Written by admin on December 2nd, 2008
Trading Edge
If you are trying to learn about day trading, you will no doubt see images of profits galore, lives of leisure, and the ability to make money at will. The reality of the situation is that when trading stocks, options, commodities, or forex, the markets and all of its participants are hell bent on burning a hole in your account. As a day trader, your daily job is in an environment that a majority of the other participants are huge, greedy, institutional, companies. These invisible opponents employ various strategies, cutting edge technology, top human talent, and any other legal ( and sometimes not so fair ) means, to make you lose money. Did I mention that all the other participants are hell bent on raiding your account?
Hopefully, right about now is when you realizing the absolute necessity of having some sort of guide or trading edge. But, understanding what a trading edge is, is magnitudes easier than finding one!
A trading edge will help you from getting clutched in your own emotions. A trading edge will enable you to dance around the smart traps set by the giant institutional firms. A trading edge will allow you to perform at the best of your abilities as a trader. A trading edge will mandate that you make more money than you loose. A trading edge can be analytical or it can be discretionary, but always stipulating sound logic. Most importantly, a trading edge will demand that you be consistent.
Strangely enough, with a trading edge those pie in the sky dreams discussed earlier can now become a reality:
A life of leisure / Stress free living: Once you know what your edge is you will be cherry-picking only the most desirable trades all the while knowing what your winning probability and expectancy is. Though the number of trades you enter will most likely be fewer in number, the chances of success would be comparatively much higher.
Profits Galore / Stable Income: Once an edge is defined and determined, your consistency will go through the roof. Once your consistency increases, your profits will go from a trickle to a white water roaring river.
Make Money at Will: If you are lucky enough to find a trading edge, and execute on it; you will not fathom the amount of money you will be able to make in a relatively short period of time. In his book PitBull, Marty Schwartz, talks about finding an edge. Once Marty found his edge he goes from not really making any money, to making $70,000+ per day the very next month! Keep in mind, this was decades ago when a million dollars was worth way more than it does now!
Ok, so how do I find a trading edge?
Once again this is easier said than done.
- Observe, Observe, Observe! Watch your markets day in and day out, and note essential patterns and thoughts you see repeating over and over.
- Test these observations on a simulator. If you don’t have a simulator just write down on paper your buys and sells, as you would have taken them.
- Rinse and Repeat.
If you find something that consistently works. Vuala! YOU HAVE AN EDGE!!!
Now wasn’t that easy? 
To wrap this up, here are some pointers to start you down that yellow brick road.
Remember, to always review your notes during non trading times or leisure times. You may discover a hypothesis you can test.  These usually give you your best results.
Trading is a game of probability. Â A real trading edge requires sound logic, and must not be influenced by emotions.
Find your edge, find wealth.
Tags: learning, Tips, Trading Edge
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