It would be east to assume that finding an edge must be difficult. While it is true that some market anomalies do require significant effort to unearth, the reality is that successful traders make their edge on surprisingly simple concepts that persist in the market. In fact, there are three simple areas where you can begin to find an edge in your trading:
- Entry Signals and Tactics: These are the ways you generate trading ideas, from the pre-built screens and analysis in our research tool to trusted research providers or newsletters you choose, there are many ways to identify good market opportunities. These can account for an extra 1 to 5% gain in edge all by themselves.
- Market Filters: These are rules that tell you strategies (bullish or bearish) to use at any given time. Market Filters help you identify the trend of your market and know what to do about the trend you observe. These rules can improve your edge by 1 to 2%.
- Exit Tactics: How you adjust your stop loss, where you set your profit targets, and whether or not you exit your entire position or just a portion of it, can magnify your trading edge by 2 to 3%.
These are only three foundational ways in which you can begin to gain an edge in your trading and this lesson will describe them in more detail. Other ways to gain an edge can be learned as you get more familiar with your natural trading style, its probability profile’s expected base winning percentage, and other edge gaining techniques you can use with the strategies that fit your style.