The question of an edge - Traders Hideout | futures io social day trading
futures io futures trading


The question of an edge
Updated: Views / Replies:12,502 / 40
Created: by Grantx Attachments:2

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 100,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 2  
 
Thread Tools Search this Thread
 

The question of an edge

  #11 (permalink)
Legendary Guesser
Reading UK
 
Trading Experience: None
Platform: Prorealtime
Broker/Data: Interactive Brokers
Favorite Futures: My 3 boys
 
Grantx's Avatar
 
Posts: 1,582 since Oct 2016
Thanks: 2,182 given, 4,090 received


TheShrike View Post
Those things you listed are prerequisite to success and may help you adjust yourself to attaining an edge. By themselves they do not equal one.

Thats what I am saying, the sum total of those things=your edge so how do you describe it or encapsulate it all into a single mathematical statistic?

As far as I am concerned, a positive expectancy sounds just like the gamblers fallacy where you flip 3 heads in a row and you then have this expectation that the 4th will be the same. Expectancy only represents what you have done to date and has no bearing on future results. The same with your actual strategy, what you rely on today could be quite different in a years time. The only constants that you can safely rely on are the things in that list (and a few other things).

Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to Grantx for this post:
 
  #12 (permalink)
Market Wizard
Cleveland Ohio/United States
 
Trading Experience: Advanced
Platform: Tradestation
Broker/Data: Tradestation, DeCarley, others
Favorite Futures: futures
 
Posts: 2,620 since Jul 2012
Thanks: 1,355 given, 4,999 received


Grantx View Post
Thats what I am saying, the sum total of those things=your edge so how do you describe it or encapsulate it all into a single mathematical statistic?

As far as I am concerned, a positive expectancy sounds just like the gamblers fallacy where you flip 3 heads in a row and you then have this expectation that the 4th will be the same. Expectancy only represents what you have done to date and has no bearing on future results. The same with your actual strategy, what you rely on today could be quite different in a years time. The only constants that you can safely rely on are the things in that list (and a few other things).

If you think "positive expectancy" is the same as gambler's fallacy, I am confident you do not understand expectancy and how it can be of benefit.

Based on 25+ years of doing this, I can tell you I put a whole lot more faith in being successful by trading positive expectancy strategies than by journaling my thoughts...

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
Follow me on Twitter Reply With Quote
The following 8 users say Thank You to kevinkdog for this post:
 
  #13 (permalink)
Legendary Guesser
Reading UK
 
Trading Experience: None
Platform: Prorealtime
Broker/Data: Interactive Brokers
Favorite Futures: My 3 boys
 
Grantx's Avatar
 
Posts: 1,582 since Oct 2016
Thanks: 2,182 given, 4,090 received



kevinkdog View Post
I am confident you do not understand expectancy and how it can be of benefit.
.

You are absolutely right. I dont understand.

And I am glad that I asked the original question because I have traders such as yourself with 25+ years of experience giving a lesson that didn't take me years to figure out the hard way

Thank you. Ill be focusing on my mathematical +expectancy going forward.

Visit my futures io Trade Journal Reply With Quote
The following 3 users say Thank You to Grantx for this post:
 
  #14 (permalink)
Market Wizard
Birmingham UK
 
Trading Experience: Intermediate
Platform: NinjaTrader
Broker/Data: TST/Rithmic
Favorite Futures: YM/Gold
 
ratfink's Avatar
 
Posts: 3,650 since Dec 2012
Thanks: 17,356 given, 8,340 received

With the benefit of Two Pints of Old Peculier I am actually 100% sure that the positive mathematical expectancy for a strategy lasts no longer than the market conditions in which that strategy performs successfully do.

A good friend who used to work for me became CTO of a large risk metrics outfit employing c50 Phd's. He confessed that the biggest problem he had was that they actually believed in what they did. Sometimes reality needs common sense to see past the numbers, as well as debunk the beliefs.

