Tuesday, April 12, 2011

Do You Really Know Your Edge?

Do You Really Know Your Edge? | PopDoc Trader:

"Ability to tolerate ambiguity is a psychological skill. And when it comes to exits, it’s even more critical. In fact, while entries and good trade location are very important, its’ ultimately your exits that will determine how much success you experience as a trader."

great article... Whenever I train a new trader I always make sure to have them write down their edge in as much detail as possible.  I think its extremely  important to always be seeking out new edge and refining your current edge because you know know when you edge will change or disappear.  Just think about all the guys that use to trade on the floor but could never make the transition to become a screen trader. Complacency Kills. Anticipate what could hurt your edge and adapt.

1 comment:

  1. This article only seems particularly applicable to retail level investors. Edge can come from many different sources: better information, structural advantages, or just better market access.

    The author is essentially addressing the touchy feely stuff, maybe some sort of developed intuition as what may happen. Certainly knowledge of simple indicators isn't an actual edge. It's really difficult to actually backtest something like this.

    It's important to note that having a net positive expected value is just a byproduct of edge and not edge itself!