What Is An "Edge" IN Trading?

All too many times I hear of the need to have an "edge" in your trading plan.
Something that gives you the upper hand on the next guy so you can take his money before he takes yours! I've heard this time and time again, and well..... I guess Im trying to figure out what my edge is?? Do I even have an edge?? How can I gain an edge on my competition?? Are Banks, Hedge funds, MM's the only people that truly have an edge in that they are the ones with enough money to really move the markets? Is the notion that a small retail trader like myself can compete and have an edge over these guys just an illusion?? Id like to hear from others on what their thoughts may be on this subject....

Do you have an edge?? If so, how did you find it? How do you define what your edge may be? How do you know when your "edge" is working, and when it is not working?
Is there ever a time where your edge stops working and needs some adjustments?

No, Im not trying to "steal" your edge, However, I would like to know how I can define my "Edge" . My trading plan is incomplete until I can truly find out what my Edge may be??

Im looking forward to some feedback!

Good day..

Edge - Higher probability of one outcome over another.

I guess that goes for having the knowledge of any special circumstance that time and again has proven to be a reliable information concerning the outcome of any trade. To have such a reliable information gives you an "Edge" on the trading, isn't it? To me, I use to check the release of the most important fundamentals on the Forex Factory calendar and see time and again that as the time of the release comes close, the prices start moving faster, after the release, the prices just go one direction, ups or downs, just have your trigger ready and follow the crowd, I mean after having done your complete homework on the evolution of the pair up to this moment anyways. Just saw no more than 30 minutes ago the release of the "Manufacturing PMI in Great Britain" with a positive outcome and a jump of more than 50 pips upwards in less than 2 minutes.
I mean, after having all the tools available to everybody else, just having this piece of knowledge really gives you an "Edge" .
Hope that sharing my experience with you was helpful.

your edge is you ...

I'm looking at it this way:

The market is really good at what it does - facilitating trade. It's not perfect though; inefficiencies occur and are then corrected for, as trading takes place. If you can find inefficiencies to exploit then the market mechanism will identify them and bring thing back into sync - carrying your (hopefully properly positioned) trade with it.

I'm looking here for edges(plural):

Market Structure & Orderflow; Pairs Correlations

I can't really elaborate since I'm just barely starting to understand the topic. Not trying to hide anything. Maybe others with more experience can say more. Anyway, I think it offers more promise than looking for an edge by throwing combinations of indicators on a chart.

Another response that you may hear is that people are finding an edge inside of their own head - i.e. psychological. That's valid too IMO but, probably not what you're asking about.

Good luck finding what you're after! (Here's the paradox: You need to know what you're looking for before you can find it. But, how do you know what to look for? That's why, in my own case, I'm looking to the market itself - rather than criss-crosses on the surfaces of charts.)

Broadly speaking, anything can get you ahead of the game can be deemed as an edge.

There are different kinds of edges:

Speed edge - if you're the fastest squirrel on the block then you'll be the first one to grab up the acorn. This is a hard edge to maintain as there's always someone faster out there who you're competing with to get a particular acorn or fill as "good fills" are a rare commodity.

There are information edges - having better info than everyone else.

The two edges above aren't achievable by most people.

There are strategic edges - you have built and implemented a better mousetrap. Now you just have to trade it as it was designed and the law of large #s will cause your account to swell with glory as your strategic edge bears fruit. This is one of the few areas where average people have a chance to get ahead by implementing way above average strategies! Almost by definition your strategic edge is expanded if you are going where no man has gone before. If you're doing the same things that everyone is doing (here on FF and other online boards) then by definition you aren't standing on the edge, but in the middle of a group or herd as you will. And sometimes a herd of small lemming rodentia will make an unfortunate turn and just keep on going.

There is luck- some people think they have an edge because what they are doing seems to be working or they think they are smarter than the average bear. (95% of people think they are smarter than everyone else and most of them are wrong lol.) And then it stops working and they wonder what happened to their edge? It's easy to have this happen. Luck is a crappy edge because once the leprechaun decides his time is up, your edge goes *poof*.

There is psychology - some people think their zenlike calmness and karate kid mentalities is an edge. Or the fact that they are in tune with their feminine side gives them the ability to "feel" the markets. It isn't a real edge in the sense that having mastery of the mental game is a lock for making $$$. But being calm of mind, grateful and open can prevent many of the problems traders face, and can help in executing "the system" and spotting new and ever better strategies that are there just for the developing.

