And even though I haven't seen schizo's dick, I am willing to bet its big! Why? Because he's actually doing some great shit in his thread. All these guys who claim to be killing it cannot even answer a few simple questions. Do they have to? No. But perhaps by killing it, they are just doing what Schizo is doing, but trading 20 lots. So when schizo is up $300 for the day, they are up $6k for the day. Do they ever have losing trades? Who knows... they never say. Do they have an 80% win rate? Once again, who knows. I do really wonder if there is something like the OP suggests, a real edge that has to be kept secret. Its as if to say a trader can put on a few trades a week with a high win rate, load up the contracts, and exit a few days later. I think the real edge is in the consistency, as has been pointed out elsewhere. Claiming you have an edge really should come with some metric. If you go back to a poster who shared some good numbers years ago, lescor, you will see that his average win and average loss wasn't actually that dissimilar from schizo. To make 500k, he probably lost about 300k (can't remember the exact numbers). This of course means that his wins were 800k, losses, 300k, and 500k net. When you see Schizo's results, his average win and average loss is usually 1-2 points apart. Now is this an edge? Sure its a statistical edge and easy to see how the money adds up, but this isn't the mythical edge that seems to be suggested by posters who never say much. This type of edge I don't think exists, unless of course you're talking inside info. I'd love to be proven wrong, and clearly no one will ever say, but I think its important to recognize the importance of a slightly bigger win over a slightly smaller loss executed over and over again.
Trading is mostly a game of behavior management. What to do when in a trade. Losers lose because human psychology is wired to fail at trading. Losers commit the same trading mistakes over and over again. The market is binary. Winners do the opposite of what losers do when in a trade. That's the basics on how to get profitable. Beyond that, if a person found a great edge outside of guessing trends and ranges, good for them. Hats off.
I personally don't like to think of 'edge' or lol...'mythical edge' ...as truly an Edge -- but rather...a Skill or Art or Craft in trading. If all you know is stock, and that's all you dabble in...then I can see why some people would be so surprised...when they hear or see of...for example... options traders talking about much higher (mythical) % returns. it's kind of like a natural body builder...comparing himself and wondering...how the supplement bodybuilder can achieve such better returns/size. There is no secret in trading -- Everything is out there for the taking. -- it's just a matter...of Seeing the Light...that's in front of your eyes. (but don't expect anyone who's truly successful to openly talk about their strategy. ) Trading is kind of like Race Car driving (to make another example). -- If you want to be a championship winner...you need a combination of the right car/strategy...and the right person/driver/mentality/skill set to magically pull it off all together in harmony. (if just one thing is wrong or off or executed poorly...then a trader will inevitably fail) it's kind of like rocket science -- but not...rocket science
I am sorry, but you really don't have an edge, and you might need to spend some more time figuring it out. Trading option is a major disadvantage--the commission and spread will kill whatever edge you think you might have. The real edge does not consist of one mind-blowing complicated concept, but consist of various basic concepts, but in the proper combination. It is hard work, painfully boring, and most peoples think it is useless.
It's not the 1980's...Spreads on many options are a penny wide and commissions per contract are well under $1.00...IOW, it's entirely possible to do many things with options that were not possible in the past.
Insider trading isn't a perfect edge, the risk is jail-time so it's very risky indeed. To me an edge equals something that can be quantified and demonstrated to perform over a long period (5 years+) using realistic (key) backtesting. If in that period the profits are consistent and far outweigh the risk, for example at least 5:1 annual return vs drawdown, then it can be considered a clear edge. Then again you can also utilize multiple low efficiency edges that combined result in impressive numbers.
Race car driver and the concept of harmony is very appropriate. That's the intangible factor i am referring to. At some point it Clicks and all the learning and experience begins to self-propel forward.
"Edge : the final frontier. These are the voyages of the trade ship EliteTrader. Its multi-year mission: to explore strange new trading strategies; to seek out new profits and new tax-avoidance plans; to boldly go where no trader has gone before." *cue STAR TREK theme music*
Finding an edge from short term movements is futile as short term time frames represent "randomness". Day-to-day market noise can be driven by many non-economically related purchase and sale decisions. Trying to derive how the market interprets new economic data from a single day’s or intraday's price action is meaningless. It takes a long time for market participants to digest and understand new information. What we should care about are the long-term trends that this buying and selling pressure creates. Those trends are the market slowly building a consensus and can stay in force with a persistence that presents higher positive outcomes of profit. Infrequently, one can scalp profits from pullbacks within the long trend. With that said, 1) "trade" for fun and with a much smaller portion of your account size 2) Don't quit your day job 3) Start incubating and learning a longer term "investing" approach ( as a start, holding small cap value over the long term has produced the best alpha VBR ETF is a good way of getting exposure ) http://www.marketwatch.com/story/8-lessons-from-80-years-of-market-history-2014-11-19 As you age and as life's increasing demands catch up with you, you won't have time or mental resources to "trade" anyway. 4) if you have to "trade", get a job in a trading division of a bank and use other people's money and at least get paid a salary for doing it
The penny wide spread is not real. It will disappear when a real move happen causing suboptimal risk management. In addition, you also have to pay a premium to trade option. If you plug all these costs into your expectancy formula, you see the efforts and the risk is not worth it. I am sure there are ways to make money in the option market. Jeff Yass has tremendous success from making the option market, and founded Susquehanna, but that is the only option success I know.