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Define your trading edge

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  • Define your trading edge

    Conceptually define your trading edge, skipping the numbers, and just defining the concept.

  • #2
    1. Convexity.
    2. The historical excess of implied volatility versus realized volatility.
    3. The historical performance of calendar spreads under volatility term structure inversion.
    4. Reversion to mean under strictly defined conditions.
    5. Scheduled event mispricing.
    6. Regulatory change arbitrage.
    7. Fading MaximumPossibleSuffering.


    • #3
      Here is one from me.

      A big problem with moving average cross over is that the wip-saw almost eats away the profits of the last trend.

      You get an edge by sizing up your position at approximately the wip-saw heights.

      Now when a long trend comes in, it allows for a large number of size ups in position, as opposed to the wip-saws.

      The 'where' and 'how' of sizing up has to be worked out and may well be different for each instrument.

      Also worth noting is that this works better for tighter moving averages, again tighter is different for different instruments.


      • #4
        1. EXTREMELY selective. 1 or two trades per week
        2. Only trade the textbook patterns
        3. 2% stop loss


        • #5
          I read fundamental news more than the average trader who is usually more focused on technicals. Give it a try for a won't be disappointed.


          • #6
            I got an edge but i'll be damned if i share it here with you ungrateful sonsabitches