"What Is An Edge?
Do Casinos Make Money?Yes. The odds are predetermined by the game (and usually set by law). The odds are set so that the house always has an "edge". The house does not win every roll, spin or deal, but the house will ultimately win over time, that is, over hundreds of rolls, spins etc. Even in a simple game like playing Red/Black on a roulette wheel, the house has the edge because of the 0 and 00 (green) slots. The player has a 47.37% chance of winning but the house has a 52.63% chance of winning on each spin. For more details: In casino games, the odds are stacked against the player and there is no way to get around them. How Does This Relate to the Stock Market?In the stock market, the odds are also stacked against the player but there ARE ways to get around them. On the other hand, the stock market can be more dangerous. Unless you are careful, the market could take away ALL of your money and a bad, highly leveraged trade could put you into bankruptcy. This is why you need an edge and a reliable system.If You Trade Without an Edge, You Will Ultimately Lose MoneyThere are a lot of hurdles in the market for the average trader. Similar to the green 0's when playing roulette, the market comes with built in hurdles which lower your chances of success.Here is just a quick list of some of the obstacles facing the retail trader:
  1. Human Emotions
  2. Brokerage commission
  3. Bid/Ask spreads
  4. Lack of proper training
  5. Lack of proper tools
  6. Price Manipulation (For example, High Frequency Trading).
  7. Misinformation from many different sources
Do you care about your hard earned money? If yes, then don't trade without an edge!So What is a Trading Edge and How Do You Get One? An edge is a way to measure if your trading strategy will result in a profit when followed over a long period of time (many trades). There are two basic ways to get an edge:
  1. Develop a system by testing and validating ideas. The goal is to test what has worked in the past and build a trading strategy around these ideas. Generally these systems are mathematical, but can also be based on chart patterns, macro events, investor sentiment, or economic data.
  2. Develop skills. Another way to get an edge is by learning the hard way and developing the raw skills. By putting on lots of trades and analyzing your results and figuring out what worked, you can learn to understand how the market works. Unfortunately, this approach can be very expensive, time consuming and frustrating as well."

Source: http://www.edgetrades.com
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