What is an edge?

Quote from jalee25:
..... For the second question, I believe you have an edge when you are confident in your system. I think it's hard to be confident in these volatile markets if you have a system that isn't profittable! [/B]
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I don't think being confident is an edge. It may lead to having an edge but it by itself is not an edge.

For example, I can be very confident that I can beat the heck out of Mike Tyson in a fist fight. But confidence can be just hallucination not reality.

If your systems/methods can lead to >50% winning over the long haul, then you can be confident of your systems/methods.
 
Quote from TokyoGhetto:

When you have your edge, you will know. You will not know any time before.

Its like a "Eureka" moment. And everything you thought you knew about trading gets thrown out the window.

I looked for an edge in all the wrong places. Just like that holy grail system that promises instant riches.

Then it dawned on me. I am my own holy grail. Once this became a truth I seeked out an edge that relies mostly on my abilities to identify market inefficiencies.

Now its just a matter of wash, rinse, repeat.

Being consistent is an edge.
Adapting and evolving to change is an edge.
Throwing on size when your right is an edge.
Cutting back on size when your wrong is an edge.
Direct Market Access is an edge.
Low commissions is an edge.
Finding the best platform/trading firm is an edge.
Believing in yourself is an edge.

Always strife to be better then those before you and those that come after you.

It takes time to find an exploitable edge. Having that burning desire to succeed in this business will allow you to overcome the learning curve.

Find that edge and squeeze it for all its worth, it wont last long.

Think in terms of an pro athlete. How do you think they developed an edge?

By pushing themselves through limits they never thought existed. Only then will you find your edge, within yourself.
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Great Post!
 
Quote from detrader9:

An edge is defined as a greater then 50 percent chance of one thing happening over another.what 90 percent of traders don't understand and will never understand is that trading is a confluence of mind, (discipline) method, (trading plan) and money management (risk control). If you don't poses all three you have no edge. hence no chance in this game.
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If you are losing/not making money, look into the mirror and ask yourself how you are doing with these 3Ms.

Thank you Detrader9.
 
What is an edge?


It is STATISTICAL evidence that serves as VALIDATION or CONFIRMATION to REPEAT what is basically the SAME trade AGAIN and AGAIN.

You ask politely do I have an edge?

As no one less than Dick Martin said many times, you bet your sweet BIPPY I do.
 
Quote from Zentrickster:

Wow. The ignorance here is truly unreal. Edge has nothing to do with anything posted. EVERYONE has all those things listed and a computer has no issues with emotional control. God you people are sooooo lost
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MM style situation

It can be in an indervidual, although rarely, as generally their behavior/insight can't be replicated.

Everything else is a competative advantage at best with the caveat that very few people do in fact have this advantage!

Regards

Johno
 
Quote from Arthur Deco:

TZ, you describe the world of the rational, logical, systematic trader. I am an irrational, illogical, unsystematic trader. Just because it is indefinable doesn't mean it isn't an edge. And what is wrong with guessing? Let's not pretend that systematic trading is not guessing, especially in the midst of a vexing drawdown which exceeds experience. Almost every trade I make is a winner. You can argue that such a high win probability passes on a multitude of higher risk trades with higher reward. But by no means is what I do guessing.
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When a response likes yours barely has a passing relation to the post, it is not really worth addressing.
 
Quote from TokyoGhetto:


Being consistent is an edge.
Adapting and evolving to change is an edge.
Throwing on size when your right is an edge.
Cutting back on size when your wrong is an edge.
Direct Market Access is an edge.
Low commissions is an edge.
Finding the best platform/trading firm is an edge.
Believing in yourself is an edge.
More...

None of these are edges and you don't know what you're talking about. These are generic & basic aspects of trading.

A true edge is a trick or methodology that has a very favorable risk/reward ratio. Some edges are near risk free, like certain arbs of ECNs or ATS versus the NYSE back before NYSE Hybrid. It simply required thinking ahead outside the box and setting up the proper resources to take advantage of these opportunities.
 
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