What is an EDGE in the strategy?

[rajesheck]

There are two two kinds of EDGEs in a strategy.

1. Positive EDGE
Normally we think of an EDGE in strategy as an aspect that gives higher probability of success. So we see EDGE as narrow way to profit in each trade. This is called the positive EDGE in the strategy.

2. Negative EDGE
On the other hand we can also have a negative EDGE in the strategy which has the nature of quickly indicating the failure of the signal generated by the strategy. The purpose of such an EDGE in the strategy is to minimise the losses.

Now there can two separate positive and negative EDGEs in a strategy or the same EDGE can act as both positive and negative ones.

Stoploss vs Negative EDGE
Stoploss is calculated based on risk reward ratio which is derived from the success rate of the strategy. In other words stoploss depends on the positive EDGE in the strategy.

The purpose of negative EDGE in a strategy is to REPLACE the stoploss. Basically a stoploss itself is a negative EDGE. Stoploss is a weak negative EDGE because it depends purely on the probability.

A negative EDGE purely based on the chart analysis is strong and it certainly can replace the stoploss. This reduces the losses in trading and eventually adding more profits.

One of the powerful negative EDGE in a strategy is MOMENTUM which is price action against time. You can find such momentum based strategies here...

Index Futures strategy :
https://www.elitetrader.com/et/threads/70-success-rate-index-futures-strategy.302944/

Index Options strategy :
https://www.elitetrader.com/et/threads/70-success-rate-index-options-strategy.302945/

Stock strategy :
https://www.elitetrader.com/et/threads/70-success-rate-stock-trading-intraday-strategy.303061/

Commodities strategy :
https://www.elitetrader.com/et/threads/70-success-rate-crude-oil-intraday-strategy.303063

Forex strategy :
https://www.elitetrader.com/et/threads/70-success-rate-forex-intraday-strategy.303062

 

[fordewind]

EDGE is to predct volatility.So far no one could make it.Maybe you`ll be the first!

 

[rajesheck]

EDGE is to predct volatility.So far no one could make it.Maybe you`ll be the first!

Volatility is almost unpredictable. A negative edge may be a quick relief.

 

[fordewind]

Volatility is almost unpredictable. A negative edge may be a quick relief.

Momentum?Perhaps..The position should immediately take off after being signed,right?Almost impossible to do it consistently,hence folks rbitrage on options and forwards.Bull poop...

 

[rajesheck]

Momentum is unique and different from scalping.

The two serious issues in scalping are

1. Landing at a wrong place
2. Quick reversal
​

Momentum trading is micro trend trading with a combination of

1. Price action against time to mark the trend and
2. Sufficient waiting time for intraday noise reduction​

 

[fordewind]

Momentum is unique and different from scalping.

The two serious issues in scalping are

1. Landing at a wrong place
2. Quick reversal
​

Momentum trading is micro trend trading with a combination of

1. Price action against time to mark the trend and
2. Sufficient waiting time for intraday noise reduction​

So?

 

[birzos]

An edge is simply knowledge of the direction of money flow and then positioning yourself to take maximum advantage of it.

 

[rajesheck]

An edge is simply knowledge of the direction of money flow and then positioning yourself to take maximum advantage of it.

A trading edge is a technique, observation or approach that creates a cash advantage over other market players.

http://www.investopedia.com/article...tal-importance-defining-your-trading-edge.asp

 

[birzos]

A trading edge is a technique, observation or approach that creates a cash advantage over other market players.

http://www.investopedia.com/article...tal-importance-defining-your-trading-edge.asp

Is there a particular reason you are contradicting yourself apart from not being very experienced: knowledge means using a technique, observation or approach; a cash advantage is money flow from one player to yourself.

 

[rajesheck]

Knowledge and skill are two distinct aspects. Skill is a phenomenon.

For example a person may have tons of knowledge about biking, swimming, car driving, etc,. But to ride a bike or swim or drive a car skill is needed more than knowledge. Thats why there is no books available like "Learn swimming in a week".

Edge is a technique and it needs skill, more than knowledge, to create an edge. A trader can share his edge to others. But he cannot share his skill of intuition and insights.

Trading is an art. There is nothing right or wrong in any art. And there are infinite ways to express ourselves in art.

Every artist is unique. Every trader is unique with unique skill. The only way to know whether we are successful as a trader is by making "consistent Profits".