First, thanks to those who have taken the time and commented on this thread. Appreciate those lurkers who read it.... Hope it helps. My whole point in posting in the first place, was to highlight that there are different types of "EDGE" that we can control and utilize. Mainly doing with ourselves and our trading plan. As private traders we have potential strength opportunities that institutional traders don't have. We also have a lot of disadvantages. So we should leverage what strength opportunities we do have... And there are many. Good Trades, Yukoner
Theoretically you are absolutely correct TradingJournals, but buying bottoms and shorting tops is extremely hard to do consistently. It is much easier to just follow an existing trend and capture the "meat" of the move that way. Just my opinion though, the astute trader can make money either way of course, if he/she knows what he is doing. PS: I am not talking about these bottoms of course, they are relatively easy to "buy", or should I say "borrow"
You plan for them. You review your trading journal, you keep one right? And that allows you to guesstimate how many future mistakes you might make per month. Then take a look at your trading system, factor in for the future mistakes, and ask yourself if it still makes sense to trade it. None of us will trade perfectly... So why allow for perfect strategy execution?
Here is how it gives me an edge. I'm stepping into the trading arena with a very small amount of my account at risk. I'm relaxed, confident, and aware that I really have no idea where the market will go or what it will do. However, I expect certain things could happen and if so my plan is to react a certain way. I know even if I screw up a trade completely and lose double my risk, I am still only down 2% (in this example). I know, unlike optimal position sizing, that when the markets go nuts with that rare event that happens so frequently... I will still be risking a small amout of overall account size versus huge losses. Such as trading through 2008 - 2009 which was insane. Kut, I think we differ a bit on our definition of edge as I believe you are referring to only that found in a system of trading the markets, whereas I am referring to the edge we can have as a trader in how we trade. That is an edge I believe we have much control over.
Ok, I had to read this a few times to make sure I clearly understand your position. I totally agree with using criteria that stem from live, real-time trading... But I believe there can be criteria in a trader's head that is also valid and not smoked up. How about confidence? What criteria do you use to determine if you are confident enough to trade today? Another edge, is your point about only using criteria stemming from live, real-time trading. Gives us an edge over those who don't.
my view on the markets: http://localsfoolsgold.blogspot.be/2013/11/my-views-on-markets-and-details-on.html
You're trivializing "edge" to the point where it becomes meaningless. If confidence is an edge, why not hair color? Most traders are confident. That's why they think they can beat the market with no trading plan or even a basic knowledge of how markets work. Your edge begins with the knowledge you gain through your research and testing that a particular market behavior offers a level of predictability and a profit to loss ratio that provides a consistently profitable outcome over time. It has nothing to do with how much sleep you get each night.