Finding an Edge

Discussion in 'Trading' started by Alfing, Aug 31, 2018.

  1. Alfing

    Alfing

    Many are saying that finding an edge is crucial in becoming a profitable trader. What are some important steps and stages in finding an edge? If you have an edge, what advice would you give those who are still looking?
     
  2. smallfil

    smallfil

    Having an edge is nothing more than having a positive expectation relative to your trading gains vs your trading losses. Here is an article explaining how to compute the expected value.

    https://www.thoughtco.com/expected-value-3126582

    Now, assuming you have a trading journal, you can compute your average gains of winning trades, average loss of losing trades, the winning percentage and losing percentage. Plug those values in the expected value formula. You will either get a positive result meaning you have a trading edge or a negative result meaning you do not have at trading edge. Preferably, you have hundreds of trades to use to compute your average gains, average losses and winning and losing percent because you know it probably, is a reliable barometer of your trading skills or lack thereof.
     
    SimpleMeLike, tomorton and Alfing like this.
  3. fan27

    fan27

    Do you aspire to be an algorithmic or discretionary?
     
  4. TheBigShort

    TheBigShort

    First take care of the things that give you negative edge. How is your programming, math/stats knowledge? Do you have a good broker? Then you need to figure out where can make money from supply/demand imbalances.
     
    SimpleMeLike and Alfing like this.
  5. manonfire

    manonfire

    Supply/‘demand imbalances? Please tell me more!
     
  6. TheBigShort

    TheBigShort

    Why are you being sarcastic? Please enlighten me with the last supply/demand imbalance you have found and the reason for it?
     
  7. manonfire

    manonfire

    No idea what you are talking about. Been around since 92 trading, on and off floor, and I consider myself very young.
     
  8. TheBigShort

    TheBigShort

    I think I have a sticker lying around here somewhere for you.....when was the last time you saw a supply/demand imbalance, in what product and why?
     
  9. manonfire

    manonfire

    Never I don’t know what you are taking about. Supply/ demand is a sales pitct.
     
  10. Alfing

    Alfing

    An interesting question. Never thought about it from this dualistic perspective. Let me say that I try to use algorithms, that I discover along the way, at my discretion.
     
    #10     Sep 1, 2018
    tommcginnis likes this.