I wrote a little article about it on my blog in response to an email I got. The article is called Trading Strategies That Work if anyone is interested in reading an commenting on it.
There are only three things that I know about that have an edge. The trend, the effects of support and resistance and momentum.
- The trend works best on markets such as large FX pairs that are driven by economic fundamentals (most notably the EUR/USD).
- Support and resistance seems to occur on markets that are driven by speculators.
- Momentum seems to be a bit harder to nail down, it occurs strongly on pairs like the GBP/USD but it is effective on any market that is prone to making large sudden movements.
The edges of the trend and support and resistance are pretty much mutually exclusive, i.e. the stronger the trend the less effective support and resistance is. So these are the only edges that I know of and the only edges I apply.
My question is: what's your edge, how do you apply it and how do you know that it really works?