Having an Edge in Trading


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Malcolm Robinson

Malcolm Robinson

Having an Edge

What does it mean to have an edge in trading?

In a coin flipping game you know that there is a 50:50 chance that the coin will land heads up or tails up, so it doesn't matter whether you bet heads or tails. If, though, the coin had been tampered with and rebalanced so that it lands 55% of the time heads up and 45% tails up, which way would you bet?

Obviously you would bet heads as you know that over time you will come out ahead. This does not mean that you will always be right or that you won't have a string of losses to contend with, but the odds are in your favour and you are more likely to come out ahead.

Having an edge in trading is similar to knowing which way the coin is biased. An edge puts the odds in your favour and increases the likelihood of any trade being a winner.

U.S. Government Required Disclaimer - Commodity Futures Trading Commission.*Futures, options, and spot currency trading have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.