Edges are typically slim. Couple your edge with sound risk management and the ability to let positions unfold/run you will have a fighting chance. Also harness randomness...what I mean by that is you have a random chance of a position moving in an outsized way in your direction by sticking with it. Understanding where institutions typically get in and get out or in other words understanding where institutions typically place bets or take bets off certainly helps. That’s my edge, I can at times read the market and understand where the medium to large players interact with the market. In my opinion that is the route of edges...reading institutional flow.
(Counting my chickens here, but...) I'm hoping 2019 will be my first profitable year. How I got to this point was, 1) After blowing up 4 accounts over a few decades, I finally got the point that position size and risk management is the key to survival [that was in 2017]; 2) I found a style that I wanted to focus on learning that hopefully in the long run is sound; 3) I found a coach who's system that made sense to me (based on previous experience) and fit my personality; 4) I back tested, back tested, back tested (and I'm still back testing) the system before I went live in May of 2019. Knock on wood I may finally get my first profitable year.
Then what do some traders have that makes them consistently profitable where most are not ? Why calendarize a straddle ?
On the contrary an edge does exist. If playing the game naively leads to a 2% probability of profit, and you have a way to achieve 3% profitability that is an edge. The only thing that matters then is risk management. Probability theory has it's roots in the study of gambling, which is what trading is.
I suppose you're right. But if you have a good 3 year trading record with your own money, then there is no harm with going first loss with someone else to juice your returns.
There was a legal case similar to this situation It involved railroad workers. "Gary Griffiths was a vice president and chief mechanical officer at Florida East Coast Railway. Cliff Steffes was a trainman at the Bowden Rail Yard for the company and the nephew of Gary. Gary and Cliff noticed there was a surprising number of tours of the rail yard by men in suits. Gary’s boss asked him to prepare a list of equipment owned by the company. They thought the company was for sale and thought they could profit from the sale. A bunch of suits walking around the train yard is not necessarily indicative of an impending increase in stock price. Given the open nature of train yards, many non-employees could have witnessed the behavior." The SEC sued and lost the case. https://www.compliancebuilding.com/2014/02/06/working-on-the-railroad-is-not-insider-trading/ Traffic in and out of the White House is obviously a public event.
As they should have lost. My point is that you can find many sources of edge, and it's a real thing. I myself have no edge. Probably.