Very true , and it only indicates a higher probability , so if a move happens on a trade with no edge , so be it , in the end your edge will prevail.(assuming your edge truly is an edge).
With due respect, I'm not sure I agree with that characterization. Ignoring my views on market "probabilities" for the moment (as explained in my prior post to this thread) for the sake of argument, consider this example. A trader has historically had a win/loss ratio of only 40%. However, his average win is 4 times his average loss. Therefore, he hypothetically has a higher probability of losing money than making money on any given trade. Nevertheless, I would think that he has quite an edge if he can actually sustain his batting average over time (a big proviso). However, by the definition you quoted, he does not have an edge.
An edge is nothing more than an indication of a higher probability of one thing happening over another. A traders ability to "act" on his buy/sell signals consistently, is a measurable, probable event. = edge
Really? His ability to act is an edge? Perhaps. But does not the quality of the method by which he generates his entry/exit signals factor into the "equation?" Imagine a valiant trader who tirelessly executes trades for every signal of a doomed method.
I generally agree with your equation. The only problem is filling in the blanks with numbers that are valid, accurate and reliable. I think that people who believe they can do so are kidding themselves. But, alas, "a man's reach should extend his grasp, or what's a heaven for?"
To me, the quality of a traders entry/exit + trade management, can be an edge. The difference between a blunt edge and a sharp edge, is the traders discipline, to "act" on those "signals".
I wholeheartedly agree. However, the original question posed by this thread was how can an "edge" be quantified. This is where I generally part company with most of the respondents. Remember, if the quantification is to have any value, it should be reasonably valid, accurate and reliable. I think that the challenge is grappling with the accuracy and reliability components. Good luck.