What is the professional's edge ?

Firstly an edge is present before any trade is executed and before any method or system is impemented.System edges and method edges are subjective and invalid , because they depend of execution skills , without these execution skills your edge is zero.

There are three edges that professionals use , these are present consistently in the markets

1)Forex edge is based on interest rate expectations

http://www.trade2win.com/boards/forex/223410-how-profeessionals-trade-forex.html

2)stockmarket indices edge is based on long trades and investor based .See image
buy stockmarket indices dips and run your profits , they consistently make money.

3)Property market edge is based on rental yield of 3% plus per annum .These make prices rise regularly.

barjon said:

I shouldn't get too hung up about it, Dom. Just think of it as something that leads to you making consistent profits.

In any event, it's not something you can go and buy in off the shelf at Tesco.

cheers

jon

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This article below is rubbish , so I did not want to comment on it.

http://www.trade2win.com/boards/edu...ommodity-futures-trading-whats-your-edge.html

The main edge in achieving the above edges is your mental edge to execute your edge.Traders have zero edge , unless you have a mental edge .All your illusionary edges are worth zero , if you can't execute your edge.

https://www.youtube.com/watch?v=GhKJ9P3agRc&feature=youtu.be

You are beginning to convince me. Seriously thanks for all the effort you are putting in here with great material.

Naturally i don't agree with everything but there's quite a bit i do.

Any chance you'd elaborate on your option strategy? If it is proprietary i understand.

piphoe said:

You are beginning to convince me. Seriously thanks for all the effort you are putting in here with great material.

Naturally i don't agree with everything but there's quite a bit i do.

Any chance you'd elaborate on your option strategy? If it is proprietary i understand.

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Take a look at monthly and weekly charts on indices , they are always up , after every fall they recover.

So after every fall , buy a weekly call option at the curent price.Always buy at major supports , these are either weekly candle lows or uotrendline bottoms.

Run your profits until daily trend line breaks on daily .

LLUZERS

A trading edge is a approach that creates a CONSISTENT advantage over other market players,anything that adds a few points to the winning side of an equation builds an edge that lasts a lifetime

How do you know if you have an edge? Quantifying whether you have an edge is usually not as easy as it sounds. Often you can read that you should verify that your trading strategy to extract the edge has profits during demo-trading.

A trading edge is simply a higher probability of one thing happening over another, over a SERIES of trades. It is not a guarantee you will make money in the markets. You need to combine that trading edge with the proper mental skills…

A professional's edge

http://www.trade2win.com/boards/indices/223440-edge-set-forget-indices-trading.html

Most traders make mistakes , mistakes eat up profits and can turn an edge into a negative edge.Emotions ,stress ,mind traps ,body condition and psychology can reduced or lose your edge to zero or negative edge .

Body conditions include feeling tired ,lack of sleep , frequent urination, hunger, weight loss, irritability, infections, and blurred vision.

http://www.trade2win.com/boards/educational-resources/223432-mistakes-make-losing-traders.html

http://www.trade2win.com/boards/psychology-risk-money-management/

An edge is nothing more than an indication of a higher probability of one thing happening
over another.Mark Douglas

The stock indices give you an edge , there is a higher probability of one thing happening over another.

The image shows a true edge.

foroom lluzers said:

An edge is nothing more than an indication of a higher probability of one thing happening
over another.Mark Douglas

The stock indices give you an edge , there is a higher probability of one thing happening over another.

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A trading edge is something that each trader must develop for themselves. That equity indices tend to rise over time is merely a characteristic of that market - it is not in itself an edge and does not enable traders to make money. If it did, then everyone would trade equity indices and everyone would be profitable. Plainly, that is not the case. It's entirely possible for two traders to trade equities indices and for one of them to have an edge and be profitable, and for the other not to have an edge and be unprofitable.

A buy and hold approach adopted by someone like Buffett complements the equity market's tendency to rise over time and that is (one of) the foundations of his success. But he's a long term investor not a short term trader. Going long on equity indices and expecting to make gains over a few days or weeks simply because they tend to rise over time - isn't an edge of any kind. What it is is a recipe for disaster that, almost inevitably, will result in a blow up.
Tim.

Tim

You are correct .

Until the financial markets change , the present edges will remain in the indices.We have a low interest rates scenario , with government printing presses expected to find growth with low interest rates.When and if that ever changes , if interest rates rise by 3 % pa , the markets will change , most long biased traders/investors will get caught.

The stock markets valuations are based on long term , so short term prices tend to fall due to news and rebound.I call this an edge , as it happens more often than not , it is the behavioural pattern.

Anybody trading these edges should do it with a good risk management and trading plan.They should risk no more than 10% of their capital in this .

The traders who believe that they need an edge or think they have an edge are misguided , they have a negative edge of the spread and commisions.

Bucket shop forex brokers have an edge , instead of them betting on direction , they get guaranteed spread income.This is their edge.

