How is money management an edge? An edge increases your expectency. If money management was an edge we would all be millionaires by flipping a coin and setting a 10 pip stop and a 20 pip target.
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An edge is the one, two or three things that tells you each time that the market is likely to rally/trend, or sell off now. Money management is to not let it go the other way any longer than you choose.
My money management is more than a stop and target. My money management is directly involved with how I manage a trade I'm already in. It sounds like you have hard stops and hard targets, and you get your entire edge from your setup. I get part of what I guess you could call my edge from my setup too, but part of it comes from managing the trade. Maybe we trade differently. There is an old thread here where a guy entered a trade by flipping a coin, and had his money management as his edge. If I can find it, I'll post it here. By the by, this is much more germaine to professional gambling, where things are much more random than they are in a financial market, which is another belief I hold. Money management seems to be a grail of sorts to those guys.
That's correct, I do use hard stops and hard targets, and always the same two or three things that point to a direction.
I totally agree. Money management can control your equity curve. Your size of drawdowns. Can even stop you losing your account. I just know from 5 years as a full time trader. Programming systems and understanding probabilities you cannot make a random entry system profitable from money management. There comes a point where you have to say 'I am getting in this trade because of x and I am getting out because of y' You are making assumptions that these two places are significant probabilistically. You are predicting the Market to some degree. My reason for bringing this up is TRO claims that he gets in because price will either break or reverse a bars high or low. Not a bad place to start building a system. However, over the course of say, 100 bars it will break this level around 50% of the time. . But price will retrace from it 50% of the time (approx, allowing for random variance). TRO needs to make some sort of prediction that the bar breaks he takes have a greater than 50% chance of continuing. Yet his whole premise is 'trading is simple. There is no trend. There is no predicting'. For this system to work there needs to be statistical significance to the entries that are being taken and not just say it will work because the winners are left to run. This defies the laws of maths.
I post charts showing what happens. In the morning, a gauge showing opportunity is posted. Later a chart showing what happened is posted. Years ago I got into arguments over showing results and whether or not they were real. No matter how detailed the statements, it was never good enough. I don't play those games anymore.
What you say is true. However, you can't say if your next trade will be a winner or a loser. You do not know what will happen on any given trade.