able to say to you, it will take you exactly 57 minutes, my model might show that based on the given data, it will take you longer then 55 minutes, meaning my model is showing somewhere between 55 and 65 minutes. Your concern is not the exact time, but is this particular drive home more then one standard deviation away from the avg drive time which lets say is 4 minutes. It appears my model is showing you that your drive will actually be more then 2 standard deviations from normal so you stay at work longer and get more stuff done. THIS is what modelling is. It is not giving you an EXACT answer. These models are absolutely effective in trading and they absolutely do work. It's not being seeing the future, but rather understanding the possible paths and then valuing them. Simply to ignore them and say, I'm going to get in my car and I don't care what you say, the traffic looks fine to me is being ignorant. You would not let your doctor use that approach, you would not let a pilot do that on a flight you are on, no one can predict the weather, I'm going to fly anyway. You would not buy a house in a dangerous neighborhood because you know, crime statistics are over rated. You use and depend on data analysis every day of your life. Why would you not use it for the most important thing you do, manage your money? It's nonsensical. Worse, it's ignorant. Now I do agree most retail folks are not going to go down this route and the data shows, for the most part, they are not profitable. Correlation or causation? You decide.