Thread: Finding an Edge

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  1. #1

    Default Finding an Edge

    Some years ago I moved to some undeveloped family land in Central Texas. The water there was bad from uncased early oil wells and nothing would grow there but mesquite trees and coyotes. Anyway, I moved a mobile home in and built me a huge pole barn.

    In front of the pole barn I put an old whiskey barrel just for looks. I found a rusty old iron like they used to heat on a fireplace, and I put that on top of the whiskey barrel.

    One morning, for no particular reason, I lifted up that rusty iron and found a scorpion under there. I killed it and moved on.

    The next morning I lifted up that iron again...another scorpion. Until I moved back to the city months later every morning I'd lift up that iron and find a new scorpion.

    I have no clue why those scorpions liked it on top of that whiskey barrel under that iron or where they came from...but they did. In the chaos of the world, I'd discovered a pattern of behavior that repeated over and over again. Why didn't matter; it just worked.

    I moved and someone stole the whiskey barrel and the pole barn. Patterns change. I believe you can find recurring patterns of order in the chaos of the world and the market. You don't have to understand 'em and you don't have to figure 'em out. You just have to pay attention! Oh...and if you are not careful you could get stung!
  2. #2


    Did they ever catch the people who stole your barn? Did the insurance pay up? Texas can be a tough place to farm. What with all the scorpions and people thieving your barn and stuff. I used to have a ranch in the centre of Dublin, but everything got nicked. So I guess what yer really saying is take great care selecting where to put yer farm.
  3. #3


    That pole barn was stacked full of worldly possessions--many of them still in the unwrapped packages they'd come in. I had double four foot wide doors which I would close and lock on each trip back to my new home 85 miles north. I'd take a load home each weekend, and the thieves would get as much as they could. I'd left a note asking them to please close the doors to the barn, but they always left 'em wide open.

    It took a couple of months but we cleaned out that barn. I left the trash and the stuff I didn't want, but the thieves took everything even the trash. I guess they burned it to keep warm in the winter.

    Finally they took the barn. I'd put poles in the ground with concrete but they pulled all of them up except one which broke. I don't know if the thieves or the scorpions got the barrel and the iron.

    I did learn I didn't need all that stuff. No the cops never caught 'em...never looked for 'em. In that part of the country everyone is a cop..deputy sheriff. They all have a badge and a the guy in Tulsa that couldn't tell the difference between a gun and a Tasar.

    The point really is that most of the world and the market is random. Most events have a probability of 50/50. Whichever way they go, the final result is skewed beyond any foreseeable certainty. Like the behavior of the scorpions in this true story there are some behaviors that have much greater than 50/50 probabilities. They can be discovered and exploited within the probability they present.

    Too much exploitation and the behavior will change. That's why the probability of so many systems that once worked is reduced to 50/50 probability of chaos. Sometimes the probability of an old system is reduced so much as to become a reliable fade.

    Finding an edge is not hard because they are difficult to find. Finding an edge is hard because traders are human and behave in predictable ways. By definition people are the crowd, and the crowd is always wrong in the end, because once the crowd is in the market...there is no one left to buy (except those few who didn't follow the crowd) the price goes down....and the rich get richer.
  4. #4


    Finding an edge struck a chord with me and my failed ranch in Dublin.
  5. #5


    Edge is an illusion created by retail traders to justify trading for ten years without making a dime ...

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