Crafting Your Trading Advantage
Discover Your Edge
Trading Edge
What’s your edge? Everyone always talks about it but what the heck does edge even mean anyway?
The definition may vary (and I don’t think there’s a textbook version), but edge to me is some ability, skill, or market observation that gives you an advantage over other market participants.
- Hedge funds might have an information edge
- HFT firms used to have a technology edge
- Prop traders used to have a speed and commission structure edge
Finding your edge as a retail trader is tougher, you need to look in different places…
Example skills:
1 – Reading order flow and taking advantage of large orders moving the market
2 – Spotting short-term turning points in the market
3 – Identifying fresh momentum
Example price observations:
1 – Price revisiting extremes after a trend day
2 – US index movement after EU close
3 – Power hour after a breakout
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You get the idea… Edge can be simple or complex. It can be small or large.
I also think your work ethic, pre-market prep and homework can be an edge. (It might not make you money, but it definitely adds to the likelihood of your success.)
More importantly, I think you can stack layers of edge together.
Good prep + open specialism + order flow skill = edge.
Today, think about your edge. Can you define it?
Even if you are not 100% sure what that is yet, think of something you believe you are good at (or could be good at) and work to build it. Because a lot of this game is confidence, and if you believe you have an edge that’s more likely to play out…