This article is about understanding the basic concept of trading, especially for those mechanical traders. Trading EDGE is often said and mentioned by people who are actively trading in stock markets. Understanding the concept of trading edge was actually what got me going in trading stocks a few years back.
Definition..
"A trading edge in the financial markets can be described as a set of conditions that when present, give a higher probability of a trade working than not working."I love this quote from Mark Douglas..
"Wins and losses are RANDOM and your EDGE is nothing more that a higher probability of one thing happening over another"So, winning and losing trades are part and parcel of the game. What important is that you are winning in the long run. The problem is - you need to have an EDGE to succeed in winning in the long run.
The good edge is if it can show you..
#1. a set of market conditions that give a higher probability of a trade working than not working.
#2. to identify when the market is trending, in which case you take trades in the direction of the trend
#3. to identify when the market is ranging, in which case you can buy at the lower boundary of the range and sell at the upper boundary of the range.
#4. there is a random distribution of winning and losing trades and you must take a series of trades over time.
Share with me you trading edge..
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