I've heard it many times, amongst other things, successful traders have an edge and one must choose a methodology that's well matched to the individual trader's goals, personality, etc. While trying to define my edge(s) I thought it would be useful to myself and others to share and learn what "edges" profitable traders are using. In turn, this may spark some ideas for new or experienced traders to expand their methodology and become (more) profitable. Personally I like computers, building systems, analyzing numbers and price patterns, make slow decisions and need to take the emotions out of entering and exiting trades. So, I need to completely automate my trading methodology which is therefore, one of my edges. I read Don Bright post that one of his firm's edges is the availability of capital, and perhaps mentoring (?) (I'm not trying to put words in your mouth Don, so please correct me if I'm wrong). Another may be relatively low commissions. Implementing a money management plan. Come to think of it, having a plan at all (entry, exit, MM). Any one else? Please do not accuse me of trying to exploit someone's "edge" for free. If you feel revealing your edge may compromise its profitability, then certainly do not post. I'm just trying to clarify and perhaps quantify in some cases what an edge is so others can benefit in general.
My Edge: I only trade when stocks are moving powerfully higher and all the rest of the time I stay in cash and smoke cigars.
An edge can be anything if you can statistically prove to yourself its an edge. By the way, there are many past threads on this topic you can find via the search function here at ET. For example... http://www.elitetrader.com/vb/showthread.php?s=&threadid=52147 http://www.elitetrader.com/vb/showthread.php?threadid=84402 Mark
The edge...oh boy see that's a very wide-open and sophisticated word. I felt like you long time ago and believe me, your inquiry is completely valid. The edge is going to have a diverse significance through all the traders in this world. Some people are going to shoot for their trading style, others that money management is the real edge, etc. although these are valid points, the edge is far bigger from just make 1 element and proclamate you just found your edge. This is how I picture my edge in my own little way To me, the markets are like moving floors, Like a tremor that never ends. My edge is to keep in balance while the floors keep trembling. In reality, all markets are chaotic in a certain way. Took my a long time to learn how to walk in this moving ground. dealing with me first (as on many times I will be the one who'll screw things up) and then I putting together all the necessary elements to stay in balance when the ground moves. All is good but here lies a little problem with the "edge" When you come to this world, you have a pre-fabicated mentality, so much hibernated from all the comfort and efficiency that the modern world has created. Let me explain: You go, and turn your car on in the morning. Pull off the driveway and head somewhere. Not even in the back of your head you are think something will go wrong. But when it happens, the least thing you do is to curse, right?? Because you're not use to. You car MUST (with all certainty) take you to point A=B. After all, you don't see a comercial that the car stalls in the middle of the road and later being pulled up by a tow truck... not a chance......they all go Just look around, I mean you get home, get the clicker, and the plasma should lite up...right???after all you paid xxxx jeffersons for the dammm thing to work.....whenever you like....it's at your command.... so people bring this mentality to trading...."HA i bought this video and I will barbecue the markets in no time. After all, the markets is like printing money out of my computer...what do I have to lose?(other than my ass)" or some other people will build a solid-roubust system ,backtested, forward, underwater tested and bullet-proof tested( oh I forgot, ET Naysayers tested) and everything but the day that you go live...that very fucking day, you lost. Isn't that frustrating??? so now they don't have an edge anymore because the moving ground ate them alive. Here they go again looking for the perfect "Mix" of indicators........why?? BECAUSE MODERN PEOPLE ARE NOT IMPOSED TO LOSE....PERIOD so when people talk about the so infamous "edge" and don't include the word "losing"...something is not right in my opinion. The market will always attempt to fry and re-fry you own little "edge" If you don't learn how to keep your head above the water and your nose clean of any foreign chemical substance, the market will beat you eventually. Deal with your loses, and look things over a period of time rather than a quick buck everyday. how many people were crying like babies her at the very site on the week of 2/27/2007 to around 4/10/2007 did you guys already forget?? so...what happened to your little "edge" back then...huh??
The mother of all edges: Understanding, learning and improving from your mistakes. Not just in trading: the trading persona is just one