One final thought - if you don't know what your edge is, then you really don't have one.

Good post, FXEZ.

A good point is the one about finding your edge on one of these system threads - really small chance IMO of holding water long term.

Also, I used to think that the "If you don't know what your edge is..." thing was B.S.. Not anymore. You'll also find out fast enough if your edges are real or imagined.

I think LasVahGoose nailed it in the first reply. Essentially forex is just a game of probabilities. If you can recognise a situation in the market where there is a higher probability that x is going to happen then you will have an edge.
Money management, trading psychology etc are all important but they are useless without that edge.

Far from being an autority on a subject, I think that having:
1. Plan
2. Discipline
Will constitute an edge, since majority will break their own rules, on a regular basis.

Would be interesting, to hear opinions of experienced traders.

we all know this market is unperdictable the only thing you can do is to keep testing the market for runners with tight trade managment, so the Edge is YOU, how you read the market, how you manage your risk/money.
Howmuch control you have over YOU, thats your edge.

Find out what works for you over and over again. The answer is in your own thinking and how you view things, a simple study of yourself.

Having an edge in trading may mean different things to different people. To me, having an edge means the abilty to execute a profitable trade consistently based strictly on one's own trading strategy.

It is not enough to merely possess some form of information, skills or knowledge which others may also have but how you are able to interpret/combine those skills and knowledge together to derive a unique trading strategy that will consistently put you ahead of others in this trading game.

The key: One needs to think out of the box.

opportunities come and go... and comes back again in a cycle.

i think the big edge is the ability to wait, sit tight and be prepared when the right time comes...

the abiltity to "plan the trade, and trade the plan" to successful completion is another edge

Knowing how to trade.

The recipe...

1) 50 cups money management
2) 1 cup mechanistic system (forward tested for six months)
3) 1 gallon of patience
4) 1 teaspoon discretion
5) 1/2 teaspoon of fundamental analysis (at least know what and when
the tier one releases take place)
5) 1 cup technical analysis (trend lines, support... etc)
6) 1 cup trading plan
7) 1 cup stop loss
8) 1 cup profit target

Edge is something you want find here!!!

Do you mean WON'T?

Or something you WANT to find here?

m

PS - You can find an edge anywhere.

Ok...WON'T FIND HERE!!!
And yes I agree with you, you can find edge anywhere...Im just looking
at one on the corner of my computer table.

lol

in complete agreement with maheswara, although i dont think of it as an "edge" since trading is what i do for a living, i find EXPERIENCE and the ability to understand what the market is doing at this moment in time to be ALL that is needed to maintain a decent growth level.

the common psychology behind the word "edge" is similar to the feelings that this is a "zero sum game" or even the silliness surrounding those who read "the art of war".

NONE of this is a "battle" between some unseen "them" and yourself --- if you trade with a broker, for the length of your trade the broker is taking the opposite side of your trade and if you succeed in "winning" your trade, the broker will get that back later by shorting a trade which puts the money right back in their pockets --- THAT and the spread is what keeps them in business and YOU are not fighting ANYONE !

EXPERIENCE is what puts you AHEAD, as it does in any field that exists, but that EXPERIENCE only allows you to KNOW WHAT TO DO, and thats the bottom line.

Most new traders LOSE because theyre not aware of how to REALLY TRADE, and so everyone is looking for that "edge" as they do for the "holy grail" and neither one of them exist !

Yesterday I was interviewing new traders for my company, and so i had to preset the days trading that is usually my portion ---- by the time I shut down the workstation, after being away from it but for a few minutes between interview, i had gained almost 700 pips ---- this is NOT to brag, as 700 pips is no record, BUT it is to point out that without even being at the computer, ANYONE with experience can do this !

I have NO edge, but i do have experience and knowledge of where prices are going and whats going on in the market, even though my connection is a cable and not personally being there, and ANYONE can learn, with a little bit of time and study, HOW to do this easily and successfully !

EDGE is a hope and a prayer for those who do not have the EXPERIENCE yet --- just as playing war has nothing to do with trading.

Its SIMPLY a matter of KNOWLEDGE and the applied use of that knowledge as pertains to the subject of trading.

I maintain a thread over in the rookie section, that teaches how to accumulate 350 pips a day which i shall grant is not learned in a day, but we have newbs there now coming up with over 150 pips a day, and theyre still learning, and NON are looking for an EDGE !

enjoy and trade well

mp