Expectation: How Much Does Your Trading Method Earn in the Long Run? “What can you expect to earn on each trade on average over the long run from your investing decisions or your trading rules?” Or, as a blackjack player would say, “What is your edge?” A first step for the Turtles was to know their edge. [...] It didn’t necessarily matter how little the Turtles lost on any individual trade, but they needed to know how much they could lose in their whole portfolio. Eckhardt was clear: “The important thing is to limit portfolio risk. The trades will take care of themselves.” [...] Trading Your Own Account Tip #1: You need to calculate your edge for every trading decision you make, because you can’t make “bets” if you don’t know your edge. It’s not about the frequency of how correct you are; it’s about the magnitude of how correct you are. The Complete TurtleTrader
OK, Tip# 1 is now clearly stated, Thanks. So what are the next tips that will change the Statistical Odds that most Retail Traders lose their money? I am not trying to be coy or cute here, but it is tough enough to "Define Edge" and that is without the danger of Semantics when we are addressing the subject. It has been said that if one cannot explain their edge in just a few short sentences -- they probably don't have one. Mine is simple -- Never trade based on charts, news, indicators or tea leaves to do determine if you should trade long or short.
"(Occam's razor (or Ockham's razor) is a principle from philosophy. Suppose there exist two explanations for an occurrence. In this case the one that requires the least speculation is usually correct. Another way of saying it is that the more assumptions you have to make, the more unlikely an explanation.)"