What is Edge in Trading?
Edge
Forex Trading Glossary
Quick Answer: Edge is a statistical advantage that makes your strategy profitable over many trades. It comes from superior analysis, execution, risk management, or psychology - not luck.
What is a Trading Edge?
A trading edge is a repeatable advantage that allows your strategy to produce positive expectancy over many trades. Edges come from superior analysis, execution speed, risk management, or psychological discipline.
Elements of a Durable Edge
- Defined setup: Clear criteria that distinguish high-probability trades.
- Risk control: Protective stops and position sizing that limit downside.
- Consistent review: Performance tracking to confirm the edge still exists.
- Adaptability: Ability to adjust when market structure shifts.
Measure Expectancy
Use historical trade data to calculate average win, average loss, and win rate. This quantifies whether your edge is real.
Building Your Edge
- Journal insights: Analyze trade outcomes to refine setup rules.
- Specialize: Focus on a handful of instruments or sessions where you excel.
- Leverage strengths: Align trading style with your analytical and psychological skills.
- Stay humble: Continually test assumptions to avoid edge decay.
Related Terms
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