Cheers

Travel Well
Visit my futures io Trade Journal Reply With Quote
The following 8 users say Thank You to ratfink for this post:
 
  #15 (permalink)
Winnipeg, MB Canada
 
Trading Experience: Intermediate
Platform: Sierra Chart
Broker/Data: Oanda
Favorite Futures: EURUSD (spot forex)
 
MWG86's Avatar
 
Posts: 490 since Jul 2015
Thanks: 847 given, 623 received

Edge

Interesting conversation, thanks for starting it @Grantx.

I agree with @kevinkdog’s statement that expectancy is edge and @TheShrike's comment that the things listed in the OP are prerequisites and not "edge" but I understand the difficulty in quantifying it for a discretionary trader. It’s not as simple as saying that ‘I go long when the 20 EMA crosses above the 50 EMA and this has a hit rate of X% and positive expectancy of 0.X% over a series of 1,000 trades.’

Part of the problem for someone who identifies as a discretionary trader is to distill their “edge” into a single sentence or statement. I personally feel that if someone has proven to be consistently profitable (with a positive expectancy) over a large sample size of both trades and time then their discretion itself is their edge. This large sample size is essential because it has to entail numerous distinct market conditions as @ratfink alluded to. Good luck trying to summarize this into a single sentence or paragraph though.

I’ve seen many times the question be posed to someone on the site “what is your edge?” I feel it’s a catch 22 just like when someone applies for their first job. It’s tough to get a job without experience but you need a job to get experience. The same applies to a discretionary edge. You can’t be consistently profitable without an edge but you can’t prove edge without being consistently profitable.

I think if you posed the same question to a consistently profitable discretionary trader either past or present on this site to distill their “edge” into a single sentence, keeping it PG, they might quote Boris Johnson and tell you to “go whistle.”


Last edited by MWG86; July 14th, 2017 at 07:44 PM. Reason: missed the k in kevinKdog
Visit my futures io Trade Journal Reply With Quote
The following 5 users say Thank You to MWG86 for this post:
 
  #16 (permalink)
Houston, TX
 
Trading Experience: Intermediate
Platform: NinjaTrader 7
Favorite Futures: NQ
 
Posts: 91 since Apr 2016
Thanks: 121 given, 88 received


Grantx View Post
Dude: I want to try this new strategy on this instrument what do ya-all think?
Trader: Whats your statistical back tested edge?
Dude: .............


How do you reduce something so complex down to a single question like that and expect an answer? Most times it can take an entire journal and we still wont know what a traders edge is.

Well, asking a trader to define his edge is like asking a magician to show you how he sawed the lady in the half. They're probably asking, "Do you HAVE an edge?"

A better question might be: are there any successful futures traders who didn't understand their own edge? They made profitable trades but it was all just a mystical feeling when they bought and sold (?).

I think when someone asks if you have an edge, they're really asking, "Do you have any idea of what you're doing? Do you have a real trading strategy or are you just whimsically trading based on this week's newest indicator?"

Reply With Quote
The following 3 users say Thank You to ShatteredX for this post:
 
  #17 (permalink)
Legendary Market Wizard
Switzerland
 
Trading Experience: Intermediate
Platform: Investor/RT
Broker/Data: IB / DTN
Favorite Futures: Futures
 
Posts: 4,647 since Feb 2012
Thanks: 4,605 given, 9,451 received

You are not there...

... having
• a positive expectancy,
• a working system
• programmed or not
• back tested or not
• 55% plus gains or not
• hundreds of hours screen time

BUT you face
• a new market field today (other than the past) AND
• you need to throw REAL money (yours or others) into the market...
• you need to PUSH the BUTTON (system or real time)
• your observance might overrule your strategy
• you might be pushing your stops further away
etc.
you know the whole story.

So having an edge is fine - but there is no proof either.
For the survival in the Future.

Good development!
GFIs1

Follow me on Twitter Visit my futures io Trade Journal Reply With Quote
The following 3 users say Thank You to GFIs1 for this post:
 
  #18 (permalink)
Elite_Member
Wiltshire, United Kingdom
 
Trading Experience: Beginner
Platform: Jigsaw daytradr
Favorite Futures: US Equity Index Futures
 
matthew28's Avatar
 
Posts: 694 since Sep 2013
Thanks: 1,359 given, 1,158 received


ratfink View Post
.....the positive mathematical expectancy for a strategy lasts no longer than the market conditions in which that strategy performs successfully do.

