The EDGE of a trader - Page 105
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Thread: The EDGE of a trader

  1. #1
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    The EDGE of a trader

    Hi traders! Many traders want to pick a profitable strategy, but not too many traders ask a question - "does this strategy have an EDGE?". Ability to earn money in a short-term time perspective is not an edge itself, it's just a correspondence of your strategy and current market conditions.

    The best way to understand the concept of EDGE it is to remember how casinos make their profit. They generate significant deal flow from their clients - they force them to make more and more bets and eventually, casino earns money and its edge can be explained in a few words: limited payoff per stake and limited stake size. That's it. That's the edge. All they have is to generate enough turnover to realize that edge.

    Edge can be formulated in a very simple way - for example, it can be ability of the market to liquidate quickly when it has exceeding inventory, or it can be ability of the trend to keep going in the dominant direction rather than reverse. It should be very simple, it's not a strategy, it's a core principle that allows you to beat the average. All you have to do is to have more situations that provide you your edge - in other words, more markets and more setups that have those profitable (for your trading style) inefficencies.

    Why do you need decent turnover to realize your edge? What about "trade less to earn more" principle? Well, the fact is that overall predictibility of the market is relatively low, and even if you have "A"-class conditions for your trade, you have no guarantees of profitable outcome. The very next trade doesn't make sence in terms of final outcome. Next 100 or 1000 trades will definitely make sence.
    So, there are core principles that should be respected by trader:

    1. Trading is a marathon and final result can be calulated only on a series of trades.
    2. Edge or your core trading idea should be simple. You should have opportunity to find it on any market. The best trading edge is that relies on fundamental unchanged behavior of market participants (say, trendiness).
    3. To realize your edge, you want to have more what works. More markets and more good setups.

    For example, I formulate my edge in the following words:
    I use ability of the strong trend to have better odds of continuation, and trade against couter-trend short-term inventory. It means that in my trading first I have to define a trend, then to define exact entry point - for entry I tend to seek for exceeding inventory of counter-trend traders. Trend creates market conditions that will help price action to go further, entry point will provide me good timing for my trade and will help me to reduce risk.
    So, you see that trend plays sigificant part in my trading, that's why I want to have more currency pairs (and other instruments as CFDs) for better trade selection. Also, I like to trade liquid markets (mostly currencies), because overbought and oversold conditions occur pretty frequently on these markets. Combining trendiness with short-term market logic helps me to move forward in my trading.

    How would you formulate YOUR edge?

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    Last edited by Value trader; 03-26-2014 at 07:40 PM.

  2. #1041
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    Quote Originally Posted by komalam View Post
    In my terms the edge of a trader is his command over his strategies and trading system. One thing is every strategy and indicator needs a good trader to give good results. Forex market has never been certain. I mostly look at the daily chart and look at the hourly charts in using the indicators or just study the charts for market analysis.
    I think that a trader will always need a full control. If they do not even have any control over what they are trading then that is just a gamble. A trader should never gambling around and take useless risks. Doing that will not make you to become a good trader and you are simply wasting your own time that way too. We should not become someone like that at all.

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  3. #1042
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    My trading formulations is that I always first keep on observing the forex market and when i see the big gap in the market in the currency price then I find some entry point in the forex market and then I also find a way to exit point in order to avoid the big loss that can be faced by the forex market.

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  4. #1043
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    Finding our edge would be one of the difficult work in forex but there is no doubt in it that we can make it possible by regular learning and hard work. First of all for that we have to choose a good trading strategy for us and have to work with our favorite trading patterns and when we will do mastery in our favorite trading patterns then it will be easier for us to do trade with our edge.

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  5. #1044
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    When you will able to gain some regular trading experience in forex then it will become more easier for you to find your trading edge in trading. But yeah a trading system should be adopt by a trader and it can give us a clear idea that how we have to use our trading stratety for the best. Gaining more knowledge and the right correction would surely bring the positive impact in our trading output.

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  6. #1045
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    Quote Originally Posted by komalam View Post
    In my terms the edge of a trader is his command over his strategies and trading system. One thing is every strategy and indicator needs a good trader to give good results. Forex market has never been certain. I mostly look at the daily chart and look at the hourly charts in using the indicators or just study the charts for market analysis.
    Of course, if that is truly your own term, then, your term is correct. Since you have really mentioned the trading system of the trader, then you have said it all. Trading in this business is more of the skills nad activities of the trader, and that is the edge of the trader, it is the overall approach which the traders is using over the market.

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  7. #1046
    Trader cutiekc's Avatar
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    Before a trader will be able to have an edge when it comes to trading, much learning will be needed for them to have that understanding, furthermore, the demo trading account is where the learning has to start from. But having a good edge will really do the trader fine as it will help the trader on making sure that most of the mistakes that other traders makes are not been made by him.

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  8. #1047
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    The edge of a trader is basically the way he or she wants to trade and has chose to trade, trading is a risky business and to have an edge the trader will have to spend more time on learning, that will make them succeed the more. Trading is a risky business so basically when one wants to succeed that far in such a business he or she would have to practice and have a more better edge.

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  9. #1048
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    Quote Originally Posted by sharegistFX View Post
    The edge of a trader is basically the way he or she wants to trade and has chose to trade, trading is a risky business and to have an edge the trader will have to spend more time on learning, that will make them succeed the more. Trading is a risky business so basically when one wants to succeed that far in such a business he or she would have to practice and have a more better edge.
    Edge of a trader will depend no how good they are and how they trade usually. The edge of a trader will be different from one to each other. Traders will need to avoid taking too much risk in their trading and try to practice a lot to make the success happen. We need to avoid taking too much risks as a trader so we can safely make our trade without panic.

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  10. #1049
    Trader cutiekc's Avatar
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    In forex trading having an edge when trading is a very important thing in this business but for the fact that so many of us what to make fast amount of money we engage in trading. Furthermore, we ought to have good trading edge and comprehend it, the way to get that done is trading with the demo trading account first and understanding the market the better.

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  11. #1050
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    Quote Originally Posted by cutiekc View Post
    In forex trading having an edge when trading is a very important thing in this business but for the fact that so many of us what to make fast amount of money we engage in trading. Furthermore, we ought to have good trading edge and comprehend it, the way to get that done is trading with the demo trading account first and understanding the market the better.
    It is like having a good trading strategy one needs it and it is good. But it needs some serious working hard so that way one needs to work hard and know how to make analysis so I think here has often been the place where it has always been hard for traders whereas making them to loss their money as a result of not being able to accomplish learning.

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