Most Traders forget that it is Market Orders that ultimately move price.
Here's my unfiltered thoughts on trying to simplify things to see where an Edge can come from ↓
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What MUST happen in order for a trade to move from Entry to Target?
• Group 1 have to OPEN a position after your entry
• Group 2 have to CLOSE their position after your entry
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If you enter a LONG POSITION, then the only way that you are going to WIN the trade is if market buy orders come in AFTER you have entered the trade.
• Market Buys can come from people OPENING A LONG after you have entered. (Opening a trade is OPTIONAL)
• Market Buys can also come from people CLOSING THEIR SHORT after you have entered. (Closing a trade is COMPULSORY)
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How can we open a long before other people open a long on the same idea?
• faster execution (hard)
• more aggressive level selection and/or frontrunning (hard)
How can we open a long before other people close a short on the opposite idea?
• we have information that they do not have (easy)
• we trade in markets where the competition is dumber and more emotional (easy)
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So there are basically 2 Options.
• OPTION 1: being faster than competition (hard)
• OPTION 2: having more information than competition (easy)
⚠️ Disclaimer: I type "easy" but I'm referring to level of difficulty (or infrastructure required) when compared to the alternative.
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Let’s talk a bit more about OPTION 2: “having more information”
Useful Framework ↓
• “if X happens, what is the probability that Y happens next?”
• if you try to ask this question for X and Y for 10,000 different ideas, it’s likely that you will find some statistical anomalies.
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Something to think about:
• through brute force alone you can find edge.
• Most crypto traders are incredibly lazy.
Barely anyone has the patience to collect the data on 10,000 ideas.
Example:
• “If RSI crosses above 90 on the 1 day timeframe on BTC, what is the probability that the next day is a green day?”
Barely anyone knows the answer to even 1 of these types of questions.
Take advantage of the fact that most participants are entitled and lazy.
Destroy your opponent with your data.
🌶️