A good friend who used to work for me became CTO of a large risk metrics outfit employing c50 Phd's. He confessed that the biggest problem he had was that they actually believed in what they did. Sometimes reality needs common sense to see past the numbers, as well as debunk the beliefs.

Thanks, I have just finished a book and you have reminded me about 'When Genius Failed' by Roger Lowenstein (the demise of the LTCM hedge fund), one of my favourites. I will re-read that.


Last edited by matthew28; July 15th, 2017 at 10:30 AM. Reason: Ropey Grammar
Visit my futures io Trade Journal Reply With Quote
The following 2 users say Thank You to matthew28 for this post:
 
  #19 (permalink)
Cologne+Germany
 
Trading Experience: Intermediate
Platform: Jigsaw Depth&Sales
Favorite Futures: ZN,ZB,ZF,UB,ES
 
Posts: 69 since Feb 2017

i think i can call myself a full discretionary trader, which means the only tools i use for my trading is the Depth&Sales in futures trading and MarketMakerBox and Time&Sales in stocks trading. i watch the play between buyers and sellers and make my final decision on which side has control. Eg in a range we see buyer aggresiveness from support to resistance. then the price comes back to support bc buyers are loading up and dont want a breakout at this moment and sellers are not quite aggressive, price chopps back to support. finally buyers become more aggressive and breakout of the range. how do you want to backtest this? you can only gain this knowledge by watching the time&sales for monthes. how do you want to backtest fake orders on the order book. offer is pumping up and the same guy loading on the other side. no way to backtest it. you see it you join the party. if it goes in my favor i make 5 times more than it goes against me. there is no way you can backtest these things. i use highlowclose bar charts only to identify interesting price levels and thats it. and. to identify the market structure.


Sent from my iPhone using futures.io

Reply With Quote
 
  #20 (permalink)
Salt Lake City, Utah
 
Trading Experience: Beginner
Platform: Jigsaw, NinjaTrader8
Favorite Futures: ZB
 
Posts: 477 since Apr 2016
Thanks: 15 given, 439 received


Some things are difficult to backtest, but not impossible. For instance you can record the level 2 data, and write a bot that trades it. If you can't program you can just trade against an old days worth of data. That's why I have a journal where I post a video of my jigsaw DOM. So I can go back, review old data.

You can also forward test. It's ok to say there is a human element to your trades. However, without categorizing your trades by signal, and tracking the win/loss percentage, average win, and average loss, there is no way to know what your expectancy is. A signal could mean the opposite of what you thing, but because you don't track it you might never notice. Hence why it is critical to journal your trades.

Reply With Quote
The following 3 users say Thank You to TWDsje for this post:

Reply



futures io > > > The question of an edge

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)
 

futures io is celebrating 10-years w/ over $18,000 in prizes!

Right now
 

$1,000 in Amazon Gift Cards being given away right now from GFF Brokers

Right now
 

$250 Amazon Gift Cards with our "Thanks Contest" challenge!

Right now
 

Show us your trading desks and win over $5,000 in prizes w/Jigsaw Trading

August
 

Webinar: Suri Duddella (TBA)

Elite only
 

Webinar: Richard Bailey (TBA)

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Edge steve2222 Terms (Glossary) 0 July 28th, 2016 03:15 AM
trading from the edge or not forgiven The Elite Circle 1 May 22nd, 2016 04:38 PM
RSI Edge? gever17 NinjaTrader 5 March 23rd, 2011 05:48 PM
Finding your edge! George Psychology and Money Management 2 September 22nd, 2010 06:49 PM
Trading with an edge - what does it mean to you ? trendisyourfriend Psychology and Money Management 22 September 14th, 2010 06:39 AM


All times are GMT -4. The time now is 01:12 PM. (this page content is cached, log in for real-time version)

Copyright © 2019 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts