What is an edge?

Weeeeeeeeeeeeeeell,

When I first started trading, a winning day was rare,
a winning week even rarer, and a winning month
non-existant.

Now I just consistenly win over the longer term.
Sure I have losing days...but my winning days are
about twice as large.

So I guess I do have an edge. It simply bothers
me that I cant identify it. :D

Recently I had a day with 1 winner and *8* losers.
Didnt phase me at all. Why?
Because I traded well. I didnt lose because I traded poorly.
I simply lost because it was one of those days. They happen.
I knew I would get it back.
Sure enough...the next day I earned twice what
I lost. Confidence in yourself is nice.
I'm really starting to feel like im "getting it". :)

But I agree Nitro...that unknown in trading is scary.
It took me so long to figure out how to make money,
that if it stops working....sheeshh... could be a LOONG
time before I figure out ANOTHER way to do it. sigh..

peace

axeman




Originally posted by nitro
It is glaringly obvious when you have it, and you get REAL worried everyday that it might be "taken away"...

nitro
More...
 
Originally posted by axeman
...
But I agree Nitro...that unknown in trading is scary.
It took me so long to figure out how to make money,
that if it stops working....sheeshh... could be a LOONG
time before I figure out ANOTHER way to do it. sigh..

peace

axeman
More...
axe,

I don't even want to think about it...I just keep plugging along...

If the HARD edge goes away, I will probably start trading spoos exclusively and from the hip, where AFAIK, no one has a glaringly obvious edge over anyone else, save the "usual suspects."

nitro
 
You need a methodology edge. An approach or system that provides a positive expectancy.

You need a psychological edge. The ability to trade your methodology and discipline to stick to your trading plan. This can be taught.

You also need proper capitalization, leverage depending on your trading style, and proper money management to prevent risk of ruin. But these things are easily obtained so I don't consider them "edges".
 
Originally posted by dottom
You need a methodology edge. An approach or system that provides a positive expectancy.

You need a psychological edge. The ability to trade your methodology and discipline to stick to your trading plan. This can be taught.

You also need proper capitalization, leverage depending on your trading style, and proper money management to prevent risk of ruin. But these things are easily obtained so I don't consider them "edges".
More...
Those things are true indisputably.

However, they are the foundation, not the house.

As to how easy they are attained, I would say that:

1) 60% of all traders don't have a "method" - they just hope that being methodical is enough
2) 50% of all traders are undercapitilized
3) 95% of all traders are psychologically ill-suited to trade
4) 80% don't understand the most basic mathematics of trade/money management and the way that it relates to the "method" they trade

nitro
 
Originally posted by nitro

1) 60% of all traders don't have a "method" - they just hope that being methodical is enough
2) 50% of all traders are undercapitilized
3) 95% of all traders are psychologically ill-suited to trade
4) 80% don't understand the most basic mathematics of trade/money management and the way that it relates to the "method" they trade
More...

This must be why 285% of all traders lose money.

:D
 
The edge is what the house has that allows it to make money. In roulette, for example, the house edge is 2/38 or > 5%.

If you want to make $$ trading, you need a system w/ an edge that overcomes the house edge. Doubling up when you lose may forstall the inevitatble, but as a system, is edgeless.
 
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