Hi all,
I was wondering recently about how one defines an edge. I tried to create an example for myself to understand it better but thought better to ask people who actually know.
Say you have a sample size of 300 races, and a specific event occurs 30 times to which you profit. Clearly with no selection criteria, this is how the market operates and to find an edge you must beat this 10%.
You filter and review your results to discover upon creating a selection criteria, of the 300 races you would only become involved in 250 of them but now profit from 50.
Would it be correct to think that with your selection criteria, you now have profited from 50 of the original 300 races, returning 16.6% where a profit has occured and therefore an edge of 6.6%?
Am I wandering along the right line?
W
Defining the edge
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TraderFred
- Posts: 194
- Joined: Wed Sep 26, 2018 7:55 am
Don’t think it matters how you define it. Ultimately your profit and loss over a long period of time will tell you if you have any edge or not.
Back fitting and reworking data to find edges can be useful up to a point, though it’s not until you try them out with real money that you find if they hold up or not.
You can cut the data and collect records anyway you like, so long as you are consistent in your own approach in doing so. Though coming up with a % comparable to other traders is difficult, as there are so many different ways of collecting the figures and calculating it.
Same with working out your ROI or your turnover, it all depends how you count and collect the data.
Back fitting and reworking data to find edges can be useful up to a point, though it’s not until you try them out with real money that you find if they hold up or not.
You can cut the data and collect records anyway you like, so long as you are consistent in your own approach in doing so. Though coming up with a % comparable to other traders is difficult, as there are so many different ways of collecting the figures and calculating it.
Same with working out your ROI or your turnover, it all depends how you count and collect the data.
I understand of course that just because something happened in the past does not mean it will happen again, however as far as back fitting goes as long as I can explain why something is happening then it makes that data more valuable.
I was more looking to find a way of understanding how to measure whether something would be useful to pursue out of practice mode.
Also, the specific example I gave came purely because I think that explained it best in my own mind as one way to seek to discover whether something had value, or an edge.
I was more looking to find a way of understanding how to measure whether something would be useful to pursue out of practice mode.
Also, the specific example I gave came purely because I think that explained it best in my own mind as one way to seek to discover whether something had value, or an edge.