TRADING MINDSET - THE NEED TO DEFINE YOUR EDGE

[forexbrokr]

GOOD AFTERNOON STEEMIT,

Happy Valentines Day... if anyone gives a fuck.

😂😂.

Now. Moving onnn. One thing that gets thrown around when you’re developing a trading strategy that makes money, is the need to define your edge. There is always talk around the need to develop and define your edge as a trader.

Something that is concerning however, is that a lot of the time when you ask a new trader what their edge is, they can’t tell you. In trading, you’re trying to be the house, but if you can’t define your edge then you’re nothing more than a horse track punter.

What is a Trading Edge?

Your trading edge is the thing that puts the odds in your favour when you trade. It is made up of the strategies that you trade, within a certain time frame, and with a certain risk profile.

For example, your edge may need your strategy to be executed over a longer period of time at 1:3 risk:reward, to be profitable.

Consider these 3 elements that make up your trading edge:

The Trading Strategy Itself

This is the way you trade. Your trading strategy itself that defines when you enter and exit a trade.

For example it could be indicator based, or using pure price action techniques around key support/resistance levels.

While there always must be an element of human intervention, all successful traders have a set of rules for entries and exits that they know work.

The Timeframe Required

Your edge might not be profitable in the short term, but if you’ve done the testing and know that over 100+ trades then it is profitable, why would you get upset and throw in the towel after just 50?

If you know the timeframe required for your edge to be executed, then you can take some of the stress out of downturns that you’re inevitably going to have while trading.

Know the timeframe and execute your edge over and over to stay profitable.

The Risk Profile Required

Finally, a key part of any trading edge is risk management. You have the ability to be the house and only take trades that will have a higher win rate than loss rate.

By using risk:reward ratios, you’re able to put yourself in the position a casino puts themselves in. For example only taking trades at a 1:3 risk:reward ratio will allow you to even run at a winning percentage of under 50% and still make money.

In my opinion, this is the most important aspect of successfully executing any trading edge. Keep your ratios high, cut losers short and add into winners.

Best of probabilities to you.

Peace ✌🏻.

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Comments

[simondocherty]

Too many people look for the pump and dump instarich scheme and all most all get burnt. Put in the time effort and patience and you willl surely be a winner.

[forexbrokr]

The patience to consistently execute your edge is key. You know you have one in your strategy, so don’t give up on it when a few trades don’t initially go your way. Remember the testing you’ve done and why you trade the strategy you do.

[georgeargyrousis]

I am using indicators and human psychology. TA is also helpful when it comes to regulated markets. In the crypto space it's hard to predict what people are going to do. It's also impossible to trade in most sites since API bots will outperform you and quite possibly ruin your trade. Just play well with the whales and minimise your risk 1:5 (risk:reward).

[forexbrokr]

Lol, sure thing.

[h3ck02g]

Thanks for the information but I think I will HODL it till the end

[forexbrokr]

What’s your edge?

[rimon512]

nice post. :)

[forexbrokr]

Cheers lad.

[enurmik]

Thanks for sharing your knowledge. Helps alot! Keep it up.

[forexbrokr]

Cheers.

[clarkk]

Thanks for the strategy on the risk:reward ratio and the edges to execution. Though its not really easy giving it a trial when it comes to risk taking no matter how low the risk seem as because most of us really gun for the win win idea and never want a lose but sure we have to weigh both options before going into any investment. This is really a heads up for crypto currencies investors and sure following this write up will give them an edge. Thanks @forexbrokr

[forexbrokr]

Not a problem Clarkk. I hope it at least gave you something to think about.

[thekrig]

Great post. Been struggling to define my strategy and therefore i am still only trading demo's. Even though I have been quite profitable trading these Demo's this was a big sticking area that kept me from starting with a live account. This definitely helped and gives me more confidence going forward. Thanks for the great content.

[forexbrokr]

No worries mate, good luck on your journey toward a live account!