Do you have an "edge" in your trading?

I am constantly asked about my edge and found that I have trouble articulating it, if indeed I have one. I've perused many trading forums and mailing lists and find that there is, at best, a mushy definition of an edge.

Perhaps I can get a better handle on the concept if I had a concrete example. I'd appreciated it if some here can provide an example of a trading strategy that has an edge, describe that edge and how it's exploited.

Thanks in advance for your efforts to educate me.

run with the winners,...cut your losses,....K I S S

My edge: Knowing where the support and resistance levels are,..market temperament,(trending, ranging),. Knowing if the market goes beyond resistance/support by more than ten pips, odds are it's going to the next level. (false breakouts are a pain huh!),..I could go on and on, but you get the gist,..
The/My edge is the abiltiy to read price action correctly,....

Don't loose more than 2%-5% of your total capital in each trade. Adjust your stop orders and leverage if needed.

Edge: Money management

Take something that will happen 60% of the time & find a way to make more than 40% from the times it does occur.

Or take something that happens 60% of the time & find a way not trade some of the 40% of the times it fails.

DT,......He was asking what YOUR edge was,......not YOUR opinion !!

Ok. I have a theory I subscribe to about how certain markets are played by people with deep pockets. I have done my own statistical analysis to discover the probability of certain events. I am able to discount some if the potential losers with the use of order book analysis & tape reading.

EricTheTrader said:

Don't loose more than 2%-5% of your total capital in each trade. Adjust your stop orders and leverage if needed.

Edge: Money management

Click to expand...

Money Management can't give you an edge.

EricTheTrader said:

Edge: Money management

Click to expand...

FFS how many times do you dunces need to be told that money managment is not an edge !

And in answer to Howards question, If you dont know what your edge is, then you dont have one. And in case you are in any sort of doubt, you dont have one.

Hi Howard,
It sounds to me as if you might benefit from re-reading this Sticky: Essentials Of First Steps
I'm assuming you read it when you first joined T2W!

Tim.

timsk ,..Ref: "What makes you think that you can compete with them? Look at it this way: if you truly believed you could dispatch Andy Murray in straight sets at Wimbledon or do a lap around Silverstone faster than Lewis Hamilton, then you’d probably become a professional tennis player or F1 racing driver. Beating the top proprietary traders of Canary Wharf and Wall Street is going to be equally tough.

This is an utterly misleading statement,... the idea is not to beat these guys,..(futile exercise),..but to mirror them !,. There's a vast difference,..

I didn't bother reading any more of the page, needless to say

Hi Hilarymannah,

Hilarymannah said:

This is an utterly misleading statement,... the idea is not to beat these guys,..(futile exercise),..but to mirror them !,. There's a vast difference,..

Click to expand...

The Sticky is aimed at newbies and the responsibility of T2W is to make the scale of the task of becomming a consistently profitable trader very clear to them. Can you imagine the response if the Sticky said something like; 'follow these simple steps and you'll be up and running and making serious money in no time at all'! The sporting analogy is merely a device to bring home the enormity of the challenge they face - and in that regard it works well, IMO.

Hilarymannah said:

I didn't bother reading any more of the page, needless to say

Click to expand...

Why?
You read one sentence you didn't agree with, ergo the rest of the Sticky is total rubbish? That's harsh. I value constructive feedback and will amend the Stickies and FAQs etc. if members point out errors or suggest ways in which they can be improved for the benefit of the membership. So please, try and keep an open mind and give the rest of the Sticky (and me) a chance!

Tim.

yes people will ask about edge but if you have one you would be insane to tell anyone.

not sure one has to beat the canary wharf to make money but only those who don't know what they are doing?

''if you don't know what your edge is, then you don't have one''

I don't know what my edge is, or whether I have one, so I guess it's fair to assume that I don't have one.
I wouldn't necessarily argue with that.
Lots of people talk about their edge being 'money management', 'going with the trend', 'cutting losers quickly' etc etc.
To ME these aren't edges.
I believe an 'edge' to be something that is basically unavailable to retail traders. I think its something reserved for the big guys in investment banks etc. I think they have access to information and tools that aid them in trading decisions that we will never get close too.
I fail to see how cutting 'losing trades early' for example can be an 'edge'. Anyone can cut losers early. An edge to me is a clear advantage over everyone else.
That's just my personal opinion.

Having said that, i've certainly been getting better over the years. My win rate has been decent for quite a while now (I have been posting all my cable trades realtime in the FX thread but not my ES and oil trades)
This improvement seems to have come about from simply recognising moves on the charts clearer. That would imply that My 'edge' is a good few years of screentime. Reading the moves/charts well. Im not classifying that as an 'edge' myself, though. (although i think its the closest there is on our level)

Do we need an edge to be a successful trader?

By my definition/idea of what an 'edge' really is, I don't believe anyone here has one IMO

the hare said:

FFS how many times do you dunces need to be told that money managment is not an edge !

And in answer to Howards question, If you dont know what your edge is, then you dont have one. And in case you are in any sort of doubt, you dont have one.

Click to expand...

Jack Schwager said this in the summing up at the end of one of the market wizard books. It made me focus a lot on this when I read it. For a very long time after reading it I still didn't know my edge.

I am still not 100% certain as there is always a state of flux. I will always be learning and refining. Theres plenty more to do in that regard.
But broadly speaking my edge lies in waiting for price action at support and or resistance.
I think in actual fact the price action at support / resistance is probably the method rather than the edge.
On reflection I would say key part of my edge is the waiting for the price action, executing, and then managing the trade.

I got out of bed this morning and fell over my edge. :innocent:

Peter

..That would imply that My 'edge' is a good few years of screentime...

yes. can't buy that.

Can you really have an edge over something if you are afraid of it ?

At what point do you stop being afraid?

I definitely have an edge.

The edge of my seat usually.

Citizen2007 said:

Can you really have an edge over something if you are afraid of it ?

At what point do you stop being afraid?

Click to expand...

I think you make a good point there.
I went through a stage of almost total paralysis when it came to execution.
In that frame of mind any edge even use of a time machine will be totally worthless.

When I wrote an earlier post I added 'executing' to waiting.
Nothing will happen without pressing the button.
I got out of my paralysis / fear by learning to trust my edge on demo trading .
Demo can have its uses.

redart said:

Do we need an edge to be a successful trader?

Click to expand...

The answer is No.

It is possible to be a successful trader without an edge if you have a luck on your side.

Lets take for example the following strategy, Risk to Reward Ratio is 1:1, but the probability of winning is less then 50% (to be precise it is 18/37). Clearly this strategy does not have an edge. Over time the trader will lose money.

Now if trader makes just one trade per day then after a year there is a 30% chance that he will be in the money.

My advice is that if you cannot quantify your edge and you really want to find out then you need to trade more often so the law of large numbers kicks in.