For me having an edge and being able to make money is the same thing. So the question is how does one make money in the market and why? I think the only way to make money is to take it from someone that is making a mistake. Your job is to find that mistake and use it to your advantage. Keep in mind that people rarely make mistakes and are trying to correct them - no one likes to be a loser. Like in sports, you can't beat your opponent if they don't make a mistake and you have to be ready and take your shot when he gives you the opportunity. Think tennis, boxing, poker, etc.
In the market people make many mistakes that you can successfully exploit until they realize it and correct their position, which they always do. People have weaknesses and the few smart guys that can see them and have the discipline and courage can profit from them. For example people don't like boring businesses (like garbage collecting, funeral services or fertilizer manufacturers) even though they might be excellent companies with outstanding management (because people like to brag and such companies are not ones you would brag about); people don't like companies that the large brokers don't recommend (yet), they prefer to buy them when they hear about them on CNBC or read a story about them in the Journal and meanwhile those companies are up a couple of hundred percent; for some strange reason people prefer to believe in the exception than in the rules, that's why they prefer to believe that companies will not be able to sustain a high growth trajectory and they fail to buy these companies which many times have some sort of built in advantage that will not cease to exist only because people believe so; trends will continue to exist because people are slow to notice, realize and internalize change, because they feel regret that they missed the train and that is why riding trends will continue to be profitable for those that can spot them; conservative people don't buy fashion stocks because they hate fashion and thus fail to buy young and hot companies which can advance thousands or percent, they prefer income stocks that yield 10% a year; people make mistakes in the small time frames too - they are slow to react, slow to notice, lazy to exploit opportunities they see, for example the discrepancy between his brokers quotes and Island that hoodooman has noticed and was diligent to exploit - why did nobody else take advantage of this money machine at the time it existed (did someone care to check if it still exists)? In the past you could have profited simply from having faster quotes or better communication or better pricing models (in options). I can't give many other examples of short term profitable strategies because I am not a very short-term trader myself, but I can pretty well interpret technical and fundamental information (only for specific companies, not macro data), and this is I guess my edge, because I think it is pretty difficult to master - it takes years of reading and practicing and that is why I can do it better than the next guy who just starts trading/investing and his head is full of misconceptions, like the significance of the latest news and economic numbers or stuff like that, or the all powerful indicators or the prophecies of market gurus.
In a word, I see the edge as an ability to make money which comes from devoting time and energy to study, observe, apply common sense and have the character to put your ideas and beliefs in practice.
