Can Regular Traders Find An Edge?

Feb. 5, 2020

I don’t believe in the no-win scenario.

I don’t believe we’re too old or too young or too busy or too uneducated.

And I don’t believe that regular traders can’t beat the best traders in the world.

I’ve seen too many “impossible” stories come true with my own eyes.

At the same time, I believe hard work can conquer just about anything. As Bruce Lee said, “The warrior is an average person with laser-like focus.”

So, that’s where I began in my quest to prove that “regular” people can beat the market. The best tennis coaches are not at the expensive Academies (100% true) and the best traders aren’t the ones in $5,000 suits watching six monitors in a Wall Street office (hopefully true).

I figured that, like tennis, hard work can help beat the best.

That’s why I spent over 2,500 hours building my first robot. I did that because that’s the way it’s done.

I tested every day. I tested when my family went to the mall. I tested every moment I had free time.

And I did it. I found an edge.

After thousands of hours it became clear that if you daytrade certain times of the day and enter on pull-backs, you can create backtest results that beat 99% of the traders out there.

Of course, that edge isn’t real unless it happens live.

And it did happen live. Like I’ve said many times, that system made 100% in a calendar year.

Mission accomplished?

Not exactly.

That system worked before there were some changes. First, Tradestation stopped trading Forex. (I’ll never forgive them for that). Then the leverage amounts were changed. And then my favorite Forex broker starting changing account types every few months.

And, after two years of trading, it looks like that edge might be gone.

Well, not gone. Just un-attainable. It still looks okay on paper, of course, but the spreads and the execution problems have hurt this strategy in a big way.

Despite all my hard work, this edge can be taken from me, and there’s nothing I can do about it.

I can’t stop the spreads from going suspiciously high when I need to enter or exit. I can’t make the indicator in testing match the indicator in real life.

And, if the Big Boys ever decided they wanted to game my strategy, they could destroy me. Faster execution speeds and/or front-running could turn my small winners into small losers on a consistent basis. This edge looks great on paper but fragile in real-life.

In tennis, there’s not a dang thing the academy coaches can do when my student is pounding their student into submission. All their money and infrastructure can’t stop my student’s superior fundamentals.

In trading, it seems to be different. Thousands of hours creating a great-looking daytrading strategy doesn’t seem to be an unstoppable edge.

Which begs the question: Then what is the edge?

Are normal, “Main Street” traders hopelessly out of luck? Or is there something we can do to compete? And win.

We’ll look at some possible edges this week, and we’ll also take a look at a simple system.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.