The EDGE of a trader - Page 51
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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. #501
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    Quote Originally Posted by splash View Post
    Sure, I see it as a lucrative business although as that kind of business which I think we need to be careful with, it could give to us huge amount of money and at the same time could make us broke thus ruining us, therefore trading is not as easy as so many thinks it is, trading is risky and a business of patient. That every trader needs to know before they can have a good trading edge.
    Trading edge is helpful but you raised a very good point that we need a good understanding of our risk. That's correct budy that we can make big money but our big risk can break all our dreams too we could be out of this business if we don't have a right management for our trading. Make sure that we are talking limited risk for trading, trader's are going for big money but they are forgetting about its negative important when they are applying high risk in trading.

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  3. #502
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    Quote Originally Posted by Earnperfect View Post
    Trading edge is helpful but you raised a very good point that we need a good understanding of our risk. That's correct budy that we can make big money but our big risk can break all our dreams too we could be out of this business if we don't have a right management for our trading. Make sure that we are talking limited risk for trading, trader's are going for big money but they are forgetting about its negative important when they are applying high risk in trading.
    Well, in case you did not know sir, one of the right edge that traders should know is the risk that the trader is working with, and the way such traders are working to absorb the risk. This is mainly through the use of their risk manage, and this is one of the edges to get the best in the market, it would automatically find safety for the account of the trader.

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  4. #503
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    every trader has limits in his knowledge and in his skills . but may be there are soem common things are similar among them . like the type of the learning way . the general look about the market . also we have to say that they finally may be winners together or losewrs together

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  5. #504
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    Quote Originally Posted by hosny55 View Post
    every trader has limits in his knowledge and in his skills . but may be there are soem common things are similar among them . like the type of the learning way . the general look about the market . also we have to say that they finally may be winners together or losewrs together
    [lang=id]it is about the ability, and everyone will have different ability to learn and understand something, and also how good their seriousness to learn and manage this business, if only have good attention for this thing, i believe they will get more value from what have been learned before, and the skill will grow after take practicing continuously[/lang]

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  6. #505
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    Quote Originally Posted by Earnperfect View Post
    Trading edge is helpful but you raised a very good point that we need a good understanding of our risk. That's correct budy that we can make big money but our big risk can break all our dreams too we could be out of this business if we don't have a right management for our trading. Make sure that we are talking limited risk for trading, trader's are going for big money but they are forgetting about its negative important when they are applying high risk in trading.
    yeah mate this is very poor that most of trader's go with big high risky trading in forex. Small risk also can give us a good amount of profit but trader's are in hurry, and their haste giving them a lot of pain when they are losing a big size of money due to their one small mistake. Many people talk about trading psychology issue, but greed is also very dangerous and one of the top problem in this market.

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  7. #506
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    different edge of the trader as happened to enter as having with the customs on personal preference on occupying use of terms with the predefined of strategy on referring stages on moderation with the decision as expending use of risks and more with the good resource to helps on funding of the manage to complete of tasks with the preparation of order with the trading execution.

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  8. #507
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    Quote Originally Posted by Hukam View Post
    yeah mate this is very poor that most of trader's go with big high risky trading in forex. Small risk also can give us a good amount of profit but trader's are in hurry, and their haste giving them a lot of pain when they are losing a big size of money due to their one small mistake. Many people talk about trading psychology issue, but greed is also very dangerous and one of the top problem in this market.
    [lang=id]for them who did trading with high risk think about a hope, hope that will give them good income, and hope they can put the right position and big money in hands instantly, but the risk is there, the market will talk with different words and sometimes out from our analysis, a little mistake can lead them to face a hard side when did trading with high risk, and so fast to blow up the account[/lang]

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  9. #508
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    Quote Originally Posted by Hukam View Post
    yeah mate this is very poor that most of trader's go with big high risky trading in forex. Small risk also can give us a good amount of profit but trader's are in hurry, and their haste giving them a lot of pain when they are losing a big size of money due to their one small mistake. Many people talk about trading psychology issue, but greed is also very dangerous and one of the top problem in this market.
    the big risk is the reason that traders lose all their money like a flame that vanishes into the thin air. traders with the small risk will make money too, except that it will not be as rapid as the trader with high risk. and the trader with big risk are better in this look.

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  10. #509
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    Quote Originally Posted by silverlady View Post
    the big risk is the reason that traders lose all their money like a flame that vanishes into the thin air. traders with the small risk will make money too, except that it will not be as rapid as the trader with high risk. and the trader with big risk are better in this look.
    Not setting a target when trading on forex is what which will make traders to loss their money, we all want to make fast money from the business, but then we are all getting it wrong as we trade with much risk without thinking if the trade should go the other way round. Therefore if a trader should understand his trading edge then he or she will know that trading with good risk management is important.

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  11. #510
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    it's a real cool thing that every one keep fighting until he find his proper strategy , you noted and talk about the fundamental analyses but in the other hand you forget something which is the difference between the type of analyses , even a technical trader can generate money and find more good system of trading , no need to be related to the news every time , pattern can shows him a lot of thing.

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