"what is your edge" market knowledge, discipline, risk /trade/money management and finding repeating patterns that I have chosen to use as a structure to make decisions.
So what? Understand- again-- I am not disputing that you arent successful. I am proving my point that tight stops using LOD/HOD is an effective strategy with the proper timing and setups.
Well, I got up around 2:45 AM Eastern today and by a little after 4AM, I was long oil. So, at least today it was an edge. In fact, on my Euro and crude trades before 6AM Eastern, my average return is about 3.5%, so maybe there's something to that "early to bed, early to rise" stuff after all. Ultimately, your best edge is the genetic endowment you were given or not given at birth, so, I tend to agree that most people, no matter how hard they work, will never succeed. The worst must be to have the genetic endowment to work hard, but not to have the genetics to have sufficient cognitive capabilities to succeed at trading. Talk about being stuck between a rock and a hard place. Those people probably make good assistants, though.
http://www.elitetrader.com/vb/showthread.php?s=&postid=3552381&highlight=#post3552381 In the above thread, JCL argued that price series autocorrelation dissapears after a few days. You now say the opposite. I think you two have explaning to do. This forum cannot tolerate such diametrically opposite views. Regardless, autocorrelation cannot be exploited easily. Actually, IMO, it is because of it that markets are tough. Thus, I think its presence, which is the same for everyone, is no edge. As far as the normal distribution of volatility-adjusted returns, I do not also see what kind of an edge it can provide. If you are in the left half of the plane, you lose money. Still, the volatility-adjusted returns are normally distributed.
my edge is: whether adversary or favorable, hold on just like a tick hold on to its prey. I do not over-analize the market: I am not a systematic trader, I am discretinary. I know I must use different weapons to kill enemies in different situations. but I know the most deadly is: buy low and sell high. others are just superficial, looks good, but works torriblely. I gamble. I treat trading as a gambling activity. not a rational activity. so when I see it climbs, I climb too, it declines, I wee slide too. I do not care why it pops or drops, I care what is going on, and join the party, I love the party go as long as it can, but I know all parties will end at some time, it goes up like no sky falling, I need take precaution and say to myself: I must get out before the party is over. if it drops bottomless, I do not want to be the hero to save the world, I need not, I know something really has no bottom. I must see a bottom to enter, so I need wait. follow my hunch/insticnt. not follow my emotional needs. I do not ask why, I ask how to take advantage of what is going on. my true edge is: I am a gambler. gamble on odds. if an object moves in some direction, it will keep moving in that direction until some resistance affects it. that is a high odd event. so take advantage of it. any thing flying will finally giving up flying because of gravity, so reverse my take before the party is over is a high odd event too. if things happen frequently, that is a pattern. patterns are high odd events to me too. double bottoms, double tops are good reversal patterns. if fed pops up some policy or a star hit our earth, those are I must accept, ...
A trading edge according to me, at least, is a consistent methodology to take profits out of the market. If it is an automated 'lead-lag' algorithm, or a simple 5 period versus 20 period MA cross on 5 minute bars on a charting package, or "tape reading" a market DOM price ladder is really in my honest opinion not relevant. I don't believe in holy grails and I don't believe in one particular trading style or methodology being the "best" or the "only way". If you can consistently make money, and you can define whatever you have been doing to cause that blessed event to take place, and you can repeat said cause-and-event over an extended period of time and over a wide variety of market conditions - then that 'thing' is your 'edge'.
Its a holiday so I am just posting to pass some time. Since I've spent a lot of time in markets and extractingtheir offer, I decided to repond to the topic, which I know well, and to not specifically respond to the posters so far. Anyone has the right and priviledge to take all of the market's offer. This is a freedom and everyone has equality. But there are imposed requirements. The form of the relationship you could have with the markets is a perfect one: a partnership. Read your signed contract. It says three things: 1. You have to do your job. 2. Do not overstep your bounds. 3. The market, your partner, is always correct. You need to have all the tools at your disposal; they are: 1. Get all the market variables as a stream of current data. 2. Use the correct mathematics that the market dictates. 3. Use the correct techniques for processing the data. 4. Assure that you have full functionality for all market contexts. (This includes resets and defaults) 5. Always steer to the correct signal arena. 6. Always focus (amplify) to see the signals. After 54 years, I have looked back over many years of (in your terminology) unbelievable success in extracting the full offer of the markets. within the first month in 1957, I determined the mathematics and mentally fashioned my mind to see themarkets to the full extent. Decades later and decades ago, technology came into being. Fortunately, all of this smoothed out the market's performance. So extracting the market's offer became more and more productive. The OP's referenced article is not the truth for me. I will list the 9 very very strong edges that I deploy to take all the market's full offer all the time in RTH's 1. My job is MADA and NOT OODA. 2. I go no further than Monitoring and Analyzing data to take profit segments just as they are offered. 3. The market is always correct as it offers profits segment after profit segment. The market only supplies information in the NOW (the present). Tools: 1. Over the years the variables have not changed. their delivery has. This affected the resets and the defaults. My revisions were made available authoritatively on the internet when it became available. 2. Granularity has always determined the algebra of the markets. For each numeric base there is an appropriate algebra. In markets all values are either on or off. This has never been understood by the industry, the academics, nor the scientists. The market centers on BBid/BAsk; onlt one or the other is ON while the other is OFF. 3. For simplicity, the better technique is to use binary vectors. Market rules (the rules the owners of market employ) are vector in nature. The advent of the mainframe, then the PC both lead to hardware and software. The basis of each is the same as the mathematics of the markets. 4. In the 70's APL's distilled the tools for using RDBMS. I used such since I began in 1957 but in a mental form. The mind is much quicker than the markets by a factor of 10 (100Msec to 10Msec). Profit segments compressed according to defaults (See above). This does not affect mental processes since the mind is so quick. 5. The groupings of significant data require that different data sets be used as profit segments ensue (complete their OOE's) At any time only 6 to 8 elements 9f 70 some degrees of freedom are required. Steering uses the combination of five sets of OOE's. In part 3 the context was introduced. the sum of the OOE's is the context. 6. This is the zoom of trading or as is said the trading is in a zone. Mentally, the mind performs as if a PC has been loaded with a complete software package that has the flow of the OOE's, and the DB in records and where the RDB is conducted using binary vector rules. (All of these have been published in ET). The streaming data is either gated or killed or summoned (See 5 above). In summary, this thread is about an OP's dilemma. Dilemmas have no solutions as we all know. How do the vast majority of potential traders never get the realization they desire? This is done by decision making which happens slowly and inevitably that leads to the consequence of a permanently destroyed mind for successful trading. The mind cannot erase the erroneous beliefs and myths with which the CW is imbued. The most significant individual experience a person can have is known to about a dozen of my expert colleagues (each trades his own created way). we have a consensus on the matter. we believe the best orientating experience a person can have is to monitor the market while someone authoritative is explaining to the person just what is coming up next. Anderson, Morge, Netto and many others come to mind.
+1 and patience as an option trader in weekly and monthly patience has served me well. I often take delivery as well and almost always the underlying reverts.
why is this guy jackhersey always so fking verbose! Only idiots and charlatans need take that many words to make a point!