Trading edge or following the crowd?

It seems we are on the looking for that "edge". That something that will make us different to everyone else and give us the profits we are hoping for. I assume the idea of an edge is to get us into the big moves, therefor bringing in the big money. If that is the case, are we not, in our quest for that trading edge, simply looking for a way to follow the smart money, and the crowd, as it is after all them that move the market in the direction we need it to.

It just has me wondering if the "edge" is actually not a unique quality to us alone, but rather it is finding a way to follow (or lead) everyone else. Being different does not mean you have a trading edge, it might mean you are the lone ranger in the wrong direction. Just some random thoughts for a sunny Australian morning.

I also had similar thoughts before akuma.
If you like, you can check it out here:
http://www.forexfactory.com/forexfor...ead.php?t=3550

But I think I like M. Douglas' definition of an edge:
An edge is nothing but a higher probability of one thing (i.e., going up) over another (i.e., going down)..

Well, actually I rephrased it..
There are also some other things like expectancy, etc., etc..
However, it's simple and easy to remember so I'm sticking with it..
It can still be improved though..

Okay, just a tangent too..

Is this not the question for the "Holy Grail", by that I mean not the trading "Holy Grail", but your personal "Holy Grail".

By that I mean that If you find it in yourself, you can apply it to anything.

Let me explain by telling my personal story.

I went to work in the summer of my eighth year. Did I have to.. no. Did I want to.. Yes!

Why would any eight year old boy want to go to work in the summer when he was off school?

Well, for me it was many reasons, my family had a moving and storage business, and my dad had been in it since he was a kid.

My cousin was 12 and his father decided that it was time for him to start working. Not to be outdone, maybe because my father is older than my uncle, he asked me if I wanted to work, and boy did I!!

I worked in the warehouse from 1 pm to 5 pm every day Mon-Fri. I worked with old timers, college kids, regular guys from around town, etc. The thing is, I wanted to do well so bad, that i did. It didn't take long for everyone to respect me. And it wasn't because I knew what I was doing, it was because I worked harder as an eight year old than anyone else there!

That first summer I made $5 a week. For an 8 year old in 1969, $5 was LARGE.

The story goes on for years. After a couple of summers I made $10 a week, after a couple more I made an hourly wage, although very small.
.
After a long while, maybe by the time I was 20, I considered myself almost an expert in the moving and storage business.

Now, did I go to school to learn this? No. Did I really start out to be an expert? No. Did I conciously in all this time period work to be an expert? No.

It Just Happened.

And Why?

Because I loved what I was doing!! I never questioned why I went to work every day, or even why I was there. I was there to do my Job.

I learned more about people, life, work ethic, honesty, and almost anything else worth while you care to mention, in those young years of my life than a lot of people learn in there entire lifetimes!!

Now, I'm completely out of that business, but your post stirred up those memories.

I believe your "edge" is stricly in "yourself"!

You might not know at first if you have it or want it, but there will be a point in time when, if you work hard enough through sheer enjoyment of what you are doing, and/or determination, that you will realize that you have it.

Actually you will have had that edge for a "while" before you realize you actually have it.

In real life my edge has become "experience", as I think everyone's does. It's got a lot to do with how people get jobs over others for example.

Why shouldn't this priciple apply to trading as well?

Maybe I'm wrong?

Just my experience anyway.

Jimmy

The first part of making money, sorry to state the obvious, is not losing it all first.

Not letting losing positions get too large is the numero uno.

But it is difficult to make more than slight amounts of money even without a spread to contend with, and even an unrealistically small spread like a quarter pip would still require a lot of skill, possibly more than someone not naturaly inclined to trade could ever acquire, to overcome and profit despite.

But you don't have to be better than most traders to profit, just avoid certain mistakes they tend to make, such as trading out of anger, fear, or greed, or allowing losing positions to ride - waiting for a retracement that might not happen.

Profiting well, outdoing hedge funds and whatnot, requires dedication and kaizen (continual improvment), and I am sure than constitutes and edge. Ensuring ones] abilty to profit over time, requires some improvement as markets do change, year after year, sometimes month after month, at least in part in response to the profit making activities of some of it's consituents.

I think to do well one needs a certain serenity about money, which is an unusual trait.

Jimmy's got a point. "Do What You Love and the Money will Follow!" is one of the best books ever. Highly recommended for that "serene" attitude toward money.

to echo your thoughts...what i've thought about this.

In business, and creative work we are taught that being unique is the way to success.

You know... the USP .. Unique Selling Proposition .. what differentiates us..

This is good for people selling forex courses, but perhaps not traders...

But it appears as you say that the market is driven by a preponderance of agreement in one direction... so as you say by seeking to be an individual and unique ... our current ingrained training pattern we are defeating ourselves.

If we are not afraid though of losing our individuality or are self-confident we do not fear following the crowd because we are secure...grasshopper.

I'm quite interested in this stuff.

I almost forgot I had started this thread, after thinking about it a little more, I think the answer is somewhere in between. By seeking an "edge" being different than others, we are trying to find a way to get ahead of the market, i.e. get into a move at the top or bottom rather than half way through. So an edge can help, to get in early, but following the crowd is what is going to keep you in those moves and in the end make you the money.

Best of both worlds?

I think getting in in the beginning of a trend, and not getting very often on false trends, would qualify us as being different.

I had a manager like this. He was always there. He came to work on Sundays and Saturdays. His salary was so diluted because of all the extra hours he put in that he efectively made not much more per hour than you would make flipping burgers. At 40, he never got married. He was a virgin as far as I'm concerned.

And then after 15 years of this he died of heart attack. Doctor said he worked himself to death.

Now, he is gone and I'm still there. I like my job. Now, who had an edge, me or him?

In his case having an edge didn't work. Or did it? Perhaps he was happy? We will never know.

Dane

A lot of traders seek the "Holy Grail", the perfect fx robot or trading system. But it doesn't exist. The holy grail is within you. Your discipline, your consistency in following your plan - that's your grail.