What is your Edge ?

[stumper]

You must have your own self-discovered edge to trade in the markets...... No matter the day or time you should always be aware of your edge, which is composed of specific skills, resources, and talents that are unique to yourself. Casinos, for example, use the vig and weighted odds to improve the number times they win........... That is their edge, and although the new trader cannot mimic the edge of the casino, I know of several tips and tricks that have helped me find my edge........... Forget any technical indicator that does not give reliable signals and seem more like astrology. Those indicators can be very subjective. I want technical indications that are as simple as possible. Support, resistance, volume, trend many of my best signals come from watching these basic four very closely.............:thumb::thumb::thumb:

Thank you ..And i agree. Just have a look at the Commodity traders in the market. They understand effects of seasonality and arbitration. This is the Edge for them.

 

[stumper]

My edge is my trading method with positive expectancy and Discipline ......

Thanks HEM. I suppose we digress on definition of Edge -- something that gives your strategy a positive expectancy ? ... Hence it ideally can not be subjective.

 

[Smart_trade]

Thank you for the insightful comments.

But my confusion (and reason for the post) starts with the premise --- What actually is a Edge? .... A Edge leads to positive expectancy and can not be subjective. Confidence and competent system are by-products of a Edge you carry and not the other way around.... would you agree? .... What Edge do you have that gives your system a healthy expectancy (You already listed a good one ... properly capitalized).

Let me further elaborate. I used to be a decently successful trader (A Small time trader though ... different story about why i got frustrated with the Indian markets). I used to trade only two instruments -- SBIN and LT. Only two. The edge (perceived) i carried was subconscious knowing of price action for of this two instruments (specially knowing when it has hit its top ). Obviously window of opportunity were few (ie; I was competent only in shorting of this two instruments) but had a hit rate touching approx 70% (Active trading Period of approx 14 months). This was very subjective as i could not explain what i saw that made me click the sell button. I burned out since this was no strategy to start with. Looses were wide as i had to rely on S/R levels for stop-loss points.

Coming back to the point ... i perceived my Edge as being "very intimate with the price action of this two instrument". Why only sell -- I don't know. Why not other like Nifty Fut's -- I tried but failed miserably.

Hence was curious on peoples perception on Edge they carry. Is your edge subjective (like my perceived Edge) ?

I consider that one's edge is anything that gives him advantage in the markets. And for me all 4 listed in my post give me huge advantage in trading.A good system could be an edge, strong MM could be an edge, understanding the market action could be an edge. Ability to quickly recognise that the trade is not working out and quickly getting out of that trade and holding the winning trade could give a huge edge to a trader. And for good traders, sum total of all these points could be their edge.

ST

 

[stumper]

I consider that one's edge is anything that gives him advantage in the markets. And for me all 4 listed in my post give me huge advantage in trading.A good system could be an edge, strong MM could be an edge, understanding the market action could be an edge. Ability to quickly recognise that the trade is not working out and quickly getting out of that trade and holding the winning trade could give a huge edge to a trader. And for good traders, sum total of all these points could be their edge.

ST

Thank you. Can i bother you with one last question? --- Do you quantify this parameters in your trading plan?

Do pardon me if my posts are sounding nosy .... I'm just trying to get a hang of the Edge traders carry. Again, appreciate your time in responding.

 

[Smart_trade]

Thank you. Can i bother you with one last question? --- Do you quantify this parameters in your trading plan?

Do pardon me if my posts are sounding nosy .... I'm just trying to get a hang of the Edge traders carry. Again, appreciate your time in responding.

My trading plans includes all the points I mentioned. Qantify ? I am sure all cannot be quantified.When I trade all these points which give me an edge are with me...they are not separate. All points giving a trader his edge cannot be quantified ...if that was possible, then any good system anyone should be able to trade and make money...I have seen traders trading same/similar systems and the results are totally different.

In my view some things like hit rate in a system, Reward to Risk etc can be quantified in a method...but some things cannot be quantified . Can one quantify his ability to read the market action ? or his ability to stay cool and take right decisions which the situation warrants and not panic in difficult situation.....these things are abstract but they give huge edge to a winning trader.

Every winning trader knows what his edge is ( which includes quantifiable parameters and non quantifiable ones). If a trader does not know his edge, he probably does not have one.

