Edge edge edge , what is it ?

[comagnum]

My edge is the sum part of all the processes in treating trading like a business. Edge is something that comes from the trader, not from the market.

The best traders on the planet have a win rate of approx 40-60%. Clearly their edge has little if anything to do with their trade identification.

Novice traders tend to think trade identification with a high win rate wins the game, a big rabbit hole. Been there - done that.

Winning traders focus mainly on the 90% they have absolute control over - themselves - the processes of trading. Losing traders typically put 90% of their focus on trade identification - the market.

"I compile statistics on my traders. My best trader makes money only 63 percent of the time. Most traders make money only in the 50 to 55 percent range. That means you’re going to be wrong a lot. If that’s the case, you better make sure your losses are as small as they can be, and that your winners are bigger." Steve Cohen

 

[treeman]

Comagnum - I love Gumby, so.. rad.

That's a great pie (donut?) chart.

 

[ElectricSavant]

ummm...edge hmmmm. what if at market open you identified which market makers ran the price up in the first minutes? would this be an edge?

 

[BONECRUSHER]

Both are equally ridiculous:

Traders that lose often are losing traders. All else being equal.

Traders that win often are losing traders. All else being equal.

I agree that a new trader will most likely never develop an edge..so maybe he or she should do the lose often but win in the end approach(and not day trade), but saying edges don't exist is ridiculous in my opinion. I'll also say some edges can last a long time...but not forever.

Adjusting an edge to volatility and/or referencing previous edges that had worked in the past to currently developing conditions can give huge results. So, one could say adaptability is an edge, which usually requires extensive experience to attain. When I do have to adapt, I never accept a high losing rate...destructive to day trading. I get the feeling that traders who say edges don't exist aren't day traders? Are there day traders out there with 40% win rate who make money year in and year out? I doubt it. Just my 2 cents.

 

[TheBigShort]

edge is just an advantage you have over other participants. Retail do have some edges over institutions such as, you can pick our spots (not forced to trade), you do not have to keep your risk to a certain level (ie. you are allowed to sell naked puts un-hedged where industry regulations may not allow this). You have small size and can trade in less liquid products if you have an informational advantage over other participants. These are true edges however, if you don't have good information, discipline and the infrastructure/broker to capitalize on them then edge does not really matter.

 

[JETLIU]

Edge is the "know how", which can describe all details in the market

 

[jinxu]

Edge is what profitable traders have and new traders seek

I seek the Holy Grail.

 

[dozu888]

Just curious. Have you tested the Turtles trading system of buying new highs or is that 20 day highs? Or Trend following for that matter? I would think both systems work but, no way to test it myself.

check CTA performance index in recent years... miserable.. doesn't work no more.

 

[777]

Bottom line:

1. Positive Expectation on the bet

Or/ and implied

2. Implied odds outside the bet

(Examples of Implied odds outside the bet: a pool hustler dumping, developing relationships, taking poor odds on an early bet on a poker hand thinking you will win big later in the hand if you hit and/or or a good bluff spot may be come up, a meaningful learning spot may come up, meaningful information may be revealed, an image may be built, etc. and so on...)

* most of the time traders, pro gamblers, etc, are looking for positive expectation on the immidiate bet.
_______

"How do we know what we know is true?"

--Ray Dalio

 

[BONECRUSHER]

My edge is the sum part of all the processes in treating trading like a business. Edge is something that comes from the trader, not from the market.

The best traders on the planet have a win rate of approx 40-60%. Clearly their edge has little if anything to do with their trade identification.

Novice traders tend to think trade identification with a high win rate wins the game, a big rabbit hole. Been there - done that.

Winning traders focus mainly on the 90% they have absolute control over - themselves - the processes of trading. Losing traders typically put 90% of their focus on trade identification - the market.

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"I compile statistics on my traders. My best trader makes money only 63 percent of the time. Most traders make money only in the 50 to 55 percent range. That means you’re going to be wrong a lot. If that’s the case, you better make sure your losses are as small as they can be, and that your winners are bigger." Steve Cohen

Comagnum...I "obsess over order entry process" in order to "identify" "sweet spot pitches". That's three of your bullet points that mean the same thing to me...all 3 totaling 45% of your pie. Maybe entry is a bigger part of your methodology than you think?????? P.S. Those 3 points are so necessary to a highly probable infrequent method...my favorite!