A trading edge is an approach that creates a cash advantage over other market players,anything that adds a few points to the winning side of an equation builds an edge that lasts a lifetime.An example of an edge could simply be identifying when the market is trending, in which case you base your trades on the direction of the trend, but most traders can not time the markets to profit.Trend trading edge is subjective depending on the time frames used to define this subjective edge.


Successful trading is about being in agreement with the market, and being in agreement with other professional traders.Long trades on indices have an edge , short trades do not as per this data.38 more long trades than short were profitable .That is an edge.

foroom lluzers said:

Until the financial markets change , the present edges will remain in the indices.

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This is the exact opposite of what I wrote in my last post - so one of us must be wrong! Markets have characteristics - they don't have edges. Edges are provided by traders only.

foroom lluzers said:

We have a low interest rates scenario , with government printing presses expected to find growth with low interest rates.When and if that ever changes , if interest rates rise by 3 % pa , the markets will change , most long biased traders/investors will get caught.

The stock markets valuations are based on long term , so short term prices tend to fall due to news and rebound.I call this an edge , as it happens more often than not , it is the behavioural pattern.

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What you've identified here is a market characteristic - or a behavioural pattern if you prefer - not an edge. Everyone reading this has the opportunity to assess your observation and, if they agree with it - they too can trade equity indices. Does that mean they have a edge? No, absolutely not. Until they get a thoroughly tested trading plan that enables them to exploit what they've observed, they'll almost certainly lose money. As will you unless you've identified what your own persona edge is and have incorporated it into a your trading plan.

foroom lluzers said:

The traders who believe that they need an edge or think they have an edge are misguided , they have a negative edge of the spread and commisions.

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You're both right and wrong in what you say. Traders need an edge and won't succeed without one, period. I agree that many think they have one when in reality they don't, but that comes back to having a thoroughly tested plan. Spread and commissions are just part and parcel of the business - they have absolutely nothing to do with a trading edge.

foroom lluzers said:

. . .An example of an edge could simply be identifying when the market is trending, in which case you base your trades on the direction of the trend, but most traders can not time the markets to profit.Trend trading edge is subjective depending on the time frames used to define this subjective edge.

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No, I'm afraid not. You're essentially just making the same point as previously about equity markets rising over time and trading long. By the same token, identifying a trend isn't an edge per se. It may be an integral part of a trader's methodology and, therefore, it is one factor (among many) that contributes towards their edge - but nothing more. If all a trader had to do is identify trends - then most T2W would be rich. It's not that difficult. As dbphoenix is fond of pointing out - most 5 year olds can do it instinctively.

foroom lluzers said:

Successful trading is about being in agreement with the market, and being in agreement with other professional traders.Long trades on indices have an edge , short trades do not as per this data.38 more long trades than short were profitable .That is an edge.

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Successful trading may - or may not - be about being in agreement with the market. Lots of people make money fading the trend and so, by definition - they are not 'in agreement' with the market. The edge that professional traders have will vary from one to the next - there isn't just one single edge that all professional traders have in common. So, I'm afraid to tell you that based on what you've said here, you don't have an edge. Sorry!
Tim.

Tim

You could sum it up by saying

The trading edge is the combination of system/method ,mental edge to execute the trading edge,it has higher probability of profiting more often than not , before any trade is placed on the system/method.

How would you sum it up?

foroom lluzers said:

. . .How would you sum it up?

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I think it needs to be quite a loose definition, as the specifics of one trader's edge relative to the next trader's edge are likely to be very different. For example, you make a big issue (along with many other traders it's fair to say) about the psychological aspect of trading. So, for you, this may form an integral part of your edge. For others, it might not. So, my definition would be something fairly general - along these lines:

'An edge is a trader's ability to analyse their market(s) of choice (via fundamental, technical or quantitative analysis etc.) and, thereafter, to devise a methodology that enables them to take advantage of said analysis in order to generate consistent profits over time'.

The devil is in the detail of course, and that will be fleshed out in the trading plan. Mere observation of a market characteristic in and of itself is not an edge and is insufficient to make a profit. A good example of this is the 'Santa Claus Rally'. Historically, equity indices have risen in December 70% of the time. Does this enable everyone to make a profit simply by going long at Christmas? Sadly not. Oh, if only it were that easy! To profit from this phenomena will necessitate the trader to devise a methodology that takes advantage of it: that is their edge.
Tim.

wow tim good stuff

i wish i could express like this in words

timsk said:

'An edge is a trader's ability to analyse their market(s) of choice (via fundamental, technical or quantitative analysis etc.) and, thereafter, to devise a methodology that enables them to take advantage of said analysis in order to generate consistent profits over time'.

.

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That is highly intelligent and I would agree with that

thats about as succinct as you get

you are llusing your edge here on this forum.

piphoe said:

thats about as succinct as you get

you are llusing your edge here on this forum.

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Timsk's own version is better than Mark Douglas.This is industry standard from now.