Edge = [Your Rate of Return p.a.] - [Risk Free Return p.a.] You can only tell you had an edge in the past. Edge in the future can only be estimated with some probability range... Most markets have trends > noise (Hurst Exponent >0.5). It is highly possible that this characteristic will continue to exist in the future. Therefore we can say that trend-following methods probably will have an edge. We can also talk about the edge in the corporate world, which IMO is highly correlated with competition in the industry where the company operates. The stronger competition, the harder is to make profits --> same is true in financial markets. When you have kids, taxi drivers or housewifes as competitors... vide: 1999-2000 bubble.