The EDGE of a trader - Page 158
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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.

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    Rookie layigold's Avatar
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    Anything that puts you on better advantage of the market gives you an edge and that should be the central focus of each trader when developing trading strategy.In my own trading strategy , I discover that pin bar candlestick on daily chart gives me an edge most especially when market has been trending in a particular direction for a while. The pin bar candle at the point of trend exhaustion could signal the beginning of a reversal and that sometimes comes with less risk. Each trader should master what gives him edge in trading and concentrate on it .

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    Quote Originally Posted by layigold View Post
    Anything that puts you on better advantage of the market gives you an edge and that should be the central focus of each trader when developing trading strategy.In my own trading strategy , I discover that pin bar candlestick on daily chart gives me an edge most especially when market has been trending in a particular direction for a while. The pin bar candle at the point of trend exhaustion could signal the beginning of a reversal and that sometimes comes with less risk. Each trader should master what gives him edge in trading and concentrate on it .
    The edge in the market are wide, traders have the strategy they are using as their edge, the use of the management of the trader is another edge. We can trade the market and keep it simple stupid when we are the kind of traders that are having good prospect for trading and we are planning rightly towards our trading. You need to likewise be careful with the pin bar, the pin bar without breakout strategy to help it further may mislead the trader.

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    Quote Originally Posted by Toyen View Post
    The edge in the market are wide, traders have the strategy they are using as their edge, the use of the management of the trader is another edge. We can trade the market and keep it simple stupid when we are the kind of traders that are having good prospect for trading and we are planning rightly towards our trading. You need to likewise be careful with the pin bar, the pin bar without breakout strategy to help it further may mislead the trader.
    traders will meet their edge after they got their awareness back, which usually happened after series of losing trades and then they try to recover by doing the right things again. i found my edge as a forex trader after losing a lot of trades with news and my mind comes up with unusual thinking which tell me how to trade my strategy better and appropriate.

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    Quote Originally Posted by Sascha View Post
    traders will meet their edge after they got their awareness back, which usually happened after series of losing trades and then they try to recover by doing the right things again. i found my edge as a forex trader after losing a lot of trades with news and my mind comes up with unusual thinking which tell me how to trade my strategy better and appropriate.
    All of us surrely go through the phase of having more losses and at this situation we need to make necessary rectifications and set things rightly. When we work the right way, losses will be still there but it will be much lower than otherwise. If we are getting good profits, then it means that our strategies are properly implemented and also supported with proper management.

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    A trader that looks for the possible means to make profits from their trade can indeed have what it takes to grow and build a strong trade that would result to having a profitable trade in forex. The right edge of a trader is his knowledge and with such knowledge, they would of course realize what should be obtainable and how they can achieve their target as a trader. Good traders works so hard to learn and they know the very importance of good management in forex.

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    The edge of trading in forex can be only one. It is traders experience and market knowledge. Trader can make right decisions to open order when he understands the market and can predict the future market movement because of his experience and a lof of similar situations seen before. All the situations are the same during the time but trader must remember the situations and solutions.

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    Quote Originally Posted by Sascha View Post
    traders will meet their edge after they got their awareness back, which usually happened after series of losing trades and then they try to recover by doing the right things again. i found my edge as a forex trader after losing a lot of trades with news and my mind comes up with unusual thinking which tell me how to trade my strategy better and appropriate.
    Traders have their edge as long as they know how to trade the market. There is no edge in the market without the experience of the trader, and the traders with experience are traders that are doing well with everything they do as regards the things of the market. We always need to work with a brilliant skills and expertise that will reduce the level at which we can lose as we are trading the market, that is our edge.

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    Quote Originally Posted by Toyen View Post
    Traders have their edge as long as they know how to trade the market. There is no edge in the market without the experience of the trader, and the traders with experience are traders that are doing well with everything they do as regards the things of the market. We always need to work with a brilliant skills and expertise that will reduce the level at which we can lose as we are trading the market, that is our edge.
    keeping a trading system with discipline will always give us our own edge about market and our strategy. don't forget what market gave us in past time with losses and mistakes, try not to do the same mistake again by using our past as our lesson. building every prevention for our mistakes and set them up as our backup plan in case our analysis gets wrong.

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    Quote Originally Posted by Sascha View Post
    keeping a trading system with discipline will always give us our own edge about market and our strategy. don't forget what market gave us in past time with losses and mistakes, try not to do the same mistake again by using our past as our lesson. building every prevention for our mistakes and set them up as our backup plan in case our analysis gets wrong.
    When we manage to build a profitable trading system and have the right mindset then fortune is ours in this businessw. In trading we have to keep moving and keep advancing by learning more and getting better at every step and with every experience. Setting profit is one thing and achieving them is another which needs lot of experience.

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    Quote Originally Posted by Sascha View Post
    keeping a trading system with discipline will always give us our own edge about market and our strategy. don't forget what market gave us in past time with losses and mistakes, try not to do the same mistake again by using our past as our lesson. building every prevention for our mistakes and set them up as our backup plan in case our analysis gets wrong.
    A trading system is what every forex traders need, the traders without a trading system will not know how to work in the forex field. With the correct trading system, forex traders can be sure that they will trade forex field more accurately, there will be minimal loss on the side of the forex traders, and that will amount to success of the forex traders too. But the trading system must have all the elements of trading in the correct proportion.

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