Psychology of Edge in trading
Any good statistician can coin a reasonable edge after studying the trading charts. A statistician's edge may be nothing more than a probability.
A trader may "see" an edge which a statistician will generally miss to see. It must be more than just probability.
One such edge is momentum, a physics in the trading chart.
Momentum is rate of price action OR timely price action OR price action against time.
Statisticians wont see this physics on the trading chart.
Momentum is an obvious psychology on the trader's chart.
The power of momentum is such that it makes possible to tighten the stoploss without being hit often, which ultimately increases both the success rate of the strategy and profits as well.
Feel free to review this case study of momentum trading strategy with a virtual stoploss : https://www.elitetrader.com/et/threads/principle-based-day-trading-strategies.304974
Note : All the technical charts (eg. moving averages) are heavily based on statistical theories and nothing much about trading psychology, which makes them less effective trading methodology.
Any good statistician can coin a reasonable edge after studying the trading charts. A statistician's edge may be nothing more than a probability.
A trader may "see" an edge which a statistician will generally miss to see. It must be more than just probability.
One such edge is momentum, a physics in the trading chart.
Momentum is rate of price action OR timely price action OR price action against time.
Statisticians wont see this physics on the trading chart.
Momentum is an obvious psychology on the trader's chart.
The power of momentum is such that it makes possible to tighten the stoploss without being hit often, which ultimately increases both the success rate of the strategy and profits as well.
Feel free to review this case study of momentum trading strategy with a virtual stoploss : https://www.elitetrader.com/et/threads/principle-based-day-trading-strategies.304974
Note : All the technical charts (eg. moving averages) are heavily based on statistical theories and nothing much about trading psychology, which makes them less effective trading methodology.
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