The EDGE of a trader - Page 111
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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. #1101
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    Quote Originally Posted by D'mastermind View Post
    A trader getting to understand the trading edge will give more time to being successful, because a trader getting to know the edge when trading means that the trader have put in more efforts into learning and by that, it means that much knowledge is obtained, With that been said, it is through practice that trader will be much able to understand the trading edge and know how to apply them to trading.
    keep digging knowledge and practicing for better skill is very important, we have to always do it as our habit to increase our ability for better trading, and so we know how to maximize ourselves and one thing that the experiences is the best teacher for us, it can teach us for many good thing till we really get the best performance for trading. practice makes us perfect time by time

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  3. #1102
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    Forex is a risky business so we don't have to rush to make a decision we need to watch out for some certain things and make sure that we are doing the right thing before we make a decision in this trade, if we don't watch carefully before making decision we can make the wrong one, there are edge in everything we do that is why we must watch carefully.

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  4. #1103
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    Quote Originally Posted by Kelv View Post
    Forex is a risky business so we don't have to rush to make a decision we need to watch out for some certain things and make sure that we are doing the right thing before we make a decision in this trade, if we don't watch carefully before making decision we can make the wrong one, there are edge in everything we do that is why we must watch carefully.
    It's only when a trader understand this business that he can actually work on the right part to make success for themselves. We as traders must know how to make the best trading decisions which of course can help us and give us good means to earn greatly in our trade. If we have good knowledge about forex, am sure that's enough edge to help us make a good trade so often.

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  5. #1104
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    Quote Originally Posted by Ifycoguy View Post
    It's only when a trader understand this business that he can actually work on the right part to make success for themselves. We as traders must know how to make the best trading decisions which of course can help us and give us good means to earn greatly in our trade. If we have good knowledge about forex, am sure that's enough edge to help us make a good trade so often.
    And the best way a trader can understand the business is through the learning process and the learning process will not be so that simple as well. I was able to learn finally through my brother after spending much amount on online materials. I now understand my edge and I now know what I am in for in the market.

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  6. #1105
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    [lang=ar]Choose the strategy needs time to learn even the strategy builds on the correct rules. Here finds the edge of the trader to get profit from forex. It does not have to be complex or strategic out a lot of the indicators are only a few indicators that determine the general direction of the price.[/lang]

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  7. #1106
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    Quote Originally Posted by Queen-of-the-coastFX View Post
    And the best way a trader can understand the business is through the learning process and the learning process will not be so that simple as well. I was able to learn finally through my brother after spending much amount on online materials. I now understand my edge and I now know what I am in for in the market.
    Yea the best way to understand this trade very well is learning if we don't take the time to learn about this trade very well it won't be possible for us to understand this trade, we must learn how to trade forex well before we can understand the market very well and be successful in our trading.

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  8. #1107
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    Quote Originally Posted by Kelv View Post
    Yea the best way to understand this trade very well is learning if we don't take the time to learn about this trade very well it won't be possible for us to understand this trade, we must learn how to trade forex well before we can understand the market very well and be successful in our trading.
    hard for traders to get the correct understanding if do not want to spend the time for practicing and learning, they only know a little thing for trading and it will not enough to sustain their effort to trade in the market, because forex trading is not a simple way to be done, they need to invest the time and take it for practicing seriously, this is the best thing need to done before think to make money at real account trading

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  9. #1108
    Trader Senorita's Avatar
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    Forex traders must understand that nothing is easy in this business if they actually plan to earn well right here. Good traders must know how best they have to improve here and sure work hard to see that they have great and better means to succeed for themselves in forex. For a trader to actually earn well, they need the right trading experience, skills and knowledge to make good trading and for me this remains the best edge of a trader.

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  10. #1109
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    Quote Originally Posted by Senorita View Post
    Forex traders must understand that nothing is easy in this business if they actually plan to earn well right here. Good traders must know how best they have to improve here and sure work hard to see that they have great and better means to succeed for themselves in forex. For a trader to actually earn well, they need the right trading experience, skills and knowledge to make good trading and for me this remains the best edge of a trader.
    Many traders know about that yet they are not making any analysis or even planning to give their all in here. The part time traders usually know about it but they are lacking any reason to give their all in here so they are slow in the learning progress. If they think they can only live from here then they will change their view for sure.

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  11. #1110
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    [lang=id]Just like the first point said that trading is a marathon and final result can be calculated only on a series of trades. This mean that this business properly will be properly done in long term, more like an investment. If we do this in short term, then the first point will be wrong and we may have some disagreements here. But that is not the problem, because we must only focus on our work rather than worry about other's theories or opinion which sometime does not help us to build a better performance.[/lang]

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