Hope I am able to convey my thoughts....

ST

 

[stumper]

My trading plans includes all the points I mentioned. Qantify ? I am sure all cannot be quantified.When I trade all these points which give me an edge are with me...they are not separate. All points giving a trader his edge cannot be quantified ...if that was possible, then any good system anyone should be able to trade and make money...I have seen traders trading same/similar systems and the results are totally different.

Thank you. Maybe im not able to express my view properly. I do understand the aspects you mentioned. But i consider them as a integral part for any decent traders. They are must have. Do they by themselves provide you a edge (not over other traders ... does it help provide you a edge on result expectancy of your strategy)? .... Say for example: Having the ability to read the ticker by itself is not a strategy. But it *can* give me a edge in my price action strategy ... i could have used it as a exit when my regular exit fails to kick in (say a WRB).

In my view some things like hit rate in a system, Reward to Risk etc can be quantified in a method...but some things cannot be quantified . Can one quantify his ability to read the market action ? or his ability to stay cool and take right decisions which the situation warrants and not panic in difficult situation.....these things are abstract but they give huge edge to a winning trader.

Yes ...... You see, this is what im looking for ....

Ability to read market action.... Very subjective at core ..... Day in and out you trade as per your plan. But is there a edge you carry? is there something special you see in market action that alters your decision to deviate from your routine plan ?...Maybe you have noted some external factor that effects the movement (Example: Fiscal releases) .... something that gives you a extra edge ... Maybe early exit, Maybe staying longer with winners, etc.

Or

You wont panic... You stay cool despite stops being slaughtered around you ... You notice its a pullback ...you might have seen correlating instrument not confirming this. Or you have ladder reading skills that is not confirming the panic.... Or you are ladden with Fundamentals that reassure you not to panic.

Every winning trader knows what his edge is ( which includes quantifiable parameters and non quantifiable ones).

Yes. An Edge differentiates a successful trader...Being properly capitalized is in itself a Edge (and i have learned it the hard way).


I appreciate your thought's. It has been helpful. :thumb:

 

[HEM]

Dear stumper ,
Now don't waste time and don't be confused in search of Edge.......... here above all post are enough to define and discribe the Edge.............

whatever is working for you or making you successful in this trading profession is your Edge........ now find what is your Edge......... Edge is very subjective and different for every trader........

HEM

 

[PartTime_Trader]

An Edge itself is a subjective/relative term. Same thing can be edge or burden for different traders / systems / time frames / mechanical / Automated / Algo / discretionary styles etc.

Lets take an example from money management.

Typically for any swing system I use, I would build positions by adding quantity to winning trades, that is the real edge for my swing trading, because if I calculate the gains/loss on only the initial position the performance is not even worth trading but having bigger position on winning trades is what makes my swing trades over all profitable.

Now with the intraday systems i trade, i keep scaling-out as it helps me locking the profits and also keeping a sane mind with an ability to hold my Swing trades. It does not matter if by not scaling-out I would make a bit more on the intraday trades, what matters is this improves my overall trading performance.


Cheers
::thumb::

 

[stumper]

Dear stumper ,
Now don't waste time and don't be confused in search of Edge.......... here above all post are enough to define and discribe the Edge.............

whatever is working for you or making you successful in this trading profession is your Edge........ now find what is your Edge......... Edge is very subjective and different for every trader........

HEM

Hello HEM,

Waste time?.

I suppose you and me, both participate in Forums to learn and share. Is'nt it?

And the only way you learn is by questioning the status quo.

Cheers Mate.

 

[stumper]

An Edge itself is a subjective/relative term. Same thing can be edge or burden for different traders / systems / time frames / mechanical / Automated / Algo / discretionary styles etc.

Lets take an example from money management.

Typically for any swing system I use, I would build positions by adding quantity to winning trades, that is the real edge for my swing trading, because if I calculate the gains/loss on only the initial position the performance is not even worth trading but having bigger position on winning trades is what makes my swing trades over all profitable.

Now with the intraday systems i trade, i keep scaling-out as it helps me locking the profits and also keeping a sane mind with an ability to hold my Swing trades. It does not matter if by not scaling-out I would make a bit more on the intraday trades, what matters is this improves my overall trading performance.


Cheers
::thumb::

Thanks. Appreciate your comments.