What is an "edge"?

Neuroway said:
@volpri, I agree. Discovering that you are able to bleed the sheep to death is not an edge. It's just about discovering who you really are.

Here. Aesop. Back from 620 BCE. Caveman morality, should I say. Primitive at best. The worst of it has no name found yet. The jungle book describes it best.

https://fablesofaesop.com/the-wolf-and-the-lamb.html
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I go with the river the wolf can do what he wants. The market is the river. The wolf is ______. The sheep is ______. Neither are pertinent to the river nor necessary. They may be at the rivers edge lapping the waters for a tad bit or they may not. The wolf is looking to eat the lamb the lamb is looking to escape the wolf. They both should jump in the river. The lamb will thus escape the wolf and the wolf will thus get a bath. All will be happy and the river continues to flow.
 
There are huge edges. I love minute charts and intraday price action/momentum (futures).

Structural edges are the best kind. I'll tell you the ones I like, take it or leave it.

(1) Rate/Index Futures Spreads
(2) Index Arbitrage Spreads
(3) Index Spreads
(4) Analyzing Synthetic Portfolios

A rate/index spread tracks cash flow between treasuries and equities. Risk on / Risk off

Tracking index arb and the trading in the equity index basis is the best edge I know of. ES traders get stopped out all day long because of this. Easy money if you trade against them.

Index spreads tell you what is really going on in the market. Retail and small speculators can't move these spreads, but large spec and prop firms love trading them.

Rate futures, Index Futures (ZF, ZN, ZB, UB ... NQ, ES, YM, RTY) are hedging instruments to cut risk and control the volatility of a portfolio.

It follows that the performance of portfolios with typical allocations will determine the demand for these instruments. You can front run institutions putting hedges on / taking hedges off

Start looking at synthetic portfolios with a range of allocations and compare them to the action in the markets. You will see through all the gaming / traps / liquidity hunts......

Learn the basics. Spot and forward markets, market making in forward instruments, portfolio theory, and market structure.
 
volpri said:
I go with the river the wolf can do what he wants. The market is the river. The wolf is ______. The sheep is ______. Neither are pertinent to the river nor necessary. They may be at the rivers edge lapping the waters for a tad bit or they may not. The wolf is looking to eat the lamb the lamb is looking to escape the wolf. They both should jump in the river. The lamb will thus escape the wolf and the wolf will thus get a bath. All will be happy and the river continues to flow.
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What they should do is in the eyes of the animal spirit possessing you, @volpri. Fake reality, should I say. What they will do is what will really happen. And it's not only in their eyes. It's in their blood. It's in their ears, in the unique perfumes they perceive as individual. To be honest, they couldn't care less about what you think they should do...
 
Neuroway said:
What they should do is in the eyes of the animal spirit possessing you, @volpri. Fake reality, should I say. What they will do is what will really happen. And it's not only in their eyes. It's in their blood. It's in their ears, in the unique perfumes they perceive as individual. To be honest, they couldn't care less about what you think they should do...
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Lol what is fake is the story. Lambs and wolves don’t talk. Rivers sing as they flow. I’m jumping in the river.

 
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A cute little singing bass. Small petty Yankee colonial stuff... Jolly good, clownesque and entertaining show indeed!!

MY world is this. And it has nothing to do with mare eating chicks. Believe me, Yank.

 
I wasn't born out of millionaire fathers, like you screwy, big mouthed, unworthy Yanks. I was born out of poor European blood that gave all they had in a series of wars that weren't worth it. I earned everything I have. Every single penny. I didn't inherit anything. Not a single penny. I'm worth every single penny I have. For me it was another journey. For you it was nothing.
 
An edge is ANYTHING that contributes towards your ability to extract and generate alpha over the long run. There's no rule book in this game.
 
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